What is Fiat-on-ramp and off-ramp?
Fiat-on-ramp is a gateway that allows users to purchase cryptocurrency. This service allows the user to convert their fiat money (eg., USD, SGD) to cryptocurrency (eg., Bitcoin, Ethereum) from a credit card or a bank account directly with no centralized exchange (CEX) involved. Specifically called on-ramps, they provide you the ability to easily access the entire cryptocurrency ecosystem.
A common concept in explaining on-ramp and off-ramp; a highway that allows one to get on and off at any time, bridging the gap between the real world and the digital world. Off-ramp in contrast to on-ramp is the exchange of your cryptocurrency to Fiat-currency. This service feature is especially critical in the context of decentralized finance. In simpler terms, after a successful investment, the off-ramp service facilitates exit from a successful investment, turning your cryptocurrency back to fiat-currency.
Instead of using a third party wallet, platforms that implement this feature allows the user to easily buy and sell all in one platform. Aside from a seamless experience, the service may also offer lower platform fees and lower conversion spread.
Why is it important to have this service integrated?
With fiat-to-crypto on-and-off ramp feature, it bridges the gap between the financial systems and the digital world. This is a crucial step to facilitating adoption into the DeFi and Web3 network.
Anyone who has a general understanding of online purchasing is now able to buy cryptocurrency with a debit or credit card. In a similar sense, turning cryptocurrency back into paper money makes dabbling into DeFi much more attractive to new users. This flexibility demystifies the untouchable notion of cryptocurrency and the likes of it, instead allowing users to access and understand this tradable commodity like any other. Thus, in order to experience the full potential of blockchain and blockchain based applications you have to have the funds on the blockchain to trade NFTs, trade tokens, play games, become a DAO member etc.
With the existence of on-ramp and off-ramp at the tip of your fingertips, it lowers the barrier to entry into the blockchain world. Choosing a platform that has an integrated fiat-to-crypto on-and-off ramp will not only help minimise additional fees, faster transaction time, it also does not require one to navigate from one platform to another.
Alternatives to exchanging fiat to cryptocurrency and vice-versa, would be machines. Machines are essentially like an ATM, where one would insert their credit card or cash to convert their fiat money into bitcoin cryptocurrency. The problem with a machine is first and foremost the availability of accessing the machine, along with the added cost of maintenance of the machine, replenishing of the currency, limited assets being offered and so on and so forth.
How does the regulation of fiat on-and-off ramp take place?
While the laws are still being sorted out, the regulation of fiat on-ramps and off-ramps are highly differ on each country. Most of the service requires their user to do KYC. Which usually contains the user’s personal information and personal identification document (such as passport and driving license). This step is added to minimize unlawful acts from certain individuals and hold them accountable for their actions in the crypto world.
Even though people highly regard true anonymity from cryptocurrency. It is also crucial for fiat-on-ramp providers to work against any criminal activity that may come from anonymity of the funds owner. Also know that more and more countries require some form of identity verification for all kinds of fiat gateway channels.
Next-gen DeFi Platform DeFiato to launch fiat-on- and off-ramp feature
The core of DeFiato is its user-friendly interface that lowers the barrier of entry to DeFi services, making it easily accessible to all users, including those with little or no experience. To further its mission, fiat on-ramp and off-ramp is a key feature that will drive mass adoption, and make the user experience even more seamless and beginner-friendly.
DeFiato is proud to announce the launch of fiat-on-ramp feature on the platform on 06 July 2022, XAM (UTC). Users will be able to deposit fiat (USD) directly on the platform. With the deposited fiat, users can swap to any cryptocurrencies supported on DeFiato and participate in staking or/and farming pools to earn yields on their fiat, and thus complete the full cycle of DeFi – fiat-to-farm on Defiato.
Stay tuned for the latest developments and announcements.
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