Telcoin is a decentralized application that will disrupt the remittance industry making it possible for remittance senders and beneficiaries to capture the fees currently awarded to legacy financial institutions. This multi-layered application is introducing instant bank settlements on all cross-border money transfers in a decentralized remittances environment set to reimagine the entire industry.
According to the World Bank, annual remittance flow to low and middle-income countries has been growing since 2018 even as global remittances to high-income countries continue to go up. Global economic uncertainty caused by the global pandemic has slowed the growth of the remittances industry, yet studies show that remittances alleviate poverty in low and middle-income countries, improving the nutritional outcomes associated with higher education spending and reduced child labor.
However, even as remittances continue to serve a bigger role in boosting the income of developing countries, reports show that Banks and other centralized financial institutions continue to be the most expensive remittance channels.
Here is a detailed guide to understanding the Telcoin ecosystem but first, a look at the remittances industry and its main challenges.
Areas that struggle with hardships caused by sub-optimal economies and unstable governments heavily rely on remittances as a source of financial security. For millions of people, remittances are not only a means of covering life’s essentials but also a contributor to their country’s total gross domestic product (GDP).
Remittances are the funds sent by a person in a foreign land back to their home country. While it is difficult to estimate the exact size of remittance flows, recorded international migrant remittances are projected to reach over $500 billion globally with a majority of the flow going to developing economies. The US alone accounts for about 15% of the origin of remittances followed closely by the United Kingdom and Saudi Arabia. Among other countries.
A typical remittance transaction takes place on services such as Western Union where the migrant sender pays the remittance to the sending agent using a credit card, cash, money order, or other alternatives such as internet banking. Then the sending agency instructs its agency in the receiving country to deliver the remittance where the beneficiary of the remittance receives the funds.
The entire process can take anywhere between two to five business days or longer in some instances. In cases of an emergency, this process can be a hindrance.
Apart from being slow, banks remain the most costly method for sending remittances with an average fee of 11%, according to a 2019 report from the World Bank.
Post offices are the second most expensive method of sending remittances with an average cost of about 7%. The post offices often include a premium for the transfer services and have also established partnerships with specified money transfer operators thus leaving no room for competition. This lack of competition keeps the charges even higher.
While digital providers often offer the fastest method for sending money across borders, users need access to other third-party operators or are required to go through rigorous Know Your Customer procedures that bar the unbanked and under-banked user from benefiting.
With reports indicating that 31% of the adult population worldwide lack access to any sort of basic financial service, the inconvenient and costly nature of remittances is currently leaving out approximately 1.7 people. The majority of this group is based in small developing nations such as India, Mexico, and the Philippines.
At a time when mobile penetration, especially in developing economies, is at its highest, a mobile-first solution can help deliver financial services to the unbanked in a much better way. Examples such as Kenya’s Mpesa service demonstrate how a mobile-first solution can offer flexibility, and ease of use while providing more affordable financial services to the world’s unbanked.
Blockchain technology is already reshaping existing centralized global financial systems. The remittance space is ripe for a blockchain-enabled solution that will mitigate the current bottlenecks in the industry.
Telcoin takes on a simple, affordable, and convenient approach that aims to make the process of sending remittance payments as easy as sending a text message. The Telcoin solution not only simplifies the process but also cuts the costs thus enabling speedy money transfers at competitive rates.
At its core, Telcoin is a community-owned decentralized application that is leveraging blockchain technology and mobile money infrastructure to re-imagine the remittances industry thus enabling users to transfer money globally in a matter of seconds.
The steps to using Telcoin are straightforward:
Telcoin works with mobile operators and e-wallets around the world to reach out to a broad base of users five times the size of active bank accounts. What’s more, the application facilitates remittances at a much more affordable rate of only 2% compared to an average of 7% charged by conventional methods.
The entire Telcoin ecosystem is made up of three layers built on the Ethereum blockchain to enable the exchange of funds on a completely decentralized network of a user-owned financial product.
These three layers comprise an interface layer, a decentralized digital asset exchange layer as well as a settlement layer that interlinks mobile network operators to the blockchain thus enabling mobile networks providers a blockchain-based non-custodial financial services.
Here is a complete breakdown of how Telcoin’s multi-layered platform operates.
The Telcoin mobile app is the user interface of the entire platform and is designed as a secure and compliant as well as intuitive interface to the platform allowing users to send swaps and even earn as they use the platform to send and receive remittances. The app will host the Send Money Smarter (SMS) Network as a feature as well as a digital asset exchange called TELxchange.
The Send Money Smarter Network will provide a solid model for Telcoin’s adoption as it enables the migrants to simply cash in, enter the phone number of their beneficiary and send any amount of money globally in a matter of seconds. This feature will decentralize the foreign exchange service to active users on DeFi protocols, therefore, enabling remittance senders and their beneficiaries to save money they would have spent on fees. The entire system is designed to scale along with the platform’s demand, therefore, enabling mass adoption.
