Littio, a Colombian neobank, gives customers access to US government bonds through crypto products.
Littio is switching vault ownership from Ethereum (ETH) to Avalanche (AVAX) to scale the products.
Launched in February, the vaults have already amassed $80 million in trading volume.
It is becoming easier for Latin Americans to gain exposure to US government bonds.
Colombian neobank Littio is turning to blockchain networks – from Ethereum (ETH) to Avalanche (AVAX) – for products called Yield Pots, which allow users to earn interest on their US dollar deposits.
Why the change? The growing demand for Yield Pots forces the operation to increase scale. Avalanche’s low transaction costs and consistency were cited as reasons for choosing the chain.
Avalanche Foundation launched a $50 million program last year to boost the development of real-world assets (RWAs) on its network and this news is a big win for the platform.
The demand for US government bonds
Littio provides exposure to Yield Pots through its partnership with OpenTrade, a London-based company that develops yield-bearing products using stablecoins and real assets such as US government bonds.
Stablecoins are cryptocurrencies designed to hold par with a government-issued currency, usually the US dollar. Real-world assets is a term for assets that exist outside the crypto ecosystem, such as real estate, but are represented on-chain in the form of digital tokens.
“Currently, [Littio] is the only Latin American neobank to use this [our vaults]but we will see more customers coming online this year offering different types of USDC-based fintech services,” Jeff Handler, Chief Commercial Officer at OpenTrade, told CoinDesk.
“Interested customers are mainly neobanks, centralized exchanges and payment companies that are already using USDC to fill a gap in demand for USD bank accounts. [USD] payments and [USD] services throughout Latin America,” Handler added
The company is available in several Latin American countries, including Colombia, Argentina, El Salvador, Brazil and Mexico.
Although Littio’s Yield Pots only launched in February, they have already amassed more than $80 million in transaction volume. They have also delivered $250,000 in returns for users in the last four months. Littio keeps and reinvests between $11 million and $13 million in OpenTrade vaults every month, Handler said.
By comparison, US financial giant Franklin Templeton’s tokenized money market fund – which similarly allows registered users to gain exposure to US government bonds – has amassed $435 million in assets since its inception in 2021.
According to the company’s website, returns from Littio’s vaults range between 2% and 5%.
It makes sense that the product would pick up demand: the Colombian peso has fallen more than 54% against the US dollar over the past decade and has fallen 88% since 1990. And it’s not the only Latin American currency facing serious inflation. The dollar, on the other hand, looks attractive.
Depending on where they are located, Littio customers may also face currency restrictions or a lack of resources to open bank accounts through their country’s traditional financial rails – giving them yet another reason to sign up for Littio.
“Littio and OpenTrade illustrate how Avalanche’s technology can give underbanked populations access to compelling products and services that are otherwise unavailable or unsustainable through traditional rails,” said Morgan Krupetsky, head of institutions and capital markets at Ava Labs, which launches Avalanche blockchain develops.