Empowering Francophone Africa: Mento Labs supports Dunia with local stablecoin tracking the CFA Franc
October 16 2023
by Oleksiy Novykov
Mento Labs is pleased to announce that it supported Africa-focused payments company Dunia by providing technical expertise in token economics, software engineering and Web3 product design, culminating in the seamless launch of the eXOF stablecoin on the Mento Platform.
The Genesis of eXOF and Dunia's Ambition
The eXOF stablecoin emerges as a testament to Dunia's commitment to innovation. It tracks the value of the CFA Franc, a currency shared among 14 African states that are organized in two currency areas (XAF in Central Africa and XOF in West Africa), which serves as a unifying economic bond within the region.
Building upon the potency of this shared currency and the burgeoning momentum of mobile money services across the continent, Dunia embarked on a pioneering mission. The resultant eXOF stablecoin lays the foundation for an array of transformative use cases for the local population.
A Collaborative Odyssey: Dunia and Mento Labs Unite
The expedition towards launching the eXOF asset embarked upon its course two years ago with the launch of Dunia's DuniaPay wallet. Committed to constructing an ecosystem that harmoniously interconnects merchants, agents, and end-users via the Celo blockchain, Dunia ushered forth a wave of transformative change. Today, this effort stands substantiated by the expansive DuniaPay network, encompassing over 25,000 merchants, as well as 10 banks and microfinance institutions strewn across the Francophone African landscape.
The next step for Dunia was adding an eXOF asset into its ecosystem. Looking for a technical integration partner, Dunia found an ally in Mento Labs. As experts in token economics, software engineering and Web3 product design, Mento Labs supported Dunia from the initial idea phase to the seamless, transparent and decentralized eXOF asset launch on the Mento Platform.
“We selected Mento Labs to provide the technical expertise and overall integration into the Mento Platform to reach Dunia’s goal of building a stablecoin that would power a mobile money ecosystem with merchants, agents and end-users interacting seamlessly on the Celo blockchain,” said Serge Kiema, Founder & CEO at Dunia.
“We are pleased to support Dunia’s launch of an eXOF stablecoin powered mobile money service to more than +25k merchants and over 10 banks and microfinance institutions across francophone Africa,” said Oleksiy Novykov, Head of Product at Mento Labs.
A particular challenge in the eXOF setup was the CFA Franc’s official fixed exchange rate against the Euro (1 EUR ≈ 656 XOF/XAF), which is why the eXOF asset is fully collateralized by EURC, the Euro-equivalent of Circle's USDC.
Possible rate shifts on forex markets (e.g. following a change in monetary policy) pose challenges for the eXOF design setup and may result in an under-collateralization risk for the eXOF asset. To mitigate this risk, the Mento Labs team developed a circuit-breaker mechanism that suspends minting and burning of the eXOF asset when the Mento Platform's oracle system detects fluctuations on forex markets. It auto-recovers after minor fluctuations, but requires governance-involvement for a reset in case of major fluctuations.
Empowering Francophone Africa Through Web3 Technology
The successful integration of the eXOF stablecoin onto the Mento Platform marks a resolute stride in the evolutionary trajectory of financial services within Francophone Africa. Through this dynamic collaboration between Dunia and Mento Labs, the potential of blockchain technology converges harmoniously with the pragmatic necessities of financial accessibility, laying the groundwork for a newfound spectrum of economic engagement within the region and beyond.
To stay up to date on everything that is happening at Mento Labs and with the Mento Platform, be sure to follow Mento Labs on Twitter X or join the Mento community on Discord.
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