The world is preparing for digital identities in the digital era. South Korea is already rolling out national IDs via blockchain technology including driving licenses (referred to as mobile driving licenses).

A pilot is being conducted in Europe for a digital ID via a digital wallet, known as the EU Digital Identity Wallet Consortium (EWC). Marie Austenaa, the Head of Digital Identity at Visa, affirmed the company has been chosen by the EU to participate in the EWC pilot. Consequently, the digital ID wallet is expected to be released in 2024.

Blockchain-powered digital identities are more secure, which will in turn mitigate fraud. It is essential for traditional brokers from the financial landscape to adjust to the ‘crypto momentum’.

The verification process will be smoother without the need to upload various documents (regulatory bodies must approve its use first). However, preparing for digital identities is crucial in the medium term.

The Transition of the Internet

Decentralized web domains and hosting environments may pick up the pace. Traditional brokers should consider entering the web3 phase as innovation may reflect a higher client base. Financial brokers can purchase a web3 domain and host their website on the blockchain.

EDNS, a web3 leader on Polygon (layer-2) has recently partnered with Alibaba cloud. The CEO at EDNS, Joey Lam said: "The motivation behind this partnership is joining hands to deliver disruptive Web3 solutions that are demanded by the market, especially in the storage area."

To remain competitive, Google Cloud partnered with Casper Lands to build blockchain-based products as well innovating the Web3 ecosystem.

The Ethereum Name Service (ENS) is another popular choice on the Ethereum blockchain. Space id (which is a new service) is offering the same services as ENS on BSC.

ETH elevated gas fees had some impact on the monthly registrations (as opposed to 2022), however, the registrations have remained steady. As of today, websites using ENS can be hosted via IPFS. A web3 presence may be rewarded with a significant PR.

Lower Payments Fees

Alchemy Pay, a well-known payment provider has made headlines as the service obtained a license from the Central Bank of Indonesia. Alchemy Pay is providing a range of payment services. The client selects Alchemy Pay from the checkout page. The exchange rate is locked, the customer makes the payment, and Alchemy Pay converts the cryptocurrency that is used for the transaction to your local currency. As opposed to traditional payment solutions, the settlement is one day. The fees are 1%, and the fraud rate is zero.

Despite the "crypto winter", usage of cryptocurrencies remains elevated. As regulations are a matter of time, exploring innovative products in today’s markets is of great importance.

Decentralized Forex Trading

Although it is still in the making, decentralized forex trading is the future of online trading. "Pendulum," a new layer-1 Mainnet on Polkadot aims to deliver a new on-chain trading experience.

Stablecoins will be used for the currency pairs. Algorithmic stablecoins will not be used, only stablecoins that are compliant in their region. Although the stablecoins that will be used were not revealed, it is likely that either USDC or USDT will be used.

The price will be provided by 0xAmber. Several oracles will be used for the price of a single asset including sanity checks. As opposed to traditional forex brokers, there is no order book but liquidity pools. 0xAmber will act as the proactive market maker without impermanent loss.

Liquidity draining is a concern. The matter is tackled by increasing the slippage in an event of low liquidity. The protocol is in the process of building its own liquidity, relying on external liquidity providers will reduce over time. It is important to note that on-chain costs are substantially lower, mainly due to the design of the AMMs.

Ending a transaction takes seconds using payment versus payment (PvP). All the reserves, rates, liquidity and trades are visible, something that is not seen in traditional forex brokers.

As it is a protocol, most of the code is open source, permissionless and available to the public. Three currencies are expected to be added in the first stage.

In an event, a large number of traders will flock to on-chain forex trading. It may reshape the forex trading industry as we know it today.