Unlocking New Liquidity Opportunities Between Domestic and International Markets with AUDD
19 Jul, 2023
By Michaela Juric, Head of Blockchain Solutions
In the ever-evolving digital landscape, stable, efficient, and cost-effective cross-border transactions are critical. The innovation of stablecoins presents a solution to this problem, with Australia having the opportunity to take its place in this global digital economy using AUDD.
AUDD is designed to provide seamless and instant transactions, removing barriers in international liquidity and revolutionizing the global exchange market.
Despite the growing acceptance and usage of US dollar stablecoins, a significant gap exists between domestic and international liquidity for Australia. Talk to any domestic exchange today, and you will learn of the chokehold liquidity limitations have on the market. With the resolution being for Australian exchanges to send their funds abroad to purchase institutional amounts of cryptocurrency, solving for the lack of domestic market depth becomes a costly process.
While many institutional firms will only receive USD, there are still a number of institutional brokers who quote AUD trading pairs – without actually supporting AUD payment rails or holding AUD bank accounts domestically.
This means in a common situation where an exchange wants to buy USDT with AUD, the process involves converting AUD to USD to make the payment to an offshore account, only to have it converted back to AUD again to settle the trade. To quantify the cost this has, a report by Oliver Wyman and JP Morgan, found that at least 0.5% of each cross-border transaction was lost only to processing fee deductions; this excluded the often undisclosed foreign exchange costs worked into the transaction. Further to this, the average time it took to settle such transactions was 2.5 days.
Given the purpose of buying stablecoins such as USDT is to mitigate the costs involved in cross-border remittances, the exposure to FX costs and inefficiencies of traditional financial payment rails, the process described is not only highly counterintuitive but is foundationally against what stablecoins set out to resolve.
The AUDD Solution
AUDD offers a unique solution to this problem. It is designed to create an instant connection that allows international institutions to receive and payout in AUDD (and subsequently AUD) without the need for an AUD bank account (domestically or abroad), or access to traditional financial payment rails. Transaction times are instant, and chargebacks are non-existent due to the immutable nature of the transactions. The value proposition of AUDD is further solidified by its backing — each AUDD is backed 1:1 by cash, ensuring its stability and reliability.
This innovative approach could profoundly affect the global market, given the volume of cryptocurrency flowing into Australia. A 2022 report by Chainalysis estimated that Australia received over $100 billion in cryptocurrency value within a 12-month period, with over half attributed to institutional volume.
With AUDD made available via our platform for quick and easy AUD deposits or settlements, our goal is to become the bridge for Australian Dollar to the rest of the world by offering peace of mind to institutions, professional traders, and exchanges alike.
Though AUDD has only recently launched, the team here are actively working on exciting developments, including listing on multiple exchanges and further blockchain development. The future is looking bright for AUDD, with plans to grow the number of use cases for AUDD’s use internally within the business and its partners.
The integration of AUDD into the global market is a significant step in bridging the gap between domestic and international liquidity. It opens up new opportunities for Institutional OTC desks and creates a new revenue stream for professional traders and exchanges.
AUDD’s innovation in the stablecoin market reflects the continuous advancement of digital currencies and their growing role in our global economy. With AUDD, we can pave the way for a more fluid, efficient, and cost-effective system of cross-border transactions for Australia.
The information in this blog is
- provided for informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose;
- not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice; and
- general in nature and is not specific to you or anyone else.
You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented in this blog without undertaking independent due diligence and consultation with a professional broker or financial advisory and you understand that you are using any and all information available in this blog at your own risk.
RISK STATEMENT – the trading of cryptocurrencies/cryptoassets has potential rewards, and it also has potential risks involved. Trading may not be suitable for all people. Anyone wishing to invest should seek his or her own independent financial or professional advice