By aggressively listing tokenized TradFi assets, maintaining true zero-fee trading on key pairs, and launching its innovative Gold Launchpad for seamless trading access to precious metals, MEXC is positioning itself as the premier gateway for the TradFi-crypto fusion.

Industry reports from Elliptic, the World Economic Forum, and leading analysts continue to project 2026 as the breakthrough year when TradFi and crypto fully merge into a single, unified financial ecosystem.

At the heart of this shift is Real-World Asset (RWA) tokenization; the process of bringing off-chain assets like gold, silver, real estate, bonds, and commodities onto blockchain rails.

Tokenization unlocks liquidity, fractional ownership, and 24/7 global access to assets once reserved for institutions and high-net-worth individuals.

Pension funds, asset managers, and banks are allocating billions, with tokenized RWAs expected to attract massive inflows throughout the year.

Why Africa is at the Center of This Trend

Africa continues to lead global crypto adoption rankings, driven by necessity and innovation. Sub-Saharan Africa has seen explosive growth in crypto transactions, with stablecoins dominating for cross-border remittances, peer-to-peer payments, and inflation hedging. In 2026, the conversation is expanding beyond utility tokens into investment-grade assets.

African traders and investors are increasingly discussing tokenized real-world assets as a gateway to global markets.

Gold and silver, traditional safe-haven stores of value, resonate deeply in regions where currency volatility remains a challenge.

Tokenized versions offer the stability of precious metals combined with the speed and accessibility of crypto.

Regulatory progress in key markets like Nigeria, Kenya, South Africa, and Ghana is also creating fertile ground for institutional-grade products to flourish.

MEXC: The One-Stop Home Positioning Traders for the TradFi Wave

For African users looking to capitalize on this trend, platform choice matters. MEXC has emerged as the go-to destination, combining unmatched asset variety, industry-leading liquidity, and cost efficiency.

• Extensive TradFi-Related Listings: MEXC recently expanded its RWA offering with tokenized gold (XAUT) and silver (XAG) futures, launched with zero-fee trading to maximize capital efficiency. These assets bridge the stability of traditional safe-haven assets with the borderless nature of crypto markets, making them particularly relevant for African traders seeking portfolio diversification.
• True Zero-Fee Trading: MEXC maintains zero maker fees across spot trading and zero fees on hundreds of high-liquidity pairs, including major futures contracts. Recent campaigns like the Commodity Zero-Fee trading pairs have saved users millions in fees while delivering deep order books and minimal slippage. In a year when institutional inflows will drive volatility, cost efficiency is a decisive edge.
• One-Stop Home for All Assets: With thousands of listed tokens spanning DeFi, memecoins, AI projects, stablecoins, and now tokenized RWAs, MEXC lives up to its reputation as the most comprehensive platform in crypto. African traders benefit from seamless onboarding, 24/7 support, and coverage across nearly every country on the continent.

Looking Ahead

2026 has gone beyond choosing between TradFi and crypto. Traders can now enjoy the convergence of TradFi. Tokenized real-world assets are democratizing access to institutional-grade opportunities, and Africa’s vibrant crypto community is uniquely positioned to benefit.

Platforms that remove barriers through zero fees, diverse listings, and relentless focus on liquidity will lead the way. MEXC is already delivering on these fundamentals, providing traders with the tools needed to navigate and capitalize on the evolving financial landscape.

Join the future of finance today. Trade tokenized gold, silver, and the full spectrum of crypto assets on MEXC, where zero fees and unlimited opportunity meet.

MEXC

MEXC Global is a leading digital asset trading platform committed to expanding financial access worldwide. With deep liquidity, a wide range of trading products, and a focus on technological innovation, MEXC empowers users to explore, trade, and grow with confidence across crypto, traditional finance, and beyond.

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Risk Disclaimer:

The information provided in this article regarding cryptocurrencies does not constitute investment advice. Given the highly volatile nature of the cryptocurrency market, investors are encouraged to carefully assess market fluctuations, the fundamentals of projects, and potential financial risks before making any trading decisions.

 In this interview, he shares how AI, mobile-first design, and deep local insight are powering scalable fintech and clean energy solutions and why Africa is poised to shape the future of global innovation.

How does AI improve transaction speed, security, and reliability on Nearpays?

AI is a game-changer for us in boosting transaction speed, security, and reliability. On speed, AI-driven predictive analytics help us optimize transaction routing, reducing processing times and making payments near-instant for our users. For security, AI-powered fraud detection kicks in big time – we’re talking real-time risk assessment, anomaly detection, and stopping suspicious transactions before they happen.

