Canza Finance has launched Baki, a new stablecoin platform based on African fiat currencies, in what is described as an initial move to bring forex trading to emerging markets. Baki, built on Avalanche, a popular L2 network, is an infinite-liquidity forex protocol allowing for slippage-free swaps between African currencies. The protocol allows users to deposit stablecoins and mint overcollateralized, synthetic assets, called zTokens, that are pegged to African currencies, creating the first on-chain implementation of African stablecoins.

Any zToken can be burned using Baki to mint the same amount of zTokens in an other currency.

As of right now, Baki is in favor of minting:

• US Dollars (zUSD)
• Nigerian Naira (zNGN)
• West African CFA (zCFA)
• South African Rand (zZAR)

Users can access dollar markets at the best possible rates because all foreign exchange conversions are offered at central bank rates.

Victor Teixeira, Chief Crypto Economist at Canza Finance, stated that Baki “aims to reshape the fundamentals of FX transactions on the continent by creating a robust and accessible market that offers all participants the best, fairest price available.”

We can solve the primary obstacle on the continent, foreign exchange scarcity, by establishing a synthetic trade for African currencies. The most effective and quickly expanding blockchain, Avalanche C-Chain, offers a multitude of adoption-enabling on ramps and off ramps to support this protocol.

A statement on the Avalanche website states that Baki would initially enable tokenized South African Rand, Nigerian Naira, and West African CFA trade on the blockchain. These stablecoins, however, differ from the majority in that USDC will support them rather than the underlying currency directly.

“zTokens—which are backed by USDC—are designed to track the values of particular fiat currencies, classifying them as synthetic stablecoins. The support from USDC, whose market capitalization exceeds $25 billion, ensures substantial liquidity, lower fees, and a simple user experience for a large number of DeFi users.”

– Avalanche

According to the participants, Canza aims to create history with Baki, the first synthetic DeFi market for African stablecoins, having raised $3.27 million in seed funding in March 2022.

The Sub-Saharan FX market is known for its peculiar dynamics, which include rapid inflation, illiquid and fragmented currencies, and a preference for OTC and P2P markets over CEXs. The protocol is well-positioned to take advantage of these characteristics and usher in the next generation of DeFi power users.