Mercado Santa Fe | Lending and borrowing for Latam
Mercado México offers fixed-rate loans with predictable payment plans in MXN, using USDC as collateral and XOC stablecoin*, bridging DeFi and traditional finance for Mexican and Latam users.
About
Why are you participating for Based LatAm? Our motivation for participating in Based LatAm is to develop a financial solution tailored to the Latin American market, particularly for Mexico, where the team members live. Why we decided to built Mercado Santa Fe? We identify two big opportunnities where Base tenchnoly can be used: 1.-We know firsthand the challenges of accessing affordable credit; traditional financial services are often costly and bureaucratic, especially for workers paid weekly, which is common in Mexico. As a result, they lack essential financial tools such as savings accounts, credit lines, or investment options. Only 31% of Mexican adults access formal credit, with many turning to informal institutions that charge high-interest rates or have unclear conditions. 2.-In Mexico, investors face high inflation, averaging 6% in 2022, while traditional products like CETES yield less than 5% annually. Mercado Santa Fe presents a more attractive alternative with the stablecoin XOC, pegged to the Mexican peso, offering stable and predictable returns without the volatility of other cryptocurrencies. This reallrepresents a substantial opportunity for innovative solutions that can bridge this gap and provide accessible, transparent, and affordable financial services to the unbanked population. Current web3 solutions, while innovative, can be overly complex for everyday users to adopt. By creating Mercado México, our goal is to offer a product that mirrors traditional financial products in user experience while leveraging blockchain infrastructure to provide transparency, affordability, and accessibility. We aim to bridge the gap between complex web3 services and the familiar needs of traditional financial users, offering fixed-rate loans with predictable repayment plans appealing to the average Mexican borrower. This hackathon is a great opportunity to solve real problems and create innovative solutions that empower individuals and communities, ensuring access to essential financial services. Additional Features This is the first iteration of Mercado Santa Fe. Throughout the Buildathon, we focused primarily on developing the core functionality of our smart contracts, which now enable users to collateralize USDC, borrow in Mexican Pesos, and generate yield with XOC tokens. While our smart contracts are fully functional and deployed on the Base mainnet, **the visual interface is still in its early stages**. We're continuing to refine the UI/UX to make the platform more intuitive and accessible, ensuring it aligns with the needs of our target users in Mexico. This Buildathon has been instrumental in laying the foundation for future iterations, with a strong focus on making the platform's interface as seamless as its backend.
How it's made
What challenges are you focusing on? One of the primary challenges we’re addressing is the lack of accessible financial products for a large portion of Mexican users, especially those who are unbanked but have access to mobile phones. According to INEGI, over 50% of the adult population in Mexico lacks access to traditional financial services, while 88% own a mobile phone, creating an opportunity for mobile-based blockchain solutions. Additionally, many individuals in Mexico earn weekly or daily wages, and a significant portion relies on remittances from abroad, primarily the U.S. In 2022, Mexico received over $58 billion USD in remittances, making it a critical source of income for millions of families. However, exchange fees and commissions, which can reach up to 7%, reduce the usable value of these funds. With Mercado Santa Fe, we offer an innovative approach. Instead of exchanging their remittances into Mexican Pesos at high costs, users can use USDC—a widely used stablecoin in remittances—as collateral to access fixed-rate loans in Mexican Pesos. This allows them to maximize the value of their remittances while avoiding high conversion fees. Furthermore, the Base network enables low transaction fees, making the solution even more affordable for those without access to traditional banking but with access to mobile phones. In summary, we’re not just adapting DeFi to fit the Mexican market; we’re solving a tangible problem for users who rely on remittances and lack access to traditional financial products. Mercado Santa Fe empowers users by providing quick, efficient access to credit, enhancing their financial stability and expanding their economic opportunities. How does your submission address this challenge? Our project, Mercado Santa Fé, is designed to complement existing initiatives like the XOC Mexican stablecoin while addressing key challenges in the financial ecosystem for Latin American users. It allows users without bank access to obtain affordable loans easily and quickly, using only their mobile phones. Lenders, on the other hand, can earn fair returns by providing liquidity. The integration of the Mexican stablecoin makes it easier for users to interact with our platform without worrying about the volatility of crypto assets. The entire process is managed by smart contracts, ensuring transparency and fair fees. For investors, the platform offers a way to **generate yield** by providing liquidity through XOC stablecoin deposits. For borrowers, especially those receiving remittances (remesas) from abroad, our solution allows them to collateralize USDC and access fixed-rate loans in Mexican Pesos. Borrowers can define the loan parameters, including the duration and repayment schedule, and our smart contracts calculate a fair APY based on the risk profile. The interest paid by borrowers is then distributed to investors, creating a sustainable, mutually beneficial ecosystem. The impact potential is substantial. In Mexico alone, over $58 billion USD in remittances were received in 2023. By offering a solution that allows recipients to collateralize this income instead of exchanging it at unfavorable rates, Mercado Santa Fe has the potential to capture a significant portion of this market. We aim to empower millions of individuals with access to cheaper, more flexible loans, while enabling investors to earn stable returns. This model can create a new financial bridge, connecting traditional remittances with the benefits of decentralized finance. Challenges we ran into One of the first challenges we faced was how to incentivize **XOC token holders** to stake their tokens and create a positive loop within the DeFi ecosystem and the Mexican financial landscape. To address this, we developed **BodegaDeChocolates** 🍫, a smart contract that allows XOC holders to invest their tokens and earn yield generated from borrower loan repayments. Next, we needed a seamless way to use the liquidity provided by investors to facilitate loans for borrowers. This led to the creation of the **MercadoSantaFe contract**, which allows borrowers to request loans in Mexican Pesos, using USDC as collateral. Borrowers can customize their loan by specifying parameters such as the loan amount, duration, and their preferred installment plan (weekly or monthly). Another key hurdle was ensuring real-time, accurate price conversion from USDC to Mexican Pesos. To overcome this, we deployed a **USDCToMXNPriceFeed contract**, combining data from two sources: Chainlink’s USDC to USD price feed, and Pyth’s USD to MXN price feed. This allowed us to calculate precise exchange rates, ensuring transparency and fairness for borrowers and investors alike. Also one of the most significant challenges we faced was simplifying the user experience for those unfamiliar with Web3. We overcame this by integrating a user-friendly interface for both desktop and mobile, allowing users to request credit through easy-to-navigate forms. Additionally, users can view real-time transactions, including amounts, terms, dates, and interest rates, making their overall experience much smoother and more intuitive