This means our users transact with confidence, knowing their money is safer.

On reliability, AI helps us anticipate and prevent downtime. Our systems learn from transaction patterns, flagging potential issues before they impact users.

This translates to higher uptime and smoother experiences for our 60,000+ SME users. Plus, AI-driven insights help us enhance our softPOS platform, making it more intuitive and adaptive to merchants’ needs. Bottom line: AI isn’t just a nice-to-have, it’s core to how we deliver fast, secure, reliable payments

What technical challenges come with running payments purely on smartphones?

Running payments purely on smartphones throws up challenges like ensuring robust security on diverse devices, managing connectivity in areas with spotty networks, and optimizing for low-end phones common in our markets.

Then there’s balancing simplicity with feature-richness – our users range from tech-savvy merchants to first-time digital adopters. We tackle these by baking in layers of security like biometric auth and tokenization, building offline capabilities, and keeping our UI super intuitive. It’s about making payments work seamlessly, no matter the phone.

How do Nearpays and Yourrider share technology or data insights?

Our companies share a symbiotic tech relationship that drives efficiency and innovation. We leverage Nearpays’ payment infrastructure to power transactions for Yourrider’s logistics and delivery services – think merchants processing payments via softPOS and riders getting paid seamlessly for deliveries.

This integration boosts cash flow for riders and offers Nearpays deeper insights into merchant needs.

Data insights flow both ways. Yourrider’s logistics data helps Nearpays tailor financial products for SMEs in specific industries, like offering instant payouts to merchants based on delivery success rates.

It’s a win-win: Yourrider optimizes logistics with payment data, and Nearpays enhances financial services with rider and merchant insights.

In what ways can payment technology solve logistics and mobility problems?

Payment tech can revolutionize logistics and mobility by making transactions seamless, instant, and data-driven. In logistics, digital payments enable frictionless payouts to drivers/riders, automate invoice settlements, and track transactions in real-time.

This boosts cash flow, reduces admin hassles, and optimizes route planning with payment-linked data insights.

For mobility, integrating payments into transport apps (like tolls, parking, or ride-hailing) creates one-tap experiences for users and operators.

In Africa’s emerging markets, mobile-centric payment solutions help logistics players scale efficiently, manage risks, and expand services. By embedding payments into the journey, we unlock efficiency gains across the mobility ecosystem.

How do you design systems that work in low-connectivity environments?

For low connectivity environments, we’re building design systems that prioritize offline-first capabilities – think transactions that work offline and sync seamlessly when connection returns. We’re leveraging local data caching, PWA tech, and optimizing UIs to work with intermittent internet.

The goal? Payments happen smoothly whether you’re in Lagos traffic or rural Nigeria. We’re also testing mesh networks and SMS fallbacks to keep things moving.

What does scaling across African markets demand from your tech stack?

Scaling across African markets demands extreme agility and local relevance. We’ve built a flexible tech stack that adapts to diverse regulatory landscapes, payment preferences (mobile money, cards, bank transfers), and connectivity realities. Our softPOS is a hit because it works on basic smartphones – meeting users where they are.

To scale, we’re doubling down on local partnerships, hiring local experts, and iterating products with country-specific feedback loops. It’s about solving payments in ways that click locally, whether in Nairobi, Lagos, or Dakar.

How do you think about cybersecurity as adoption grows?

Cybersecurity is top-of-mind as we scale. With growth comes increased risk, so we’re doubling down on layered defenses – think AI-driven fraud detection, biometric auth, and tokenization for sensitive data.

Our partnership with Cybersource is a big boost; their global expertise in payment security complements our local know-how. Together, we’re baking in robust security as we expand, protecting our users and their transactions. It’s about building trust, fast.

What role can African startups play in the global fintech ecosystem?

I firmly believe African startups can absolutely play in the global fintech ecosystem – and we’re proving it. With tech talent, innovative solutions, and a huge underserved market, African fintechs bring unique value. Our softPOS tech, for instance, solves real problems for merchants here and has potential elsewhere. The key is solving local challenges exceptionally well, then scaling smartly.

Global partnerships are a big enabler. Collaborations with international players like Cybersource give us access to tech, expertise, and networks. But it’s not just about plugging into the global ecosystem – African fintechs need to lead with solutions that work locally, then expand. With the right blend of innovation, partnerships, and execution, African startups can go big globally.

How do you see Africa’s fintech market evolving over the next decade?

