Codex - Reviving Crypto's Payments Use Case: What You Need to Know
Integrated Payment Flows, $15.8M Seed Round, & More
Markets are up, and the attention of retail may be more fixated on fleeting narratives now that there is momentum in the markets. But institutions, especially on the TradFi side, are focused on other areas of crypto: specifically, stablecoins.
Stablecoins serve as a way for crypto-natives to find relative stability compared to the volatile onchain landscape. But this might be the least important attribute of stablecoins, with stablecoins providing a reliable solution for store of value use cases, cross-border payments, and more.
We’ve seen Web2 fintechs express tremendous interest in the stablecoin space, with Stripe acquiring Bridge for $1.1B. Meanwhile, crypto-native companies are also expanding. In recent weeks and months we’ve seen Plasma raise $24M from Tether and other large backers. Just this week, Circle announced Circle CPN, an initiative that seeks to expand $USDC’s use in international payments.
In today’s edition, we’ll discuss Codex, an OP-based stablecoin chain backed by Circle, Coinbase, and more…
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Background on Codex
Codex is a stablecoin-focused chain, with an emphasis on payments. Existing crypto infrastructure, including wallets, exchanges, etc. has been optimized for trading and speculation, with much less focus on simply transferring funds. Codex looks to operate in this niche, handling problems including optimizing the chain for transfers, integrations with on and off-ramps, and more.
Earlier this month, Codex raised $15.8M in its seed round led by Dragonfly Capital, with additional participation from Coinbase, Circle, Wintermute, Selini Capital, Cumberland, and others. These funds will go toward building out the Codex stack. This includes the Codex chain, which maintains stable transfer costs to ensure that people can use the chain at any time without worrying about congestion. The Codex API will allow businesses and merchants to integrate the Codex chain for payments without having to be too involved with this process themselves. Codex will also leverage relationships with CEXs or local FX brokers to help ease the friction of offramping funds into local currencies.
The entire Codex stack allows existing businesses, fintechs, and payment processors to tap into Codex’s stablecoin infrastructure. This way, Codex doesn’t necessarily have to onboard users itself. The cost savings and efficiency gains of stablecoins can do the work for the team by enticing applications with existing users to leverage Codex. This is reflected in the team’s comms, which don’t place a heavy emphasis on marketing to retail or individuals.
Codex’s versatility and ability to be integrated into existing payment flows allow it to be used for anything from manual cross-border transfers to e-commerce payments for customers. Codex can make both fiat and stablecoin transfers simpler.
The stablecoin space is heating up, and there is renewed focus on the payments problem, after years of attention being placed more on yield-bearing stablecoins and tokenized treasuries. With Circle and Tether both investing in or developing their own solutions to global payments and on/offramping, the accessibility of stablecoins for businesses and individuals may soon increase significantly. Not to mention Web2 fintechs and payment processors, which can make large acquisitions to get into the stablecoin space.
It isn’t just stablecoins that are being used to simplify global payments. It was recently reported that China’s CIPS payments system, which uses the RMB, processed over a trillion dollars in daily volume. This exceeds the daily trading volumes of SWIFT. It is now safe to say that there is large demand for moving away from traditional cross-border payment systems, whether for national security or simply cost savings, settlement times, and efficiency.
While international payments certainly isn’t the only application for stablecoins, this use case is where stablecoins as a solution can provide the most value. Stablecoins can provide an optimized transaction experience that is still denominated in USD without disrupting existing payment flows.
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