XDC Network (XDC): Transforming Trade Finance Through Tokenization
With the ever-growing volume of transactions and activity in the global trade finance industry, businesses are looking for ways to settle their cross-border payments as efficiently, affordably and securely as possible. This is, however, often more a wish than a reality. What usually happens on the ground in trade finance is vastly different, as credit risk, high transaction costs, delays in processing payments and documentation, lack of transparency and numerous other issues continue to hinder more active trade.
XDC Network (XDC) is a long-established hybrid blockchain platform that aims to resolve these issues by providing a secure, transparent, private and efficient environment to facilitate trade finance operations. Probably the largest project in the blockchain industry dedicated specifically to trade finance and international trade use cases, XDC Network uses a combination of public and private blockchain features to act as the optimal medium for asset tokenization and fast, low-cost and secure cross-border payments.
Key Takeaways:
XDC Network (XDC) is a secure, scalable and low-cost blockchain platform optimized for use cases in the areas of trade finance and asset tokenization.
XDC is a hybrid chain, combining the elements of public and private access. While the main chain is public, businesses have the option to launch their own private subnets.
The platform's native token, XDC, is used for gas fee payments, staking, stake delegation, reward payouts to validators and governance.
What Is XDC Network (XDC)?
XDC Network (XDC) is a hybrid Layer 1 blockchain that combines public and private access features to offer asecure, scalable and low-cost environment for trade finance payments and asset tokenization. It uses its own variation of the delegated proof of stake (DPoS) block validation method, allowing it to offer gas fees that are small fractions of a cent (around $0.0001) and a processing capacity of more than 2,000 transactions per second (TPS). As a low-cost and highly scalable medium for crypto payments, XDC Network aims to provide an efficient platform for trade finance operations and tokenization of real world assets (RWAs).
While there’s no shortage of highly scalable and low-cost blockchain networks, many are either public platforms on which transactional privacy is hard to maintain, or private environments that lack transparency. XDC Network takes a different approach by acting as a hybrid environment; while the main XDC chain is a public network, businesses have the option to launch their subnets and customize the level of access to specific data and operations. The ability to act as a transparent and verifiable public ledger — combined with the functionality to protect sensitive financial data — makes XDC a key enabler for trade finance transactions.
XDC Network also features a high degree of interoperability with external platforms, both blockchain-based and those outside of the web3 world. The platform is compatible with the Ethereum virtual machine (EVM), making cross-chain communications with other EVM chains seamless for users and developers.
Importantly, XDC has integrated support for ISO 20022, a widely adopted messaging standard used by financial institutions to exchange data. The integration of ISO 20022 is aimed at optimizing the efficiency and compatibility of XDC transactions with Web 2.0 entities in the trade finance industry.
Some key use cases for XDC Network include supply chain management solutions, efficient payments between parties in the trade finance sector, applications utilizing high-volume micropayments, tokenization of physical and digital assets and more. In general, any application or business that requires fast, efficient, minimal cost and secure payments could benefit from using the XDC platform.
The XDC Network project was originally conceived and launched in 2017 in Singapore under the name XinFin by Atul Khekade, Ritesh Kakkad. It's supported by the nonprofit XDC Foundation, launched in 2021. XDC Network's mainnet was introduced in mid-2019.
How Does XDC Work?
Hybrid Blockchain
Besides its ultra-low transaction costs and high processing capacity, probably the biggest advantage of XDC Network for trade finance operations is its hybrid nature. While public networks are great for transparency, they’re often ill-suited for financial transactions between two corporate parties. XDC Network acts as a public network, but allows organizations to control the level of access to data via private subnets.
A private subnet’s privacy and access features can be customized per the agreed terms between transacting parties, or per the requirements of the organization operating the subnet. For instance, a common scenario in trade finance is the need to demonstrate enough financial reserves to pay for goods and services before entering into a contractual agreement. Using a public access mode, a transacting business can demonstrate to the counterparty its financial reserves and creditworthiness. After concluding the agreement and receiving the goods, it can process the actual payment via private mode.
During the whole process, all the verifications and transactions occur via the XDC Network’s platform without the need for lengthy bureaucratic procedures, such as obtaining a letter of credit from a bank and setting up a dedicated trade finance account.
XinFin Delegated Proof of Stake (XDPoS)
XDC Network uses a customized variation of the DPoS block validation method. XinFin Delegated Proof of Stake (XDPoS) can process more than 2,000 TPS by concentrating block validation activity in the hands of a few validator nodes. At the first stage of the validation process, a small set of validators is chosen via voting to create blocks of transactions. These elected validators collate and sign the blocks, which are then fully endorsed by a broader set of validators as adhering to the blockchain's consensus standards.
Block validators, also known as Masternodes, need to lock a collateral amount of 10 million XDC (around $270,000 as of Oct 31, 2024) to participate in the validation process. A fixed reward is generated for the completion of the validation of each block, which is shared among Masternodes, distributed proportionally according to their performance and uptime. There are currently 108 Masternodes on the XDC blockchain, with another 178 registered as standby Masternodes, ready to step in if a current validator drops out.
Users who would like to participate in securing the network's operations but can't afford the 10 million XDC collateral can still earn a share of block validation rewards by delegating their funds to a Masternode.