I see Africa’s fintech market evolving explosively over the next decade, driven by mobile penetration, regulatory maturity, and innovative solutions. We’ll see massive growth in digital payments, Buy Now Pay Later services, and embedded finance – think payments integrated into everyday apps and platforms. The rise of super-apps and decentralised finance (DeFi) will further accelerate financial inclusion.

Regulatory clarity will boost cross-border payments, stablecoin adoption, and partnerships between telcos, banks, and fintechs. AI-driven credit scoring will unlock financial inclusion for millions. Sustainability and compliance will become key differentiators. Africa’s fintechs will lead globally, exporting solutions and attracting international investment. It’s an exciting time.

Following the month-long competition, 14 teams emerged victorious, winning a chance to collaborate with Trilitech’s Business Development teams and bring their innovations to the Etherlink mainnet.

The hackathon, organised in partnership with Encode Club, attracted developers worldwide to build on Etherlink’s high-performance infrastructure. 

Projects leveraged Layer 2’s sub-500ms confirmations and near-zero transaction costs to create applications spanning from generative art platforms to AI-powered development tools.

“This was our first hackathon for Etherlink, and the response from builders has been phenomenal,” said Adebola Adeniran, Developer Relations Engineer at Trilitech and hackathon mentor. 

“We received nearly 100 submissions, with standout projects emerging across DeFi, Art, Gaming, and AI. Several teams will be selected to collaborate with our Business Development teams to bring their ideas to life on the Etherlink mainnet.”

Permalink claimed both the Best Overall Project award and first place in the Collab Culture category for its fully on-chain generative art platform. Permalink was created by a digital artist for the digital art community. 

The platform empowers artists to easily experiment with AI and algorithmic techniques, making it simple to generate unique works and mint them as NFTs.

In the DeFi category, Stack won first place for its gamified, mobile-first Web3 investment platform targeting Gen Z users. The application enables fractional investment in real-world assets and stocks for as little as $1, with automated investing through daily habits. 

Runner-up Superlink presented a mature DeFi vault project with strong community engagement, while MeshPay secured third place for enabling offline blockchain-based payments in emerging markets.

“Etherlink’s developer experience has been smooth and powerful. Its EVM compatibility allowed us to use familiar tooling (Hardhat, Viem, Solidity) while benefiting from the performance and low-fee characteristics of Tezos’ L2. 

“We’re especially excited about Etherlink’s focus on real-world utility and believe it’s one of the best environments to launch community- or data-driven protocols like Foretell,” said the builders working on the project Foretell. 

The gaming category showcased innovative approaches to on-chain entertainment. Etherlink Bounce To Earn GameFi took first place for delivering a playable, engaging experience, while Seas of Linkardia earned second place for excellent onboarding and UI/UX design, scalable for both Web2 and Web3 users.

The Vibecode wildcard category highlighted creative applications of blockchain technology. Time Stone won for its innovative app that lets users lock files until a chosen point in the future, ensuring they can only be accessed later. 

The app uses decentralised time oracles and cryptographic encryption for security. Etherlink Agent Kit secured second place for integrating LangChain capabilities with a comprehensive SDK for account, token, NFT, and chain operations.

Special recognition went to Tickity for the Community Choice Award, recognising its mobile ticketing concept, and FOMO Insurance received the Judges’ Choice Award for its innovative DeFi insurance approach.

Winners of the Etherlink Hackathon 2025 will receive mentorship and additional funding opportunities as they develop their projects for mainnet deployment.

The collaboration between hackathon teams and Trilitech’s Business Development division aims to accelerate the transition from concept to production-ready applications.

The event which kicked off on May 10, 2025, will runs through June 10, 2025. This global celebration brings users a unique trading experience packed with exciting benefits, generous incentives, and the chance to earn up to 550 USDT in rewards.

MEXC DEX+ seamlessly integrates the security and convenience of centralized trading with the asset diversity and early price discovery advantages of decentralized platforms.

Designed to make on-chain trading simpler and safer, DEX+ empowers users to engage confidently in the Web3 space.

To support the growth of the DEX+ ecosystem and reward its global user base, MEXC is launching this event with a three-tiered reward structure, encouraging users to explore decentralized trading while benefiting from early market participation.

Three Reward Tiers—Earn Up to 550 USDT

1. Exclusive New User Reward

During the event, new users who register on MEXC for the first time and complete at least 100 USDT in total trading volume on DEX+ will receive 20 USDT worth of SOL tokens, helping them kickstart their journey into trading on DEXs.

