Building a new infrastructure for stablecoin foreign exchange: Analyzing the three major innovative paths of Numo, Mento, and ViFi

Author: moyed, Cryptocurrency Analyst

Compiled by: Felix, PANews

Foreign exchange has long been the invisible infrastructure of global commerce, but its development has lagged behind other aspects of finance. Stablecoins are changing this landscape. By transforming currency into programmable, anonymous assets, they enable instant transfers on the blockchain. This allows forex trading to occur directly on-chain without relying on banks or payment networks.

This shift is giving rise to stablecoin forex services, which involve the exchange of value between currencies priced in stablecoins or between stablecoins and local fiat currencies. Unlike traditional forex that depends on intermediary banks and market makers, stablecoin forex can be conducted natively on-chain, allowing anyone with a wallet to participate.

This article explores why this new forex architecture is important, the current market situation, and how projects like Numo, Mento, and Virtual Finance are shaping its future.

The Importance of Stablecoin Forex Trading

Forex is one of the largest existing financial systems, with daily trading volumes estimated by the Bank for International Settlements at over $7 trillion. However, its infrastructure remains fragmented and inefficient. Stablecoins offer a borderless alternative: 24/7 currency settlement, supporting billions of dollars in transfers monthly, with a circulating supply exceeding $200 billion.

This rapid growth reveals a market blind spot. Nearly all fiat-backed stablecoins are pegged to the US dollar; according to Cumberland Research (2023), their supply accounts for over 99%. Non-dollar options like EURC, JPYX, or BRLC remain scarce, creating dollar concentration risks and limiting access to local currency liquidity. As Cointelegraph (2024) pointed out, expanding issuance of non-dollar currencies is crucial for global adoption.

Stablecoin forex fills this gap by transforming stablecoins from static stores of value into an interoperable currency network capable of instant on-chain conversion, settlement, and hedging—fulfilling the promise of stablecoins as a truly universal settlement layer.

Current State of Stablecoin Forex

Market and Infrastructure

On-chain forex activity has seen significant growth in trading volume and efficiency. According to Robert Leifke, Ethereum alone handled approximately $1.4 billion in forex transactions in 2024. He notes that on Uniswap V3, the implied spread for EURC/USDC pairs is about 6 basis points (bps), which is ten times narrower than the roughly 60 bps typically charged by retail brokers like Wise for $1,000 trades. On faster Layer 2 networks like Base, spreads have fallen below 1 bps, approaching interbank trading efficiency.

These figures confirm that major stablecoin trading pairs are no longer bottlenecks. On-chain liquidity has improved, transaction costs have dropped sharply, and prices are closely aligned with traditional markets. A study by Uniswap Labs (2024) estimated that on-chain forex trading can reduce cross-border payment costs by up to 80% compared to traditional payment systems.

However, persistent friction remains in the fiat-to-stablecoin conversion process—namely, the on/off ramps between banking systems and blockchains. Providers like MoonPay, Ramp, and Transak still charge fees ranging from 100 to 450 bps per transaction, hindering the efficiency of on-chain trading.

An emerging solution is bank-issued tokenized deposits, often called deposit tokens. These are regulated digital liabilities fully backed by assets on the bank’s balance sheet. The Bank for International Settlements Innovation Hub (2023) suggests such tools can streamline minting, redemption, and settlement by directly connecting banking infrastructure to blockchain networks. This would eliminate costly on/off ramps, making fiat transfers as final and transparent as on-chain transactions.

Downstream Transfers

A deeper structural change is occurring—not just technologically, but in where forex transactions happen. Traditionally, currency exchange occurs at the remittance source: remittance companies or banks convert USD into local currencies before funds cross borders. Stablecoins disrupt this model by allowing users to send value directly in USD form, with recipients deciding when and how to convert.

As Chuk, author of “Stablecoin Blueprint,” and Dave Taylor, CEO of Etherfuse, mention, this shift moves “forex trading” from banks and remittance processors to wallets, remittance platforms, and local merchants. Now, currency exchange happens at the destination, where liquidity is more abundant and spreads narrower, transforming forex from wholesale banking to a consumer-facing service. Recipients can choose timing and rates more flexibly, merchants gain access to cheaper local liquidity, and wallets capture the spreads once controlled by financial intermediaries.

This pattern is already evident in high-inflation markets like Argentina, where individuals and businesses increasingly hold stablecoins as operational funds, only converting to local currency when necessary. Essentially, forex has become a downstream, market-driven component of digital wallets and new banking services, redistributing control and profits from institutions back to end-users—marking a major shift in business models in the stablecoin era.

Projects Building the Future of Stablecoin Forex

Several emerging projects are rethinking how on-chain currency exchange operates. These teams are not merely copying traditional forex platforms but designing mechanisms that embed exchange, pricing, and risk management directly into blockchain infrastructure. Among them, Numo, Mento, and ViFi Labs stand out for their different yet complementary approaches aimed at enabling large-scale stablecoin forex operations.

