Tiger Research: How Far Can On-Chain Forex Settlement Go?

Key Points

• The high costs and long delays of cross-border remittances and foreign exchange in emerging markets are not due to technological lag in any single link, but rather the result of a combination of three constraints: process review, bank operating hours, and thin USD liquidity.
• KiiChain's approach is to pool the liquidity of various national fiat stablecoins onto a single chain, allowing for round-the-clock exchange and settlement. Whether its value proposition holds depends on whether the source markets themselves have sufficient depth.
• It does not eliminate intermediaries, nor does it intend to. Out of eight steps, only three truly disappear; the other five have changed their executing entities and names, but the structure remains the same. This is more akin to organizing existing inefficiencies rather than replacing them.
• Official disclosures indicate a cumulative transaction volume exceeding $500 million and over 350,000 users. However, the more substantial parts of the roadmap remain in conceptual stages, making it too early to judge.

1. By 2026, the Financial System Remains Unchanged

On Friday afternoon, a fund manager from an exporter in Bogotá made a payment to a supplier in the U.S., and the screen only displayed a terse "Processing."

Every cross-border transfer is backed by a complex process. Qualification reviews, foreign currency account verifications, currency exchanges, and final settlements are all essential steps. The global financial infrastructure still operates inefficiently: banks in different countries have varying operating hours and regulatory systems.

News from the other side of the globe can be transmitted in real-time. Technology has long since dissolved the boundaries of information and culture, yet the financial infrastructure supporting economic operations remains cumbersome.

This structure exerts even greater pressure on emerging market countries. Their local currencies have a low status internationally, making it difficult to obtain liquidity instantly, which adds delays and costs to every transaction step. In some transactions, USD liquidity is insufficient to absorb the scale of the quoted local currency, significantly raising exchange costs and extending completion times.

The problem is clearly defined; the next question is: what part of this can an on-chain structure actually solve?

2. Solutions from a Group of OTC Practitioners

KiiChain's founders, Danyel Arenas and Alex Cavallero, previously operated a digital asset OTC desk in Latin America and managed the market-making fund Inmersion Capital. They aim to bridge the already thin liquidity between local currencies and USD while completing two-way transactions under conditions of inconsistent bank operating hours and strict capital controls. The cost of this inefficiency is borne by their own funds, which determined their subsequent angle of approach.

KiiChain positions itself as an on-chain forex layer for stablecoins and real-world assets (RWA). The core idea is simple: concentrate the liquidity of USD stablecoins and various local currency stablecoins onto the same chain, allowing for uninterrupted exchange and settlement even when the banking system is closed. The company has raised a total of $26 million, with investors including Nimbus Capital.

It is noteworthy to clarify the boundaries of this positioning. It aims to solve the timing and friction of settlements, not the origin of liquidity itself. These two matters will be repeatedly separated in the following text.

3. Four Components: What They Solve and What They Cannot

According to official descriptions, there are four components supporting this concept: KiiChain App is responsible for executing transactions across assets and currencies, Kii Oracle provides decentralized real-time price data, RWA Protocol handles compliant tokenization, and KiiChain Pay connects fiat and on-chain assets.

The component list itself does not explain much. What truly needs to be examined is which layer of constraints each one touches structurally.

3.1. KiiChain App: Bringing RFQ Price Discovery On-Chain

Emerging market currencies occupy a marginal position in the global financial system, enduring long-term pressures of thin liquidity and settlement delays. Existing forex trading methods, whether RFQ (Request for Quote) or CLOB (Central Limit Order Book), have failed to address this.

The automated market maker (AMM) model commonly used in DeFi is also unsuitable. The core of forex trading is currency exchange and real arbitrage demand, not value storage or investment. Liquidity providers are thus exposed to losses from price fluctuations but find it difficult to earn returns from daily trading flows, which is a flaw of the model itself.

KiiChain App adopts a model it calls the Atomic Quote Network (AQN): the process of finding the optimal exchange rate follows the traditional financial RFQ approach, while the actual movement of funds is completed instantly on-chain. Price competitiveness comes from the former, while settlement speed and transparency come from the latter.

This design does address settlement delays. However, liquidity risk is beyond the model's range; it is an external variable. Whether AQN can deliver results ultimately depends on the number and capacity of institutional market-making partners, which requires long-term accumulation.

3.2. RWA Protocol: Shifting Trust from Banking Relationships to Code

Traditional forex trading cannot directly verify collateral and can only rely on substitutes for trust between banks, such as letters of credit and correspondent accounts.

KiiChain's alternative is to tokenize the collateral itself on-chain. The T-REX standard (ERC-3643) programmatically embeds identity and qualification rules into tokens, and transfers to disqualified addresses are directly blocked. Sensitive identity verification is handled by licensed off-chain operators, with only revocable cryptographic certification records kept on-chain.

Eligible assets cover real estate, bonds, and commodities, but regulated financial products can only be distributed through licensed issuers. The form of trust has changed, but the source has not: the entity issuing the certification remains subject to regulatory and judicial jurisdiction.