2. Trading Streak Rewards

Existing users can unlock rewards based on their trading activity:

• Trade a minimum of 50 USDT over three consecutive days to earn 10 USDT in bonus rewards.
• Reach a total of 200 USDT in trading volume over seven consecutive days to receive an additional 20 USDT, for a total reward of up to 30 USDT per person.

3. Referral Rewards

Invite friends through your unique referral link and earn 20 USDT per valid referral. Each participant can earn up to 500 USDT in referral rewards.

Additionally, all referrers will enjoy a 40% trading fee rebate based on their referees’ DEX+ trading activity.

“The DEX+ Super Fest is a rare opportunity for crypto users worldwide to explore decentralized exchanges, enjoy innovative features, and unlock meaningful rewards. Whether you’re just beginning your crypto journey or already an experienced trader, this campaign delivers real value.

“Don’t miss your chance to trade smarter, earn more, and explore the future of DeFi. Visit the DEX+ Super Fest page on MEXC and join today.

Founded in 2018, MEXC is dedicated to being “Your Easiest Way to Crypto”. Known for its extensive selection of trending tokens, airdrop opportunities, and low fees, MEXC serves over 40 million users across 170+ countries.

With a focus on accessibility and efficiency, its advanced trading platform appeals to both new traders and seasoned investors alike. MEXC provides a seamless, secure, and rewarding gateway to the world of digital assets.

Combined, Rayls and LayerZero bridge DeFi and TradFi systems to enable seamless movement of stablecoins, CBDCs, and tokenized deposits across more than 120 blockchains, unlocking new liquidity, security, and compliance opportunities for financial institutions worldwide.

As institutional demand for secure and compliant blockchain infrastructure grows, Rayls continues to set the standard in blockchain solutions, building on collaborations with organisations like the Central Bank of Brazil, Nuclea and Kinexys by JP Morgan. Following the launch of its public chain and a Series A funding round of up to $16M, bringing the total raised to $38M for core developer Parfin, Rayls has expanded its reach, most recently through its collaboration with Arbitrum to launch its first TradFi-DeFi blockchain infrastructure for Institutional DeFi and financial markets RWA.

LayerZero on Rayls connects its private subnets with more than 120 public blockchain networks, enabling secure asset transfers and real-time financial interactions.

This partnership expands Rayls’ ability to drive mainstream institutional adoption of blockchain technology while maintaining the highest security and compliance standards. LayerZero’s interoperability framework ensures seamless movement of tokenized assets, real-world assets (RWAs), stablecoins and CBDCs across multiple chains.

By enabling frictionless assets and data movement across multiple ecosystems, it paves the way for cross-border payments, tokenized RWAs, enhanced tokenised asset liquidity, and complex financial use-cases that exist across a variety of blockchains, from Ethereum to Solana to TON to many more.

“LayerZero’s ability to provide seamless and secure cross-chain communication is fundamental for Rayls as we work to integrate financial institutions with decentralised finance technology,” said Marcos Viriato, CEO and Co-founder of Parfin, a core developer of Rayls.

Viriato added: “With this integration, we’re making it possible for financial institutions to securely move assets across global networks, unlock new liquidity channels, and participate fully in the evolving world of DeFi. LayerZero’s infrastructure is crucial for realising our vision of bridging TradFi and DeFi at scale.”

Bryan Pelligrino, CEO and Co-Founder at LayerZero added:

“Financial institutions need infrastructure that doesn’t force a choice between security, compliance, and interoperability. With Rayls, we’re bridging institutions, central banks, and DeFi protocols in a way that allows tokenized assets, stablecoins, and CBDCs to move securely across both public and private networks. This is the foundation for a unified, scalable financial infrastructure that supports innovation and inclusivity across the globe.”

The partnership addresses key challenges in the financial industry, including the lack of interoperability between private and public blockchains—a crucial factor for global liquidity and transactions.

The next phase of the partnership will see LayerZero’s cross-chain messaging integrated into the Rayls platform, with pilot testing set to begin with select financial institutions in 2025, ahead of a full-scale launch later in the year.

This ecosystem is supported by the innovative efforts of both financial institutions and fintechs, which have expanded access to financial services, driven adoption, and empowered millions of Nigerians. Innovations such as the Central Bank of Nigeria’s (CBN) eNaira, Africa’s first central bank digital currency, highlight how regulators are fostering groundbreaking solutions to enhance financial inclusion and modernize the economy.