Numo: Building Forward Markets for Emerging Currencies

Numo addresses a long-standing gap in global finance: small and medium enterprises (SMEs) in emerging markets often cannot access affordable forex hedging services. Traditional forward markets mainly focus on major currency pairs like USD/EUR or USD/JPY, while hedging emerging currencies is either prohibitively expensive or nonexistent. For companies paid in USD but paying suppliers or employees in local currencies, exchange rate volatility can significantly impact profits.

Numo introduces on-chain forward contracts inspired by YieldSpace AMM, originally developed for fixed-income assets. Each Numo pool represents a zero-coupon bond curve for a specific currency, encoding the relationship between current and future value over time. When two such pools—say, USD and Kenyan Shilling—are combined, their discount factor ratios determine the implied forward rate. As traders add or remove liquidity, the curves dynamically update, creating a real-time, algorithmic forward market. This design requires no traditional credit limits, market makers, or oracles for interest rates.

By making forward pricing transparent and permissionless, Numo enables emerging market firms to lock in future forex rates directly via blockchain liquidity. It transforms a service once reserved for interbank clients into an open protocol, serving as a global public hedging tool.

Mento: Anchoring Stablecoin Forex to Real-World Exchange Rates

Mento approaches stablecoin forex differently—focusing on maintaining stable prices rather than creating markets. Even with multiple stablecoins pegged to different currencies, exchanges often suffer from slippage, limited liquidity, and inconsistent pricing. Traditional AMMs like Uniswap rely on curve formulas suited for volatile assets, but when both sides aim to stay stable, efficiency drops.

Mento introduces Fixed Price Market Makers (FPMMs), which trade at a pegged rate derived from trusted oracle prices, with minimal spreads. Instead of a curve-based formula, each liquidity pool maintains a fixed exchange rate generated by a reliable forex oracle, with small fee bands to absorb minor fluctuations. When inventories diverge significantly, Mento triggers lightning swaps—rebalancing via external sources such as reserves, collateralized debt positions, or third-party issuers—to restore equilibrium instantly. This structure functions like an on-chain currency issuance authority, closely tying pairs like cUSD ↔ cEUR or cCOP ↔ cUSD to real-world forex rates.

This model enables predictable, low-cost conversions between stablecoins, ideal for remittance apps, payment processors, and DeFi protocols that require certainty rather than speculation. It demonstrates that on-chain forex can reach institutional levels of tightness while remaining fully transparent and composable, effectively transforming blockchain into a reliable multi-currency settlement layer.

ViFi Labs: On-Chain Simulation of Real Forex Dynamics

ViFi Labs takes a more synthetic approach. Unlike projects like Mento that peg stablecoins to external oracle rates, ViFi directly simulates forex market dynamics on-chain—markets where access to USD is limited and demand for hard currencies exceeds supply. This is especially relevant for economies under capital controls or with parallel exchange rates.

ViFi’s core mechanism, VARQ (Virtual Access Reserve Quota), converts USD stablecoins into a flexible, fully collateralized forex system. When users deposit USDC, it’s transformed into vUSD, serving as collateral to gain exposure to other currencies. VUSD then splits into two tokens: vFiat, which tracks the value of foreign currencies; and vRQT, which grants the holder the right to buy back USD at the official rate. Users can treat vFiat as synthetic pesos or euros, while vRQT acts as an insurance policy ensuring future USD redemption at the official rate.

ViFi’s Virtual Exchange (VEX) combines these components into a single market where users can freely trade vUSD, vFiat, and vRQT. Prices are driven by supply and demand; if USD is scarce, vRQT’s value rises, mimicking shortages in real forex markets. Arbitrageurs exploit differences between oracle rates and market prices, restoring equilibrium.

This design ensures each synthetic position is fully collateralized in USD, while reflecting real-world forex pressures on-chain. It offers a credible model demonstrating how stablecoin systems can simulate and eventually replace traditional restricted forex regimes, providing transparency and collateralization for users and institutions.

Toward a Universal Settlement Layer

Stablecoin forex trading is quietly becoming the foundation of global digital finance. On-chain spreads are narrowing, fiat on/off ramps are improving, and value transfer is shifting from banks to wallets—indicating that currency exchange itself is being rebuilt for an open, programmable world. Yet, forex remains the most underestimated aspect of stablecoin discourse. Without efficient, interoperable forex trading, stablecoins risk remaining fragmented within markets and unable to realize their full global potential. More discussion and innovation around forex are essential, as this domain will ultimately determine whether stablecoins become truly global currencies or merely isolated payment tokens.

Related reading: From On-Chain to Everyday Life: An Overview of Stablecoin Global Consumption