While the world may be large in geographic size, the technological advances of the last 100 years have made it significantly smaller. With the advent of the internet, planes, and super tankers, it is easier than ever to get goods across state borders, expansive oceans, and custom checkpoints.
Therefore, it is no secret that today’s modern world is an interconnect supply chain. Even with all of the 21st century technological advancements, the concept of trade has hardly changed, as people exchange goods and services for others goods, services, or means of value (modern day money).
While this may be constant, the act of paying and getting paid is increasingly difficult across borders. With different taxes, exchange rates, and capital controls, getting paid can sometimes be the most difficult part of a transaction. It is not only the previously mentioned barriers that make payment a difficult subject, but there is incentive on both sides of the deal to delay or speed up the payment.
For example, the seller wants to get paid immediately for a product that they send off. Unlike the seller, the buyer of the product wishes to put off payment for as long as possible. The struggle between these two sides has created a financial opportunity called Supply Chain Finance (SCF), which is the middleman between the buyer and the seller. The process adds cost to the deal, but is a win-win-win situation.
Essentially, the SCF institution allows the seller to get paid almost immediately, and the buyer to put off payment for up to 120 days. The SCF is an intermediary who takes a small cut of the total contract cost. While this process works, it is still a trusted system in the sense that the seller still has to send the product, even after they have received payment from the buyer, and the buyer still has to send funds to the SCF institution.The team at ETHLend is aware of this issue and are investigating ways in which blockchain and tokenization can fill the costly intermediary of SCF.
With ETHLend’s buy levitra canada ground breaking platform, the entire process could be on the blockchain and within their single ledger system. The current system of loans with cryptocurrencies as collateral will be the main portion of the ETHLend platform, but imagine the possibilities to use the tokenization process further. The same default protection that is offered via ETHLend (securing of loans backed by crypto collateral) could be extended to goods and services. However, instead of “default” being the worst-case scenario, the default scenario could be exactly what is needed in order to facilitate contract payment.
A potential scenario could be along these lines: company A makes a product and then tokenizes it and pledges the tokens on the ETHLend platform. Once the item has been tokenized and sent off to secure escrow, the tokens will be put on the blockchain inside the ETHLend platform. This means it is 100% guaranteed that the asset is real, and in the hands of the escrow.
The intended recipient, company B, can then purchase this loan on the ETHLend marketplace. Once the loan is purchased, company A immediately receives the funds, and company B has full ownership of the tokens and the escrowed item. With the understood default, company A would then default on the loan and initiate the transition of the asset from escrow to wherever company B wants to take delivery.
This entire process could revolutionise the Supply Chain Financing industry, as the single ledger blockchain will completely automate and make the entire system trustless. The smart contracts will deploy and send the goods without any thoughts, emotions, or delay. According to some estimates, the yearly SCF and accounting receivables management is over $1 trillion per year.
Blockchain solutions for this industry are already being investigated by the ETHLend team, and being able to enter this market will be a disruption of the norm which will drive value and incentive in order to use the ETHLend platform for instant, trustless financing for the global supply chain sector.
Andreas Achleithner [email protected]