Stablecoin FX is transforming currencies into programmable assets that move directly onchain, removing intermediaries and enabling global, wallet-based exchange.
FX activity is shifting downstream from banks to wallets and merchants, giving users control and turning conversion into a consumer-level service.
Projects like Numo, Mento, and Virtual Finance show how onchain FX can handle hedging, parity, and scarcity, forming the foundation for a universal settlement layer in digital finance.
FX has long been the invisible infrastructure of global commerce, yet its modernization has lagged behind every other part of finance. Stablecoins are beginning to change that. By turning currencies into programmable, bearer-style assets that move instantly across blockchains, they enable FX to occur directly onchain rather than through banks or payment networks.
This shift is creating what many now call stablecoin FX, the exchange of value between stablecoin-denominated currencies or between stablecoins and local fiat. Unlike traditional FX, which depends on correspondent banks and market-making institutions, stablecoin FX can occurs natively onchain, accessible to anyone with a wallet.
This article examines why this new FX architecture matters, where the market stands today, and how three projects, Numo, Mento, and Virtual Finance, are building its future.
FX is one of the largest financial systems in existence, with the Bank for International Settlements estimating over $7 trillion in daily turnover. Yet its infrastructure remains fragmented and slow. Stablecoins offer a borderless alternative: 24/7 currency settlement that already powers hundreds of billions in monthly transfers and over $200 billion in circulating supply.
This rapid growth has revealed a missing layer. Nearly all fiat-backed stablecoins are USD-pegged, accounting for over 99% of supply according to Cumberland Research (2023). Non-USD options such as EURC, JPYX, or BRLC remain scarce, creating dollar concentration risk and limiting access to local-currency liquidity. As Cointelegraph (2024) notes, expanding non-USD issuance is critical for global adoption.
Stablecoin FX fills this gap by turning stablecoins from static stores of value into an interoperable network of currencies that can convert, settle, and hedge instantly onchain, completing the stablecoin promise of a truly universal settlement layer.
Onchain FX activity has grown significantly in both volume and efficiency. According to Robert Leifke, Ethereum alone processed around US $1.4 billion in FX volume during 2024. He notes that the implied spread on the EURC/USDC pair on Uniswap V3 was roughly 6 basis points (bps) for a US $1 000 swap, ten times tighter than the ~60 bps spread typically charged by retail brokers such as Wise. On faster L2 networks like Base, spreads have already fallen below 1 bp, approaching interbank efficiency.
These figures confirm that major stablecoin-to-stablecoin pairs are no longer the bottleneck. onchain liquidity has deepened, transaction costs have collapsed, and price parity now closely tracks traditional markets. Previous study by Uniswap Labs (2024) estimated that onchain FX could lower cross-border payment costs by up to 80 percent compared to legacy rails.
However, the persistent friction lies in the fiat ↔ stablecoin conversion layer, the on/off-ramp between the banking system and the blockchain. Providers such as MoonPay, Ramp, and Transak continue to charge between 100 and 450 bps per transactionand these costs overshadow the efficiency gains achieved onchain.
An emerging remedy is for banks to issue tokenized deposits, often called deposit tokens, regulated digital liabilities fully backed by on-balance-sheet funds. The BIS Innovation Hub (2023) argues that such instruments could streamline minting, redemption, and settlement by connecting bank infrastructure directly to blockchain networks. This would collapse the costly on/off-ramp layer and let fiat transfers move with the same finality and transparency as onchain swaps.
A deeper structural change is emerging not in technology, but in where FX takes place. Traditionally, currency conversion occurred at the source: remittance firms or banks exchanged dollars for local currency before funds ever crossed borders. Stablecoins invert this model by allowing people to send value directly in dollars, leaving recipients to convert only when and how they choose.
As Chuk, the Author of Stablecoin Blueprint, and Dave Taylor, CEO of Etherfuse mentions, this shift moves the “region of FX engagement” from banks and remittance processors to wallets, off-ramps, and local merchants. Conversion now happens at the destination, where liquidity is deeper and spreads are narrower, turning FX from a wholesale banking function into a consumer-level service. Recipients gain flexibility over timing and rate, merchants access cheaper local liquidity, and wallets capture the spread that once belonged to financial intermediaries.
This pattern is already visible in high-inflation markets such as Argentina, where individuals and businesses increasingly hold stablecoins as working capital and convert to local currency only when needed. In effect, FX has become a downstream, market-driven layer of digital wallets and neobanks, redistributing both control and revenue away from institutions toward end users, the defining business model shift of the stablecoin FX era.
