MoneySwitch Yearly Update for Frax Community

MoneySwitch Yearly Update for Frax Community

MoneySwitch came to Frax with a proposal to participate in the seed round as a protocol DAO. The following update will outline the progress made and challenges overcome since the original DAO proposal. We will then follow up with what’s coming up next in our relentless endeavor to power the future of cross-border payments.


A quick re-cap on why MoneySwitch is building a Liquidity-as-a-Service (LaaS) platform for the cross-border payment industry. The vast cross-border payment industry is expected to process over $190.1tn in payments in 2023. The overwhelming majority of these payments are made via SWIFT; cross-border payments via SWIFT are based on an antiquated pre-funding model; they are slow, expensive, and have no guarantees of credit time. With MoneySwitch, we are going to change all of that!

MSBs (Money Service Businesses) must pre-fund all their payout partners to be able to process payments. Dormant liquidity lies in bank accounts all over the world waiting for use. The complexity grows the more payout countries an MSB services. Liquidity has to be in the right place at the right time every single time. Cross-border payments are highly capital intensive, capitally inefficient, and have incredible short-term liquidity demand.

Our LaaS platform offers cross-border payment companies Just-In-Time Liquidity, meaning they can access deep liquidity when and where they need it; we have made it simple, instant, and always available. We will initially bring the MSBs onboard looking for liquidity; once onboard and comfortable with the availability of liquidity, we foresee our MSB partner moving away from a pre-funding model to one on-demand. This will free up capital, allowing our MSB partners to invest more into their product and service offering, giving them a competitive advantage and powering a fundamental change in the cross-border payment industry – that’s where we are going!

Product Development – FinTech, Blockchain, AI

Keeping in line with the DeFi mullet thesis and given the fact that we work only with regulated corporate entities, building a pure FinTech user experience where all the complexities on the blockchain are abstracted away has been one of our core mission statements. With our FinTech layer, we have been able to roll out and extend the following value and services to our MSB partners:

  • Deep Liquidity: Allow MSBs to access deep liquidity Just-In-Time when they need it.
  • Always Available: Allow MSBs to pull liquidity anytime, unconstrained for traditional banking hours.
  • Flexible Duration: Allow MSBs to get liquidity for the weekend for the next for weeks.
  • Repay Anytime: Allow MSBs to make full or partial repayment anytime, allowing them to use only what they need when they need it.
  • No Tech Integration: No tech integration is required; everything is managed through the MoneySwitch dashboard.
  • Optimized Capital: Allow MSBs to get liquidity when they need it, repay it when they don’t & only pay for what they use.

Behind this FinTech layer sits a DeFi layer, with an on-chain liquidity engine that does all the heavy lifting and allows us to harness the value blockchain. Things such as offering liquidity, which is always available, unconstrained from traditional banking hours, is something relatively common within the DeFi ecosystem as it all happens through smart contracts, but that is not the case within the FinTech ecosystem. With our two layers, we can give our MSB partners a better user experience while still extending them the value of having things done by smart contracts – the Mullet is real!

Our FinTech layer enables us to collaborate with regulated companies holding financial licenses, granting us a distinct advantage. Through a fully immersive FinTech experience, we can cater to the needs of these regulated companies and provide them with identical services.

In addition to the FinTech and DeFi layers, we have also built an AI layer. Working with our MSB partners, we were able to access over four-year transaction data, which we used to build machine learning algorithms that map the velocity of money within the cross-border payment flows. It also maps trajectories and seasonality in the payment flow. We use this for scoring and setting credit limits for our MSB partners as well as conducting regular “health checks” on our MSB partners. We are able to monitor the velocity of money, the trajectory, and seasonality and act upon it if it deviates from the initial baseline set.

Challenges Along the Way

There have naturally been a myriad of challenges along the way since we got started. However, two events have had a profound impact, especially on our ability to launch.

The first big challenge came with the UST collapse and the FUD it generated among regulators, which caused FUD among MSBs subject to the regulations formulated by those same regulators. All the MSBs we had lined up for our initial launch backed out. To overcome this challenge, we spent significant resources and time to achieve full regulatory compliance in Switzerland, allowing us to overcome the FUD among our prospective MSB partners.

The second key event was the recent banking crisis. One week before our dated beta launch, the banking crises brought down Silvergate and others; with that, we, like many others in the blockchain industry, lost access to payment rails and certain specific Circle APIs we were using. This prevented us from launching and made some of our flow of funds schemas non-viable. We have since then refactored our FinTech layer into a microservice architecture, allowing us to integrate with several different payment providers and banks, and refactored our smart contracts to be compatible with the new flows and architecture. We have connected with multiple payment rails providers and overcome this potential single point of failure.

What is Coming Next

We are laser-focused on getting put together and getting things going; we are optimistic about launching the platform in Q2/2023 – hopefully, the third time is the charm.

For the launch, we have partnered with several key players within the blockchain ecosystem, including Ava Labs, to build more awareness and help educate more people about our work at MoneySwitch.

Finally, we are actively working with several partners to integrate a Banking-as-a-Service (BaaS) component into our FinTech layer. Our LaaS combined with a BaaS will allow us to simplify further and streamline the user experience and value proposition we offer our MSB partners.


With the onset of crypto winter, key challenges have meaningfully impacted our ability to launch, but we have overcome those challenges and are keeping at it. We hope the FRAX community continues to be an integral part of our journey moving forward. If you have any questions or thoughts, please reach out to us on Discord or Twitter.

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