Introduction
BlockFinaX is an FX hedging protocol for emerging markets. Businesses pay an upfront premium to protect against adverse currency movements, while underwriters commit capital to back potential payouts and earn premiums for taking on that risk.
The protocol serves businesses with currency mismatches, including importers, exporters and payment providers. A business earning in local currency but facing a dollar payment can buy protection for a specified amount and period, with payouts determined by agreed exchange-rate conditions and contractual limits.
BlockFinaX is designed for integration by fintechs, banks and payment platforms, so they can offer FX protection within their existing products. Their customers can manage currency risk alongside cross-border payments, supplier invoices and treasury operations. These institutions can also use the protocol to hedge their own currency exposure or participate as underwriters.
Every contract is fully collateralised: its maximum payout is locked when it is bought, so the payout never depends on anyone's promise to pay. Smart contracts hold that collateral and settle using exchange-rate data supplied by oracles. Stablecoin settlement allows FX protection to operate alongside onchain payments, giving businesses a way to manage the currency exposure that remains when converting between stablecoins and local currencies.
The problem
Businesses in emerging markets often earn in local currency while paying suppliers, lenders and other partners in foreign currencies. Between agreeing on a transaction and making payment, exchange-rate movements can increase costs, erase margins and disrupt cash flow. Importers face rising foreign-currency bills, exporters face uncertainty over the local value of their earnings, and fintechs and payment providers carry exposure between collecting funds and completing settlement.
Access to FX hedging remains difficult for many of these businesses. Traditional products can involve minimum transaction sizes, collateral requirements, banking relationships and onboarding processes that smaller firms struggle to meet. Businesses are left to absorb the risk, raise prices or buy foreign currency early, tying up money they need for operations.
Stablecoins provide another way to move and hold money, but businesses still face currency risk when their revenues and obligations are denominated in different currencies. Holding dollars only addresses that exposure if a business already has the funds to buy them.
Banks, fintechs and payment platforms serving these customers also need ways to offer FX protection within their existing products. Building the pricing, underwriting, collateral management and settlement systems requires specialist expertise and infrastructure. This leaves a gap between the platforms businesses use to make payments and the tools they need to manage the currency risk around those payments.
BlockFinaX closes that gap: protection businesses can buy in the products they already use, backed by underwriters and settled onchain.
How BlockFinaX works
- Underwriters fund pools with USDC. Each pool sells one kind of cover on one currency pair, for example a USD/NGN Up cover, which pays if the naira weakens against the US dollar.
- A business chooses its cover: the amount, how long, and the rate it wants protection from. It pays one premium in USDC.
- The full possible payout is set aside at that moment, so every contract sold can always be paid.
- At the end date, the business is paid the difference in USDC if the rate has moved past the agreed level. If it has not, the cover simply ends.
See Worked examples for one contract followed to the cent, with every fee, and Expiry and settlement for how the rate is agreed.
Who it is for
See Who it is for and Use cases for detail.
| You are | You want to | Start with |
|---|---|---|
| An importer, exporter or any business with foreign-currency payables or receivables | Fix the most a currency move can cost you | Buy your first protection |
| An investor, desk or fund with USDC | Earn premiums by providing protection | Provide liquidity |
| A desk or institution with a view on a currency | Run your own pool with your own prices | Create a pool |
| A company that wants to offer protection to its own customers | Build BlockFinaX into your product and earn a fee | Partner docs |
What protection covers, and what it does not
- It pays on a reference exchange rate agreed by the protocol's oracle. It does not convert your currency, and your bank's rate on the day may differ. See Reference and executable rates.
- Only the rate at expiry counts. A move during the contract that reverses before expiry does not pay.
- Payouts are limited. You choose the limit, or the pool sets it, and moves beyond it are not covered.
- A contract cannot be cancelled or sold back before expiry.
- You do not need to show an invoice. The payout depends only on the exchange rate.
Where BlockFinaX runs
BlockFinaX runs on the Stellar network and settles in USDC. You can fund your account from Stellar or with stablecoins from supported EVM networks, which the protocol converts to USDC for you. Network fees are covered. See Networks and assets.