Scaling LUNO

LUNO can become a global macroeconomic crypto product of choice

In 2020, South African founded crypto on-boarding company LUNO was fully acquired by Digital Currency Group (DCG).  LUNO’s vision is to “upgrade the world to a better financial system.” Joining DCG was a good move because LUNO joined the likes of DCG member companies Etherscan, Genesis, Grayscale, Kraken, Lightning Network, Ripple, and more - putting LUNO in a position to become a global macroeconomic authority on tech and crypto.

LUNO’s target is to upgrade a billion people to a better financial system by 2030. I think LUNO can achieve this by adding more products through the LUNO app, such as digital identity and access to the broader DeFi space as an asset management tool.

Digital Identity

When you create a LUNO account you need to submit a scan of your ID document, then link a bank account so you can transfer fiat from your bank account to your LUNO digital wallet, and vice versa. You’ve therefore completed a KYC process as LUNO on-boards you onto their system. LUNO should then create a product where they allow people to do e-KYC.

Because LUNO has your data, and has verified that you are who you are, and that you aren’t involved in any illegal activities, the company can be trusted as a user-data source, where if you want to on-board yourself as a user in any other scenario, on any other platform - banking or otherwise - you can do so using your LUNO crypto wallet.

This type of service on the LUNO app can work similar to an ENS where each LUNO user gets a simple address name such as "mansasithole@luno.eth". Benefits of a luno.eth address:

• No need to remember a string of bank account numbers, or a long digital wallet address, risking incorrect capture and lost funds.   

• Simple payments address to send and receive crypto payments

• Simple address that represents my digital identity

• Because I’ve done KYC with LUNO, LUNO can enable me to do e-KYC where if another company wants to on-board me they can type in a request to LUNO’s system (using my luno.eth address), LUNO’s system sends a request to me (a sort of 2-factor authentication) and I give permission for LUNO to give the requestor my data to allow me to on-board onto the requestor’s system.

• If necessary LUNO can also allow people to open a separate account for business transactions. With this account the user can upload all business documentation once. LUNO then stores this data in a digital locker. The user can then again use their luno.eth address to also do e-KYC for their business.

Benefits For Users

For individuals and businesses, they then don’t always have to go through the KYC process as it is now, with endless physical documents containing contracts, I.D scans, certificates, etc. Everything is made simple.

The result for LUNO is Preference and Asset Management.

Preference and Asset Management

Enabling people to have digital identities and do e-KYC can help LUNO scale to even become a national product of choice where national governments use LUNO technology as a national standard, whereby every resident has to have a digital identity enabled by LUNO, and therefore a digital wallet.

Going bigger, the digital wallet can give access to a suite of products in a “super app" context, including:

• Asset management tools for users: Users can get access to global pools of capital to fund their business, trade, lend and borrow.

• Access to transfer payments: grants, tax credits, etc can be received by residents straight into the digital wallet

• Financial audits: because the wallet allows blockchain enabled transactions, financial trails are easily tracked and in most cases this will help people get better credit scores. Additionally, in the case where you want to make an investment like a venture capital investment, your luno.eth wallet can be used as a marker for your identity and your affordability.

Move or die

In the case that LUNO continues to be conservative and not extend its product range, there’s a competing crypto exchange called VALR that can easily play the role being suggested for LUNO. VALR is another South African founded crypto trading platform. Arguably the closest South African competitor to LUNO, VALR is estimated to service 250 000+ retail clients (may be a big underestimate) and 500+ institutional clients from around the world.

VLAR also offers:

• Buying and selling of 60+ cryptocurrencies (largest selection of any platform in Africa)

• Rewards to market makers - attracting partnerships with more DeFi applications

• VALR Pay, which enables

  • free ZAR payments to any cell

  • free ZAR payments to any email address

  • receive ZAR payments for free.

VALR is in a good position to grow their customer base even more and is already exploring simple address-directed payments through VALR pay.

Earlier this year VALR raised $50 million in an oversubscribed series B funding round led by Pantera; and which included 4Di Capital, Alameda Research, Coinbase Ventures, and more. This was Africa’s largest ever crypto funding round. At this rate, and with the exposure that VALR offers to the rest of the crypto market, VALR is also in the running to be a global macroeconomic authority on crypto.

The reason LUNO likely wins is besides the greater customer base, the closer partnership and support from DCG and the launch of LUNO Expeditions enables LUNO to take advantage of a wide array of expertise that DCG has been exposed to through its other member companies.

More Ways LUNO Wins

Already operating in the UK, Singapore, South Africa, Malaysia, Indonesia, Nigeria, Australia, and the United States; scaling LUNO as described above can additionally benefit LUNO in these ways:

Partnerships for global macroeconomic plays

Sure LUNO is already highly technologically competent, and has done well to build an 8 million user customer base, but integrating an ENS-like service and a broader asset management tool will take things to the next level as LUNO becomes a more serious player on the global macroeconomic scale. Nowadays countries are competing for tech expertise in a fight to become the most technologically advanced country. LUNO can become a tool of choice for crypto on-boarding, data management (storage, security, transfers) and enabling access to financial instruments in the DeFi space.

Data

Remember that saying from a while back; “data is the new oil”? On top of the 8 million users worth of data, LUNO can get orders-of-magnitude more data which they can leverage to build more services within the LUNO app, or build more services within LUNO the company - where LUNO licenses these services; in a similar manner that Amazon Web Services licenses services it offers.

Additionally, having more data will make LUNO Expeditions more successful because the venture arm can more accurately guide founders on the steps that make sense or are most likely to succeed, based on the data that LUNO was able to accumulate. At the same time, the data accumulated will help LUNO Expeditions pick better companies, and make better decisions with regards to capital allocation - thereby improving ROI for LUNO Expeditions.

Competitive advantage

LUNO can look more like a super app that offers not just a crypto exchange and crypto savings, but also access to

• crypto lending

• staking

• access to traditional financial instruments (public equities, IPO markets, seed and venture capital)

• insurance

• privacy protocols using private keys

• domain name access and transfers using an ENS-like service.   

This type of expedition (excuse the pun) for LUNO actually fits in well with their venture capital arm, LUNO Expeditions - meaning the project described above is actually do-able. There’s no reason to not use years of experience in the crypto space, evidenced by millions of users across different countries, to not try to become a global crypto and technology authority. ENS already exists and is used by tens of thousands of people. Digital lockers are used by India to service a billion Indians. Super apps exist such as WeChat. APIs that enable the integration of different services again exist in India through India Stack and its larger applications Aadhaar, UPI and DEPA. These products are there, so exploration into how to take advantage shouldn’t be scary for LUNO, especially not since they have the full backing of Digital Currency Group.