One consistent theme in Nigeria’s financial services sector has been its unwavering focus on innovation and collaboration. From the early 2000s, when pioneers like Interswitch and NIBSS laid the groundwork, to the rise of fintech giants such as Paystack, Flutterwave, and PiggyVest in the 2010s, players in the ecosystem have consistently sought new ways to deliver value.

Today, blockchain is at the forefront of this evolution, with institutions adopting these technologies to improve efficiency and customer experiences. Zone, a trailblazer in regulated blockchain technology, is at the center of this shift, uniting banks and fintechs under a decentralized payment network.

In this exclusive interview, Sunday Agbi, vice president of Operations at Zone Payment Network, delves into how Zone is reshaping Nigeria’s payment landscape with its innovative infrastructure and partnerships.

TE: Zone has been described as a game-changer in the payments space. Can you give us an overview of what sets Zone’s infrastructure apart from existing payment systems in Africa?

Sunday Agbi: Zone’s infrastructure is Africa’s first regulated blockchain network for payments, and that alone marks a significant departure from conventional systems. Unlike traditional centralized systems, our decentralized network allows financial institutions to connect directly, eliminating the gaps experienced with centralized payment networks. This means faster transaction times, reduced costs, and increased security.

What truly sets us apart is how we’ve seamlessly integrated innovation with regulatory compliance. Zone was designed to address the unique challenges of Africa’s payment ecosystem while adhering to the highest standards of governance. By enabling direct, real-time interactions between financial institutions, our network ensures full transparency, making payments not only more reliable and secure but also more resilient.

This approach has earned the trust of leading financial institutions and regulators alike. By embedding compliance into the core of our infrastructure, Zone offers an interoperable system that empowers banks and fintechs to innovate without compromising security or regulatory standards.

TE: Collaboration with commercial banks and fintechs seems central to your strategy. How does Zone enable such partnerships, and what value do they bring?

Sunday Agbi: Collaboration is central to our mission because the future of payments depends on the synergy between traditional financial institutions and innovative fintechs. B

anks bring scale, trust, and deep customer relationships, while fintechs introduce agility, creativity, and new ways to engage users. Zone bridges these worlds, creating a unified infrastructure where both can thrive.

Our decentralized payment network enables seamless, real-time interactions between financial institutions on our network (both banks and fintechs alike).

For example, through our ZonePOS payment gateway,  financial institutions using ZonePOS can process transactions directly with the other, bypassing traditional intermediaries.

This not only reduces operational costs but also delivers a faster, more seamless experience for end-users.

Beyond technology, our partnerships are built on trust. By aligning with the regulatory frameworks of institutions like the Central Bank of Nigeria (CBN), we create an environment where both banks and fintechs can confidently innovate. This collaboration ultimately benefits merchants and consumers, strengthening Nigeria’s payment ecosystem.

TE: Zone operates in a highly regulated industry. How do you navigate compliance while staying innovative?

Sunday Agbi: Navigating regulatory compliance is non-negotiable in our space, and Zone prioritizes this at every level.

Our regulated blockchain infrastructure is not only innovative but also fully aligned with the requirements set by regulators like the Central Bank of Nigeria.

We actively engage with regulators to ensure our solutions meet and even exceed compliance standards. This involves building transparency into our system—such as ensuring full traceability of transactions—and using technology to enhance anti-money laundering (AML) and fraud prevention measures.

Ultimately, our commitment to compliance ensures that the ecosystem we’re building is both sustainable and trusted by all stakeholders.

TE: How is Zone preparing for the future of payments in Africa, given the rapid evolution of technology and customer expectations?

Sunday Agbi: The future of payments in Africa lies in scalability, accessibility, and trust. At Zone, we’re focused on expanding the capacity of our decentralized network to accommodate increasing transaction volumes while reducing latency to near-zero levels.

Furthermore, we continuously invest in our R&D to anticipate customer needs, ensuring our infrastructure is future-proof.

TE: Looking ahead, what does success look like for Zone in the next five years?

Sunday Agbi: Success for Zone is rooted in creating a payment ecosystem that transcends borders while continuing to redefine what’s possible within regulated blockchain technology.

Over the next five years, we aim to expand our network to connect financial institutions and fintechs not only across Africa but also on a global scale. By enabling seamless local and cross-border payments, Zone will become an essential bridge for financial services between emerging and developed markets.

We also envision Zone as the definitive example of what regulated blockchain can achieve—a concept championed by our CEO & Co-founder Obi Emetarom.

