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One of the trends that experts anticipate will gain momentum in 2022 is decentralized finance, or DeFi, as its known. We are hearing more and more about transactions with cryptocurrencies or the use of blockchain to offer new financial services by non-traditional financial institutions.
One such case is that of delt.ai. The Mexican company raised US$25 million in cryptocurrencies a few days ago. It did so through TrueFi, a DeFi lending platform designed by TrustToken.
José de la Luz López, the CEO and co-founder of delt.ai, told Contxto that this capital would serve them to maintain competitive rates, grow at an accelerated rate, extend larger credit lines and provide a more complete service.
He pointed out that by doing it with stablecoins, the funding was much faster and that if they want to increase it in the future, they avoid renegotiating contracts. Here is what he told us:
Contexto (C.): What market opportunity does delt.ai see in Mexico?
José de la Luz López (JLL): We started to see the market since late 2018 and early 2019, when we started delt.ai. At that time there was already a great proliferation of consumer solutions. As consumers, we don’t have as many problems accessing financial products as a company might have. Therefore, we thought of an alternative for businesses.
The market we saw was with small and medium-sized companies, since most of them do not have sophisticated financial products. This problem gave rise to the idea of creating a technology-based product that could eventually provide the same degree of sophistication to meet the needs of SMEs and startups when they have not yet reached a scale that would allow them to have a full-time staff.
It was very clear that this business segment was neglected.
C.: Are you going to grant loans with stablecoins?
JLL: The intention is not to lend in stablecoins. We fund ourselves with stablecoins; we are partners of TrustToken. We then transform this funding into pesos with our own crypto tools. So, what we will continue to lend are Mexican pesos.
However, the benefit of this transaction is that we will be able to maintain competitive rates, grow at an accelerated pace, extend larger lines of credit and provide a more complete service.
C.: Why do it through TrustToken?
JLL: One of the benefits of TrustToken is that the market is very broad. When we first started talking to them they had a US$1 billion lending capacity; and now, in less than six months, they are at US$1.5 billion. The size of the crypto economy is just under a trillion.
So one of the reasons DeFi makes sense is the flexibility and the speed with which it works. When we want to do a funding it is much faster, and when we need to grow it there is a lot of room to do so without having to renegotiate a new contract.
This happens because on the other side there are many stablecoin holders who are looking for a return; so the market continues to grow at an accelerated rate and this is aligned with the growth generated by delt.ai.
C.: What are you using the new capital for?
JLL: Mainly for two things: first, to increase credit lines to clients who are asking us for more credit on the platform. Second, to offer the service to new clients.
C.: How does delt.ai work?
JLL: delt.ai is a revolving credit that you can draw through the platform or spend in the form of a credit card. In addition, it has other tools such as multiple transfers.
We don’t want this to be a simple credit. We want what we call a “smart credit”, that you can use for whatever you need at that moment. That could be for paying a payroll, buying material for a sale, sending massive transfers or having 24/7 withdrawals without having to go to the ATM or a physical branch.
All this demand for products and services needs to be backed by delt.ai loans. So, this institutional funding helps us to make a bigger backing; we can pass up to around 10,000 new clients with this line and with the agreement in place to grow it as needed.
C.: How has your monthly growth been and how do you expect it to be with the new capital?
JLL: In all of 2021 we grew 21x in volume. By 2022, we will be looking at 5x.
C.: What is your differentiator in the market?
JLL: The ability to disperse these loans massively with the Multitransfer option. It is a product that has been growing a lot since it has the ability to send thousands of SPEI, up to 36,000 per hour, in a way that requires no attempts since our system processes them for you.
Another differentiator is that the delt.ai account now also has access to programmatic connections (APIs). Our clients are often asking us to program their services in a massive way.
C.: Are you planning to expand to other Latin American countries?
JLL: Right now we are not thinking about expansion; we believe that the Mexican market is still very large and still needs a lot of exploration. What we want in the short term is to offer more robust products for new needs.
In the long term, since we have proprietary technology and infrastructure, it is relatively easy to reach another country. However, we first want to offer a more complete range of products.
C.: What are your plans for 2022?
JLL: For now, to grow credit and release a new card with a license we acquired with Mastercard in another partnership, and also to help customers test new tools such as APIs.
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