In the background of his feature, platform users will be able to deposit Telcoin’s native TEL token as well as a global basked of stablecoins into a diverse network of liquidity pools.
All remittances from the SMS network will then flow through these liquidity pools with instant settlements in a single tap. The recipient on the other side of the transaction can instantly cash out with a stablecoin or swap the funds into local currency. As there is an active network of Telcoin users on DeFi protocols providing liquidity, the transactions and swaps will be affordable and instant.
The V1 version of the SMS network is launching on DFX (Polygon) and QuickSwap with support for the USA, Canada, and Singapore remittance markets. Therefore, the SMS network will start by supporting the following asset-backed stablecoin pairs:
The exchange of funds from one currency to the other will take place on the TELxchange. This is a user-owned decentralized digital asset exchange that uses Telcoin’s native token (TEL) as the reserve asset and medium of exchange on the Telcoin ecosystem.
This decentralized exchange crowdsources liquidity from its users thus enabling remittance senders to swap different currencies directly from their bank accounts without giving up custody of their assets.
The entire TELxchange ecosystem is made up of Telcoin’s native token, as well as the native token of each supported TELx DeFi protocol, therefore, enabling seamless swapping between different assets across networks.
Telcoin’s native TEL token is used as the reserve asset and bridge currency of the SMS network as well as on TELxchange. Therefore, every product volume will flow through TEL market pairs on DeFi protocols with liquidity mingling pools such as TEL/BTC. TEL/ WETH and TEL/AAVE to mention a few.
TELx is the decentralized liquidity network layer of the entire Telcoin ecosystem. It is the underlying framework that enables TELxchange on the Telcoin mobile application. It will serve as the engine powering Telcoin’s suite of financial products.
The TELx platform will connect with supported DeFi protocols such as Quickswap and DFX whereby the entire transactional volume of the Telcoin application will flow through TELx without compromising decentralization and user-ownership.
As a decentralized exchange and marketplace, Active TELx miners have the responsibility of providing liquidity reserves to the supported TELxmarkets as they stake their liquidity tokens in the staking contracts that earn them pool trading fees as well as TEL tokens.
For instance, a liquidity miner can supply liquidity for a supported TELx market such as USD/CAD. Once such a market reaches product viability i.e. capable of powering end-user transactions and paying fees to TELx miners on every transaction, the TELx market is integrated with the Telcoin application.
By enabling an open, non-custodial liquidity mining platform, Telcoin users get to supply liquidity to the TELx platform thus powering the non-custodial financial products they enjoy on the Telcoin application. They also get to capture the fees that would typically go to centralized financial institutions.
Ultimately, TELx decentralizes access to liquidity on the Telcoin app thus powering cross-border money transfers, digital asset exchange, and more without relying on an intermediary. Telcoin users will be able to supply liquidity to the Telcoin ecosystem through TELx in a non-custodial manner using supported DeFi protocols as they earn the native TEL token as well as transactional fees.
The Telcoin application would not be complete without a settlement layer that enables mobile network operators to connect to the blockchain and facilitate instant money transfers using beneficiaries’ mobile numbers.
This is why Telcoin integrates Rinvendale which is a decentralized ledger that enables mobile network operators to provide blockchain-based, non-custodial financial services to their subscribers. With Rivendale, a mobile network operator does not need expensive banks or custody solutions to launch domestic payments, asset exchanges, and a full stack of financial applications.
Rivendale is an enterprise blockchain for the telecom industry enabling GSMA full member MNOs the righto run transaction nodes and earn network fees. It is built as an open Ethereum sidechain run, validated, and secured by MNOs (Mobile Network Operators).
The interoperable and permissionless nature of Rivendale makes it possible for MNOs to launch fully customizable financial applications tailored to meet local demand.
TEL is the native utility token of the Telcoin platform. Its main function is to be the native medium of exchange, reserve, and protocol asset of the platform. The token also features a consumptive and productive use case for market participants across all layers of the Telcoin platform. TEL is built on Ethereum as an ERC-20 token as a decentralized utility token and is used by Rivendell validators to secure the network and pay the cost of consumed computational resources on the Rivendell system.
Until the advent of Telcoin, remittance payments to family members and B2B international payments have been at a great economic and personal cost. The fees have been so exorbitant that the United Nations has set a goal to reduce the transactional cost of migrant remittances to less than 3% as one of the Sustainable Development Goals of 2030. One of the main reasons that keep the fees high is the fact that there are too many intermediaries in the remittance payment business. Telcoin offers a viable solution that cuts out the middleman in the remittance payment process thereby reducing transaction costs below 2.5%.