3.3. Kii Oracle: Consensus Cannot Solve Source Thinness

Price discovery in traditional forex occurs in the interbank market, dominated by a few large trading banks. Restricted access ensures trust, but the cost is that currencies not deeply embedded in this network can only face opaque pricing determined by a few quotes, especially true for emerging market currencies.

Kii Oracle's idea is to replace closed interbank trust with open consensus among validators. Trusted validators independently collect prices from multiple exchanges and calculate a weighted median based on their respective staked shares to reach consensus, automatically excluding values that deviate too far from preset standard deviations to prevent a few entities from manipulating prices with extreme quotes.

This mechanism addresses data fragmentation, serving as a technical remedy, but cannot generate the liquidity depth that the interbank market possesses. When the quoted local currency stablecoin has a thin source market, no matter how refined the calculation logic, price distortions and severe fluctuations still exist. Oracles can make dispersed prices more trustworthy but cannot thicken a thin market.

3.4. KiiChain Pay: Integration Does Not Equal Unblocking Bottlenecks

The bottlenecks of traditional forex settlement concentrate on the nodes of funds entering and exiting the banking system: account opening, compliance review, and operating hour restrictions. If a transaction is stuck at the initial step, speeding up the intermediate processes is of limited significance.

KiiChain Pay packages four channels into a unified API. On-ramp converts fiat into digital assets after completing KYC; off-ramp withdraws digital assets to bank accounts after completing KYC; FX swap is custodial, processed through contracts or service providers; decentralized exchange (DEX swap) does not require KYC and completes on-chain exchanges via LiFi routers.

Among the four channels, the first three still rely on external licensed operators, KYC processes, and the operating hours of off-chain service providers. Integration improves accessibility, but the bottleneck itself has not moved. The only channel that truly bypasses the banking link is DEX swap, as it does not involve fiat.

There are similar limitations in pricing. The market API adds a layer of price spread on quotes from external liquidity providers, essentially marking up for resale rather than independent price discovery.

4. Out of Eight Steps, Only Three Truly Disappear

Looking at the four components together, KiiChain has not created a financial system without intermediaries, but rather a settlement layer where intermediaries can meet without being constrained by national borders and operating hours.

Building a system that completely eliminates all intermediaries is unrealistic. Funds flowing within regulatory boundaries must inevitably bear KYC obligations and be operated by licensed entities.

Thus, the extent of process compression is limited. Out of the aforementioned eight steps, only three completely disappear; the remaining five retain their basic structure, with only the executing entities and names changing, while the processes themselves remain.

A more accurate analogy is concentrating scattered exchange points into one place. In the past, exchanging pesos for dollars required running between different exchange houses in various countries, each with its own operating hours. KiiChain's approach is to gather these intermediaries onto the same chain platform rather than driving them away. The operational capacity for settlement still exists; the convenience and speed are enhanced because all parties interact within the same space, eliminating physical distance and time differences.

This still holds practical value. The liquidity of multiple local currency stablecoins concentrated onto a single chain allows for the automatic execution of exchanges between digital assets on the platform via smart contracts around the clock. However, the nodes for real fiat inflows and outflows remain subject to the operational conditions of off-chain service providers.

Therefore, rather than saying this is a dismantling of the intermediary structure, it is more accurate to say that the underlying infrastructure has been moved on-chain to refine the stubborn inefficiencies of the traditional financial system. The standard for judging the value of this matter should be the extent of optimization, rather than the narrative of disruption.

5. Numbers at the Starting Line

Officially disclosed data indicates: cumulative transaction volume exceeds $500 million, approximately 350 B2B2C enterprise clients, and a user base exceeding 350,000, with user growth maintaining at about 10% per month. These numbers come from the company itself, and there is no independent metric available for cross-validation.

The more substantial items on the roadmap remain in conceptual stages: on-chain debit cards, a payment network covering 50 countries, stablecoin deposit products, unsecured lending, U.S. virtual accounts, and AI-driven automatic settlement systems. What is currently operational is focused on the foundational function of forex settlement infrastructure.

Transitioning from a payment tool to an on-chain financial hub hinges on whether ecosystem participants can come together. Liquidity partners, multinational corporations, and individual users must interact within the same network for network effects to emerge, providing the premise for a leap to the next generation of financial functions.

Returning to the initial question of this article: what part of the on-chain structure can solve emerging market forex issues? The current answer is the timing and friction of settlements, not the depth of liquidity. The former can be achieved through architectural design, while the latter can only be addressed by negotiating with market-making partners one by one, expanding market by market. KiiChain has already proven it can achieve the former; the latter remains unanswered.

The path of on-chain forex is worth pursuing. But how far it goes depends on execution, not just the architectural diagram.

This content is provided for general informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online promotions, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets. Crypto assets are highly volatile and may result in loss. The availability of WEEX services, products, and related events may vary by region. You are responsible for ensuring that your participation is in accordance with applicable local laws and regulations.