By demonstrating how decentralization and regulation can work in harmony, we aspire to set a global standard for innovation in payments.

In addition, we’re committed to evolving our network’s capabilities to support a broader range of use cases.

From powering regulated DeFi protocols to providing a platform for advanced financial products, Zone will continue to push the boundaries of what blockchain can do in a compliant, secure, and scalable manner.

Ultimately, success means building a financial infrastructure that empowers institutions, businesses, and individuals—enabling payments that are faster, more reliable, and inclusive, and ensuring that Africa remains a leader in the global financial innovation landscape.

However, there is a question not to be ignored — Is DeFi a revolutionary step towards financial inclusion, or a reckless gamble that leaves Nigerian investors exposed?

For many Nigerians, traditional financial institutions haven’t kept up with the country’s economic situation. High bank charges, limited access to credit, and cumbersome bureaucracy are major limitations. 

In contrast, DeFi platforms are built with a goal to make access to financial services easier, potentially boosting entrepreneurship and wealth creation. This innovation has attracted billions of dollars in investment, with a projection of high returns and innovative financial products. 

From decentralized exchanges to lending and borrowing platforms, DeFi has brought in new opportunities for investors and entrepreneurs. 

The borderless nature of DeFi is particularly attractive in a continent like Africa, where cross-border payments can be slow and expensive. Nigerian businesses and individuals can potentially connect with global markets and financial products through this innovation, bypassing traditional financial intermediaries. This could bring in new opportunities and stimulate economic growth across the continent.

Central Bank Digital Currencies (CBDCs): Boon or Bane for the Tech Industry?

The Dark Side of the Coin — Unregulated Risks in a Wild West

However, the lack of regulation inherent in DeFi is precisely what worries many. Unlike traditional banks, DeFi protocols operate outside the control of the Central Bank of Nigeria (CBN). This lack of oversight brings up several undeniable issues including:

Investor Protection

Recent high-profile scams and rug pulls in the global DeFi space reiterate the fact that without regulatory safeguards, Nigerian investors, many of whom are new to crypto, could be particularly vulnerable.

With no regulatory oversight, bad actors can easily manipulate prices, create artificial demand, and engage in pump-and-dump schemes. These activities can lead to huge losses for unsuspecting investors and undermine the credibility of the entire DeFi industry.

The anonymity associated with DeFi platforms can be attractive for criminals. This could potentially sabotage Nigeria’s ongoing efforts to combat financial crime.

Smart Contract Bugs and Hacks

DeFi relies heavily on smart contracts, which are self-executing contracts with the terms of the agreement directly written into code. While smart contracts can potentially bring  greater automation and efficiency, they are not immune to bugs or vulnerabilities. 

Hackers have exploited these vulnerabilities to steal millions of dollars in cryptocurrencies, leaving investors with huge losses and questioning the security of the sector.

Consumer Protection and Financial Stability

The lack of regulation in DeFi also brings up the issue of consumer protection and financial stability. Traditional financial institutions are subject to strict regulations and oversight to ensure that they operate in a safe and sound manner. 

But on the contrary, DeFi operates in a regulatory vacuum, with no clear rules or guidelines to protect consumers or maintain financial stability.

A Need for a Balanced Approach — Regulation vs. Innovation

The CBN recently issued a cautionary note, highlighting the risks associated with cryptocurrencies. However, a complete ban on DeFi could hinder innovation and financial inclusion efforts.

Questions for Discussion

Here’s where we need your voice!

• How can Nigeria leverage the potential of DeFi while mitigating the risks?
• Should the CBN adopt a more subtle approach to crypto regulation, facilitating reliable innovation within a controlled framework?
• What role can financial literacy campaigns play in helping Nigerian investors to scale through the DeFi industry safely?

A Global Conversation

The increasing use of DeFi in Nigeria is an aspect of the global trend where developed nations like the US and the UK struggle with how to regulate this growing technology. Nigeria’s experience, successes, and challenges can inform the global conversation on the future of this digital asset.

Join the Discussion!

Share your thoughts on DeFi in Nigeria and the broader conversation on crypto regulation. Is DeFi a revolution waiting to happen, or a gamble that could backfire? Let’s work together to ensure a secure and inclusive financial future.

According to the latest Chainalysis report, obtained on Thursday, it was revealed that those illicit funds dropped by approximately $9.3bn from $31.5bn in 2022 to $22.2bn in 2023 which is about 29 per cent.

The blockchain research platform noted that the drop could be attributed to an overall decrease in crypto transaction volume, both legitimate and illicit.

