NEC's biometric identity network spans over 70 countries, and the tech giant just signed on to bring stablecoin payments to Avalanche. But a closer look at the deal raises questions about whether AVAX stands to benefit at all.
The Crypto Desk desk. Editor: Sam Daodu.
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Japan’s NEC, a leader in biometric identity systems operating in more than 70 countries, is looking to enable stablecoin payments on the Avalanche (CRYPTO: AVAX) blockchain. The goal is to streamline the process so that a shopper’s identity verification and stablecoin payment can be completed in a single approval. This effort follows a memorandum of understanding (MOU) NEC and Ava Labs signed in July, which allows them to explore the partnership further.
However, the announcement did not provide any financial details, a launch date, or specify which stablecoin would be used. According to Avalanche, the two companies are collaborating to create a framework for biometric-verified blockchain services, suggesting the project is still in the exploration stage, with no pilot program or live service in place.
As for AVAX, it has shown little reaction to the news. Trading at $8.53, it rose slightly by 0.9% over 24 hours but is down 22.4% from the previous month and about 94% below its all-time peak of $144.96 on November 21, 2021. In contrast, Bitcoin (CRYPTO: BTC) fell less, down 10.4% over the same period.
NEC and Ava Labs Have Only a Design on Paper
NEC, a prominent Japanese IT and electronics firm specializing in biometric security and digital identity, is credited with over 1,000 biometric identity systems worldwide. Ava Labs is the primary development team behind Avalanche. However, neither company disclosed the deal’s potential value, who will bear the costs, or what revenue they anticipate.
The technical aspects are a bit clearer. Along with the MOU, both companies released a white paper outlining an Avalanche-based system that integrates identity checks with stablecoin payments. Importantly, the biometric data itself will remain off the blockchain, while only proof of identity verification will be recorded.
The white paper example involves a foreign tourist using a stablecoin to make a purchase in a Japanese store. However, since the paper primarily discusses a conceptual design, neither company is currently generating revenue from this initiative.
Avalanche also offers custom chains that connect to its network, and recently shifted to a pay-as-you-go fee model. This new structure lets developers like NEC avoid locking up a significant amount of AVAX upfront, lowering the cost barrier to building on Avalanche.
NEC’s Design Leaves AVAX Out of the Payment
One notable gap in this initiative is the payment mechanism—the asset used to settle transactions hasn’t been named. Potential candidates include JPYC, a yen stablecoin, as well as a dollar-pegged stablecoin or a bank-backed yen token, while AVAX would serve as the network facilitating the service.
AVAX can gain traction in two main ways: it can be used to pay transaction fees and secure the network through staking, where holders lock up their tokens to help validate transactions in exchange for rewards. However, because stablecoin checkout primarily impacts AVAX through minor network fees, and because no specific figures on fees, volume, or staking are disclosed, it’s difficult to gauge potential demand.
Avalanche’s description of NEC as the “global leader in biometric identity” is primarily self-promotional, and while Avalanche stands to benefit from its partnerships, actual outcomes remain uncertain.
Avalanche’s Previous Partnerships Haven’t Boosted AVAX
Despite previous announcements, AVAX’s price hasn’t rebounded. For example, the Dubai International Financial Center Courts began recording court orders on Avalanche on October 14, but court paperwork brings in very little in transaction fees.
The recent announcement regarding Japan’s tax refund program is a more concrete test of demand since it specifies the payment asset. On October 29, Avalanche revealed that Japan Tax Free, JPYC, and UPBOND would allow tourists to receive refunds in JPYC, a yen stablecoin, starting November 1. Interestingly, that same day, AVAX hit its lowest price in the past month.
Competition in the space is fierce. Visa (NYSE: V | V Price Prediction) supports Avalanche for stablecoin settlements, alongside Ethereum (CRYPTO: ETH), Solana, and Stellar. Additionally, Japan’s yen stablecoin market is becoming crowded, with Mitsubishi UFJ Bank, Mizuho Bank, and Sumitomo Mitsui Banking Corporation running a trial of a jointly issued yen stablecoin in July. BlackRock (NYSE: BLK) signed an MOU with SBI Holdings and Startale Group on October 27 covering another yen-backed stablecoin, JPYSC.
Can the NEC Deal Help Avalanche AVAX Recover Its October Losses?
For now, the answer appears to be no. NEC stands to gain a new identity-verification product and a potential showcase for tourist payments, while Ava Labs benefits from a well-known partner for promotion. AVAX will only see a boost if these payment initiatives come to fruition and generate sufficient demand for transaction fees and staking. As it stands, the MOU does not guarantee any of this.
To erase its losses from October, AVAX would need to see a 30% increase to reach $11.09, where it stood on October 4, significantly higher than its 20-day average of $9.20.
The most significant indicator for AVAX holders will be any announcements about a specific stablecoin, a partnering merchant, or a pilot program launch date. If such updates are made, it could change the outlook for AVAX.
Contact [email protected] for any questions or corrections.
Sam Daodu is a crypto analyst and the editor of 24/7 Wall St.'s Crypto Desk, where he covers Bitcoin, XRP, Ethereum, Solana and the altcoins investors search for most. His work focuses on price levels, spot ETF flows, on-chain data and the regulatory decisions that move crypto markets, written so a first-time buyer and a seasoned trader can both use it.
Sam has written about crypto professionally since 2019 and has published more than 2,000 articles. Before joining 24/7 Wall St., he wrote for crypto media outlets and Web3 companies and ghostwrote for crypto founders and token launches. His analysis is syndicated on Yahoo Finance, MSN and AOL and has been cited by other crypto news sites. He also founded MacLabs Marketing, a content and personal branding agency for crypto founders and executives.
When he isn't reading charts, Sam is usually at the gym or watching One Piece, a series he maintains has better tokenomics than most altcoins.
