Cryptocurrencies are probably always on a roller-coaster ride. Bitcoin hit close to $20,000 in late December 2017 and memes about a missed chanceat becoming an overnight millionaire got circulated on social media. It lost over half of its value in no time and graduallyit again shot up to over $15,000. Nuo Capital, founded by Varun Deshpande, Siddharth Verma and Ratnesh Ray in 2018managed to offer a money-making way in terms of crypto assets, irrespective of their liability to change with respect to the dollar. An alternate credit analytics platform BeeWise, which was acquired by Aditya Birla Money in 2017 has been earlier founded by the trio.
Ethereum blockchain, upon which the start-up’s Nuo Protocol has been builtenables peer-to-peer borrowing and lending in cryptocurrency assets. A blockchain is known for being a digital ledger that keeps a track of the transactions without an intermediary, just like a bank, comes into the picture. The platform witnessed $25 million of loans being disbursed in crypto assets within six months of its launch, Varun Deshpande, Co-founder reportedly said that Nuo has found favour with many users since they don’t need to trust a third party with something as precious as their assets because the platform does not take the custody of the money at any point in time.
The second major reason suggested by Deshpandeis that a lot of the lenders on Nuo were coming from Japan, USand Europe was that banks in these geographical areas had low interest rates for deposits. The USDC is referred to a class of cryptocurrency named as ‘stable coin’ because they are backed by a reserve asset.They are considered to have the flexibility of cryptocurrency when attempting to provide price stability. This was when they understood they can actually create a retail banking platform for customers just for the use of a stable coin with a comparatively better way of converting USD or any other asset into cryptocurrency.
Nuo Capital created a product called Juno on witnessing a potential market in retail banking through crypto. Juno,which is essentially a neo-bank, a bank that runs only through an application interface and does not hold a physical presence. The product’s launch has been scheduled in January in the US. An annual interest of 5.5% will be availed by Juno customers on their savings with no lock-in or hidden fees. It has planned to also introduce a debit card along with a partner bank in the near future.
Juno is known to have raised $3 million in October in a seed round led by Polychain Capital and Sequoia Capital’s Surge programme, a start-up accelerator which has been launched by the venture capital firm.
Two challenges for the company are blockchain technology and its regulation. What gets difficult for a blockchain like Ethereum beyond a certain point is doing a large set of peer-to-peer transaction as the chain is not very scalable. Regulation is however considered to be the elephant in the room. Regulators world over are yet not totally convinced in terms of the safety and usefulness of cryptocurrency. The Reserve Bank of India has reportedly banned financial services under its domain from dealing in crypto assets. According to a statement made by Deshpande, launching products in India would mean collaborating with a bank, a situation that doesn’t seem likely.