Chainalysis noted that centralised exchanges had been the primary destination for funds sent from illicit addresses, at a rate that has remained relatively stable over the last five years.

“Over time, the role of illicit services has shrunk, while the share of illicit funds going to DeFi protocols has grown.

“We attribute this primarily to the overall growth of DeFi generally during the period, but must also note that DeFi’s inherent transparency generally makes it a poor choice for obfuscating the movement of funds,” it said.

The firm indicated that the 2023 trend closely resembled 2022 regarding the breakdown of service types used for money laundering.

However, it added that there was a slight decrease in the share of illicit funds directed to illicit service types, accompanied by an increase in funds moving towards gambling services and bridge protocols.

“If we zoom in to look at how specific types of crypto criminals laundered money, we can see that there was a significant change in some areas. Most notably, we saw a huge increase in the volume of funds sent to cross-chain bridges from addresses associated with stolen funds.

“We also observed a substantial increase in funds sent from ransomware to gambling platforms, and in funds sent to bridges from ransomware wallets,” it added.

Further, Chainalysis said 109 exchange deposit addresses received over $10m worth of illicit cryptocurrency each, and collectively, they received $3.4bn in illicit cryptocurrency in 2023.

“While that still represents significant concentration, in 2022, only 40 addresses received over $10m in illicit crypto, for a collective total of just under $2.0bn.

Sophos details these advanced sha zhu pan operations (also known as pig butchering) in the article, “Cryptocurrency Scams Metastasize into New Forms.”

Originating from organized crime gangs in China, the new kits provide the technical components needed to implement a specific pig butchering scheme called “DeFi savings.”

Criminals position DeFi savings scams as passive investment opportunities that are similar to money market accounts, often times to people who have no understanding of crypto. Victims only need to connect their crypto wallet to a “brokerage account,” with the expectation that they will earn significant interest from their investment.

Victims are adding their crypto wallets to a fraudulent cryptocurrency trading pool, which the fraudsters then empty.

“When pig butchering first appeared during the time of the COVID pandemic, the technical aspects of the scams were still relatively primitive and required a lot of effort and guidance to successfully scam victims. Now, as the scams have become more successful and the fraudsters have refined their techniques, we’re seeing a similar evolution to what we’ve seen with ransomware and other types of cybercrime in the past: the creation of an as-a-service model.

Pig butchering rings are creating ready-made DeFi app kits, which other cybercriminals can purchase on the dark web. As a result, new pig butchering rings that are unaffiliated with Chinese organized crime groups are appearing in areas like Thailand, West Africa and even the U.S.

As with other types of commercialized cybercrime, these kits lower the entry barriers for cybercriminals interested in pig butchering and vastly expand the victim pool.

Last year, pig butchering was already a multi-billion-dollar fraud phenomenon; sadly, the problem is likely only to grow exponentially this year,” said Sean Gallagher, principal threat researcher, Sophos.

Sophos X-Ops has been tracking the evolution of pig butchering schemes for two years. The earliest iterations—dubbed by Sophos as “CryptoRom” scams—involved connecting with potential victims on dating apps and then convincing them to download fraudulent crypto trading applications from third-party sources. For iOS users, these scams required victims to download an elaborate workaround that allowed scammers to bypass security on victims’ devices and gain access to their wallets.

In 2022, the scammers continued to refine their operations, this time finding ways to bypass app store review processes to sneak their fraudulent apps into the legitimate App Store and Google Play Store.

This was also the year that a new scam pattern emerged: fake cryptocurrency trading pools (liquidity mining).

In 2023, Sophos X-Ops uncovered two vast pig butchering rings—one based out of Hong Kong and one based out of Cambodia.

These rings leveraged legitimate crypto trading apps and created elaborate fake personas to lure victims and steal millions from them. Further investigation revealed that pig butchering operators were adding AI to their arsenal.

At the end of 2023, Sophos X-Ops uncovered a vast liquidity mining operation involving three separate Chinese organized crime rings targeting nearly 100 victims.

During the investigation into this operation, Sophos X-Ops first noticed the availability of pig butchering scam kits.

In the most recent pig butchering operations that Sophos X-Ops has investigated, the fraudsters have removed any previous technological impediments, as well as significantly lowered the amount of social engineering required to steal from victims.

In the DeFi savings schemes, victims now engage in fraudulent crypto trading through legitimate, well-known cryptocurrency apps and give (albeit unknowingly) the scammers direct access to their wallets.

