LatAm’s biggest digital banking startup, Nubank, recently announced the launch of its first cryptocurrency, Nucoin. With the focus on increasing the engagement of the fintech’s user community, the new product will expand the company’s internal rewards program.
Nucoin will be accessible to the bank’s more than 70 million customers on the continent starting in 2023. And according to the company, the digital currency is expected to be launched free of charge to customers in Brazil, Mexico, and Colombia.
“The project is another step ahead in our belief in the transformative potential of blockchain technology and to democratize it, even more, going beyond the purchase, sale, and maintenance of cryptocurrencies in the Nu app,” said in a statement the General Manager for Nucoin at Nubank, Fernando Czapski.
Benefits system for Nubank’s token owners
The company announced that Nucoin would function as a way to “recognize customer loyalty and encourage engagement with Nubank products” by offering discounts and additional benefits to token owners.
The expectation is that these coins will be traded on the cryptocurrency market in the future, within the blockchain structure, similarly to other digital currencies.
The blockchain technology behind Nucoin will be provided by Polygon, a renowned global company in the sector. It will use a protocol called “Layer 2” to alleviate congestion on the ethereum blockchain, where transactions can often carry high prices and have a slow processing time. According to Polygon, this system can support thousands of transactions per second.
Polygon’s network is home to some of the most significant Web3 projects worldwide, such as Aave, Uniswap, and OpenSea. Currently, it offers solutions to many big players, such as Meta, Stripe, and Adobe.
Highly decentralized product
Nubank also highlighted that the digital currency would be developed in a highly decentralized process, from the comments and ideas of an exclusive and closed community dedicated to the digital currency and formed by users of NuCommunity — a channel focused on communication between customers and the bank.
According to the fintech, the selection of guests began this month. It will continue until November, involving the most engaged members of the NuCommunity — which currently has more than 2 thousand users — and most use the products and services of Nubank.
“These guests will actively participate in the co-creation of Nucoin in a discussion without intermediaries.”
The company did not offer details about how the new asset will operate within the open cryptocurrency market or whether it will be solely traded within Nubank’s platform. But the bank started this year offering this kind of Web3 products within its platform, allowing users to buy and sell bitcoin and ethereum.
In-house crypto-trading service
Since June, the digital bank has offered bitcoin and ethereum trading on its app. Three weeks after launch, more than one million users had made crypto trades on the app, according to data released by Nubank itself.
The service is operated in partnership with Paxos, a blockchain infrastructure company, which acts as a liquidity provider and performs the custody of cryptocurrencies.
In Latin America, a tendency of some of the largest fintechs has been the development of in-house cryptocurrencies. In August of this year, Mercado Livre launched its cryptocurrency through its financial arm, Mercado Pago.
Mercado Coin, the company’s digital asset, was created to offer a new cashback system to its customers.
Jorge C. Carrasco is a Cuban journalist and writer based in Brazil. He has contributed to several publications, such as Foreign Policy, The Spectator Australia, Estadão, Época, Washington Examiner, and Quillette, among others.