Several emerging projects are rethinking how currency exchange works onchain. Rather than replicating traditional FX desks, these teams are designing mechanisms that embed conversion, pricing, and risk management directly into blockchain infrastructure. Among them, Numo, Mento, and ViFi Labs stand out for taking distinct yet complementary approaches to how stablecoin FX could operate at scale.
Numo targets one of the most persistent blind spots in global finance: small and medium-sized businesses (SMBs) in emerging markets have almost no access to affordable FX hedging. Traditional forward markets concentrate on major currency pairs like USD/EUR or USD/JPY, while hedging for frontier currencies is either prohibitively expensive or nonexistent. For companies that invoice in dollars but pay suppliers or employees in local currency, this leaves earnings exposed to volatile exchange-rate swings.
Numo introduces onchain FX forwards using a design inspired by the YieldSpace AMM, originally developed for fixed-income assets. Each Numo pool represents a zero-coupon bond curve for a given currency, encoding how present and future value relate over time. When two such pools, say USD and KES, are combined, the ratio of their discount factors determines the implied forward rate. As traders supply or withdraw liquidity, the curve dynamically updates, forming a live, algorithmic forward market. This removes the need for traditional credit lines, market makers, or oracle-fed rates.
By making forward pricing transparent and permissionless, Numo enables emerging-market businesses to lock in future FX rates directly through blockchain liquidity. It turns a service once reserved for interbank clients into an open protocol, a public hedging tool for the long tail of global commerce.
Mento approaches stablecoin FX from a different angle, price stability rather than market creation. Even when stablecoins exist for multiple currencies, converting between them often involves slippage, limited liquidity, and inconsistent pricing. Traditional AMMs like Uniswap rely on curved bonding formulas, which work for volatile assets but create inefficiencies when both sides are meant to hold stable value.
Mento solves this by introducing Fixed-Price Market Makers (FPMMs) that trade at oracle-anchored mid-rates with minimal spreads. Instead of using a pricing curve, each pool maintains a fixed rate derived from trusted FX oracles, while a small fee band absorbs minor volatility. When inventory drifts too far in one direction, Mento triggers flash-swap rebalancing, drawing liquidity from external sources such as a reserve, collateralized debt positions (CDPs), or third-party issuers, to restore balance instantly. This structure functions like an onchain currency board, keeping pairs such as cUSD ↔ cEUR or cCOP ↔ cUSD pegged tightly to real-world FX rates.
Through this model, Mento provides predictable, low-cost conversion between stablecoins, ideal for remittance apps, payment processors, and DeFi protocols that need certainty rather than speculation. It demonstrates that onchain FX can achieve near-institutional tightness while remaining fully transparent and composable, effectively turning blockchains into reliable settlement layers for multi-currency digital money.
ViFi Labs takes a more synthetic approach to stablecoin FX. While projects like Mento anchor stablecoins to external oracle rates, ViFi models the dynamics of restricted FX markets directly onchain, where access to dollars is limited, and demand for hard currency exceeds supply. This makes it especially relevant for economies facing capital controls or parallel exchange rates.
At its core, ViFi uses a mechanism called VARQ (Virtual Access Reserved Quota) to turn USD stablecoins into a flexible, fully backed FX system. When a user deposits USDC, it’s wrapped into vUSD, which serves as collateral to create exposure to other currencies. From there, vUSD is split into two tokens: vFiat, which tracks the value of a foreign currency, and vRQT, which gives the holder the right to buy back dollars at the official rate. Think of vFiat as your synthetic peso or euro, and vRQT as an insurance ticket that guarantees you can return to dollars later.
ViFi’s Virtual Exchange (VEX) connects these pieces into a single market where users can freely trade between vUSD, vFiat, and vRQT. Prices are determined by supply and demand, if dollar access becomes scarce, vRQT rises in value, just like in real-world FX markets during a shortage. When conditions stabilize, arbitrage between the oracle rate and market rate brings prices back in line.
This design ensures every synthetic position remains fully collateralized in USD while letting real-world FX pressures emerge organically onchain. In doing so, ViFi offers a credible model for how stablecoin systems could simulate, and eventually replace, traditional restricted FX regimes, enabling transparent, collateral-secure currency access for users and institutions alike.
Stablecoin FX is quietly becoming the foundation of global digital finance. Onchain spreads are narrowing, fiat ramps are improving, and value transfer is shifting from banks to wallets, showing that currency exchange itself is being rebuilt for an open, programmable world. Yet FX remains one of the most underrated parts of the stablecoin conversation. Without efficient and interoperable FX, stablecoins stay fragmented within their own markets and fail to realize their global potential. More discussion and innovation around FX are essential, because this layer will ultimately determine whether stablecoins function as true global money or remain isolated payment tokens.
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