In addition, the scammers can conceal the wallet network that launders stolen crypto, making the scams harder for law enforcement to track.

“The DeFi savings scams are the culmination of two years of pig butcherers refining their operations. Gone are the days when the scammers had to convince victims to download some strange app or transfer the crypto themselves into a soon-to-be-stolen digital wallet.

“The fraudsters have also learned how to better ‘market’ their schemes. They’re taking advantage of how liquidity mining pools operate to steal the funds by telling victims it’s a simple investment account. This is often an easier sell, especially since most people don’t understand the ins and outs of cryptocurrency trading and everything is done under the guise of trusted brands.

“In other words, it’s never been easier for people to fall victim to pig butchering, which means it’s never been more important to be aware that these scams exist—and know what to look out for,” said Gallagher.

Tips to Avoid Falling Prey to Pig Butchering

To avoid falling victim to a pig butchering scam, Sophos recommends the following:

• Be skeptical of strangers that reach out via social networking sites like Facebook or texts, especially if they want to quickly move the conversation to a private messenger like WhatsApp
  • This also applies for new matches on dating applications—especially if the stranger begins talking about trading in crypto
• Always be weary of any “get rich quick” scheme or cryptocurrency investment opportunity that promises large returns in a short amount of time
• Be familiar with the lures and tactics of romance scams and investment scams. Non-profits like the Cybercrime Support Network have resources that can help
• Anyone who believes they have fallen victim to a pig butchering scam should immediately withdraw any funds from any affected wallet and contact law enforcement.

Timeline of investigation on Pig Butchering, continue reading here.

One such revolution is the rise of cryptocurrencies and decentralized finance (DeFi). For many, the opportunity cost of not participating might be far greater than they realize.

Bridging the Financial Gap

Globally, a staggering 1.7 billion people remain without proper banking facilities, and many more are underbanked.

They face challenges, such as high loan interest rates, which stifle the growth of small businesses and, consequently, economic expansion.

By introducing decentralized finance or crypto solutions, these financial barriers could be dismantled, providing access to essential services for billions.

Why Does Opportunity Cost Matter?

Opportunity cost isn’t just about missed profits; it’s about optimizing decision-making for the best possible outcomes. By understanding and weighing these costs:

• Investors can diversify their portfolio, reducing risks and enhancing potential returns.
• They can adopt a longer-term perspective, shielding against the crypto market’s inherent volatility.
• However, focusing too much on opportunity costs can lead to decision paralysis and missed chances due to the crypto space’s unpredictable nature.

Understanding Opportunity Cost in Crypto

In simple terms, opportunity cost represents the benefits an individual or a business could have received but missed out on due to the choices they made. In the crypto world, this translates to the potential gains from one digital asset over another.

Businesses can’t afford to overlook the transformative power of blockchain. This technology promises enhanced security, given its decentralized and nearly unhackable nature.

Especially for sectors prone to fraud or dealing with confidential data, blockchain can be a game-changer. However, businesses need to weigh the pros and cons.

The benefits of transparency, security, and trust offered by blockchain must be measured against the costs and complexities of its implementation.

When thinking of investing or trading cryptocurrencies, there are many scenarios where opportunity costs need to be considered, such as:

• Crypto Choices: Imagine a scenario where someone invests in Bitcoin but misses out on the explosive growth of an altcoin. That missed profit is their opportunity cost.
• Holding vs. Trading: Keeping a cryptocurrency for the long term could lead to substantial gains. However, active trading might offer more consistent returns. The choice between the two can represent a missed opportunity.
• Emerging vs. Established Cryptos: Investing in new crypto projects might yield high rewards, but they come with risks. If an established coin like Ethereum or Bitcoin would have been more profitable, that’s an opportunity cost.
• DeFi vs. Traditional Investments: While DeFi projects can offer impressive returns, traditional investments like stocks might perform better. Missing out on either side could mean losing out on potential profits.
• Cash vs. Crypto: With inflation affecting many fiat currencies, holding cash instead of investing in appreciating cryptocurrencies might mean missing out on wealth accumulation.

Key Takeaway

The world of cryptocurrencies and DeFi is a landscape of vast opportunities. While it’s essential to weigh the opportunity costs, it’s equally crucial not to be left behind in this digital financial revolution. The future might very well belong to those who understand and harness the power of decentralized finance.

*The writer, Heath Muchena is the Founder of Proudly Associated & Author of The Digital Entrepreneur Manual, Digital Economy Survival Toolkit, Blockchain Applied, and Tokenized Trillions.