XDC Network's consensus mechanism has undergone significant changes in the years since its launch. It was first based on proof of work (PoW), moving later on to the more efficient and environmentally friendly proof of stake (PoS), and then upgrading to the XDPoS model described above. In October 2024, the project launched version 2.0 of its mainnet, which features the next iteration of the block validation model — XDPoS 2.0.
The upgrade to XDPoS 2.0 has further improved XDC Network’s scalability and security, providing better validator incentives to Masternodes. While these improvements were accompanied by gas fee increases of up to 50 times, the actual fees on the blockchain remain minuscule, around $0.0001 on average, as they've increased from an even tinier base.
XDC Subnet
We noted above that XDC allows businesses to spin off private subnets that can be customized to the requirements of each client and use case. The XDC protocol may also be used to launch gasless subnets, a valuable feature for applications that aim to provide a smooth user experience in areas such as gaming, the Internet of Things (IoT), micropayments and more. A gasless XDC subnet operates as a Layer 2 solution connected to the main XDC chain, and is optimized for specific use cases, such as decentralized finance (DeFi) and GameFi, allowing users to transact without holding any cryptocurrency.
XDC Token Standards
As a blockchain capable of supporting smart contracts, XDC has developed different token standards for specific use cases, similar to the system of standards used on Ethereum (ETH).
XRC20
XRC20 is the blockchain's standard for fungible tokens, with a functionality similar to that of Ethereum's ERC-20. XRC20 tokens are interoperable, and can be used within the blockchain's decentralized apps (DApps). They’re ideal for powering payments flowing between parties in trade finance.
XRC721
XRC721 is XDC's standard for non-fungible tokens (NFTs). Unlike XRC20 tokens, each XRC721 token is unique and has its ownership and intellectual property (IP) metadata attached to it. Besides creating standard NFTs, these tokens are also useful for tokenizing unique RWAs, such as physical and digital artwork, real estate, unique brand assets and luxury goods items.
XRC404
XRC404 is the blockchain's standard token. It combines the features of fungible and non-fungible tokens. Using this standard, developers can program complex functionality to accommodate both fungibility and uniqueness attributes as required. Some use cases for XRC404 include fractionalized NFTs and complex financial instruments that require unique identification, but may still exist in multiple quantities.
What Is the XDC Network Token (XDC)?
Originally, the XDC project — then called XinFin — launched its native cryptocurrency, XDCE, on the Ethereum blockchain in early 2018. With the launch of the XinFin mainnet in mid-2019, the XDC token native to the blockchain was also introduced. Throughout 2020 and early 2021, XDCE could be migrated to XDC at a ratio of 1:1. At the end of March 2021, XDCE's circulation was terminated and the token's contract on Ethereum was closed, with XDC remaining the platform's sole native cryptocurrency.
XDC tokens may be used for gas fee payments, staking/stake delegation and validator reward payouts, as well as for governance. XDC Network Masternodes, all of whom need to stake 10 million XDC on the network, can participate in the voting process to determine the direction of the platform's ecosystem development and its operational rules. The wider XDC community indirectly participates in these governance processes via stake delegation.
XDC has a total supply of nearly 38 billion, with no maximum cap specified.
You can store and use XDC tokens with one of the many wallet apps supported by the platform, including XDC Web Wallet, XDC Pay, Guarda, MathWallet, MyEtherWallet and more. The industry's two leading hardware wallets, Trezor and Ledger, are also supported, and the Ledger Nano S Plus model can be connected to the XDC Web Wallet.
For an added level of enterprise-grade security, XDC also supports three multisig wallets (a type of wallet that requires multiple signatures for transaction approval).
Source: XinFin.org
Where to Buy the XDC Network Token (XDC)
The XDC token is available on Bybit as a Spot swap pair (XDC/USDT) with the USDT stablecoin. If you don't have an account on Bybit, you can easily register for one to take advantage of trading opportunities across our Spot and Derivatives markets.
XDC Network Price Prediction
As of Nov 1, 2024, the XDC token is trading at $0.02719, which is 86% lower than its ATH of $0.1928 on Aug 21, 2021, and over 6,700% higher than its ATL of $0.0003953 on Jul 22, 2019.
Long-term price forecasts for XDC are bullish. DigitalCoinPrice predicts a maximum rate of $0.0706 in 2025 and $0.20 in 2030, while PricePrediction expects the token to trade at $0.0547 in 2025 and $0.3715 in 2030.
Some investors are making extremely bullish assumptions regarding the token, hoping it might reach $1 or even as high as $100. While $1 isn’t totally out of the question from a long-term perspective, it's still quite unlikely within the next five years. Most major price prediction portals or analysts don’t see XDC coming close to the $1 mark within the next few years. However, one prediction portal, PricePrediction, anticipates the token to cross $1 by around 2033.
As for the $100 level, it's highly doubtful unless some major development leads to a mammoth XDC price pump.
Closing Thoughts
XDC Network is the trade finance industry's flagship project, leveraging blockchain technology for the sector. While other web3 solutions aimed at trade finance might exist, the leadership in this niche is firmly in the hands of XDC.
As the volume and activity of international trade increases, businesses in this sphere will find it difficult to ignore the numerous benefits of this platform. All of its features — ultrafast and low-cost payments, transparent creditworthiness verifications directly on the blockchain, compatibility with the ISO 20022 financial messaging standard, stellar scalability and the ability to spin off your own private chain — position the platform as an ideal solution for trade finance organizations seeking efficiency and security.
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