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Three serial entrepreneurs start a Blockchain-powered bank for cryptocurrencies

Tarush Bhalla
3rd Apr 2018
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Nuo, a first-of-its-kind platform, aims to provide financial services to the next billion. The decentralised banking platform lets people deposit, lend, and invest with cryptocurrencies.

Can you create a bank without bankers?

That’s what got serial entrepreneurs Varun Deshpande, Ratnesh Ray, and Siddharth Verma excited about their new venture.

The trio had earlier started BeeWise, an expense management application with close to 1.5 lakh users. However, unable to scale, the platform pivoted to help institutions underwrite customers through their data.

Founders of Nuo: Ratnesh Ray (L), Siddharth Verma (R) and Varun Deshpande (behind)

Although there were plans to pivot BeeWise into a neo-bank, the inability to get APIs from banks became a considerable challenge. Thinking through further challenges, the founders also realised that setting up their interface on a third-party backend of a bank might not be a convincing proposition.

The trio eventually exited the company in 2017 and thought of Nuo, a banking platform based on Blockchain and working with cryptocurrenices.

“We decided what was wrong with the banking system and rethought it from scratch,” Varun says.

Nuo?

Breaking different fractions of banking, Nuo is a blockchain banking platform that allows users to deposit, lend and invest like in a bank, but with cryptocurrencies.

Varun explains,

“The crypto exchanges in the market are creating fiat currency to crypto, and letting people invest. We are trying to solve what a customer can do after they have cryptocurrency with them.”

Launched just last week, the company already has close to 20,000 users within five days of launch. Nuo has also received $250,000 in funds from CitrusPay founders Amrish Rau and Jitendra Gupta, who are now heading PayU India.

Deposits

This is where the journey starts. Users transfer their cryptocurrency to the Nuo wallet to start operating in the ecosystem.

Unlike digital wallets, crypto wallets store only the private key that has access to the cryptocurrencies, which rest on the public blockchain.

The balance in the wallet is nothing but the worth of cryptocurrency based on current market rates.

Payments

Nuo has partnered with a Singapore-based card processing provider even allow users to spend using cryptocurrency. Connected to the wallet, the card provider processes payments and the customer’s crypto wallet gets debited.

Peer-to-Peer Lending 

For a collateral-based loan, borrowers need to put a cryptocurrency token against which they would get the loan. Further, borrowers define the premium and the terms of repayment. The minimum premium which a borrower needs to pay is 5 percent of the loan.

Once a lender agrees, a smart contract is immediately made with no interference from the Nuo platform.

Varun says, “This is just like a gold loan.”

However, while taking the loan, the borrower needs to pledge 1.5 times of their currency. For example, a borrower has to pledge 1.5 times of Stellar if he is asking for a loan of 1 bitcoin.

The loan is given in the form of either bitcoin or Ethereum at present.

The founders also state that in case of defaults, the Smart Contract opens up and gives the collateral pledged to the lender.

Investing

Nuo isn’t a fiat-based exchange. This means users cannot buy cryptocurrencies against fiat currency. The platform allows users to invest in the top 20 tokens, based on their market value.

Working on the 0X (ZeroX) protocol, the platform is completely decentralised where it doesn’t hold the private key and the transaction doesn’t take place through Nuo.

Users can only purchase other cryptocurrencies (on the platform) using Ethereum considering the 0X protocol works on the Ethereum Blockchain.

The founders explain, “We play no role of being the buyer or the seller. Unlike other exchanges in India, we are the first decentralised exchange to be launched.”

The lending and investing capabilities are expected to go live on the platform by mid-April.

How do they make revenues?

The platform makes its revenues across four products.

The first is Lending, where Nuo takes one percent as commission of the total loan fulfilled. The second is Investment, where Nuo charges close to 0.1 to 0.25 percent of the total investment made.

Further, when a payment takes place, Nuo charges 0.5 percent MDR on the card transaction.

Just like BeeWise, the founders will also monetise Nuo by opening their APIs to partners, which will charge these businesses 1.2 percent on every transaction value. These can include cryptocurrency platforms like Poloneix, which can tap into Nuo’s customer base and allow them to perform margin trading in the market.

How will this grow?

In the Union Budget for 2018-19, Finance Minister Arun Jaitley had said that the government does not consider crypto-currencies legal tender or coin, and would take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system.

This was misinterpreted and put the Indian cryptocurrency ecosystem into a frenzy.

On asking, how Nuo plans to take on the misperception around crypto, Varun says,

“In terms of what I see, we are moving towards a saner market. In terms of ICOs, people are creating more products and there is a lot more money flowing in than before. But there is a dearth of cryptocurrency products in the market. And, from day one, we were building for the global market, since it is a huge opportunity for us.”

Today, Nuo has customers in close to six countries, including India, Indonesia, Nigeria, Vietnam, Philippines, and Russia.

The eight-member team is now looking to make $1 million in revenues across all their products in the next one year. The company is also looking to launch their iOS app in the next three months.

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