When the concept of cryptocurrency started expanding, it shook the traditional financial services with the introduction of Blockchain technology. Blockchain is a set of information blocks chained sequentially to one another. These blocks are immutable and tamper-proof providing transparency into any transaction.
Let me introduce you to Whrrl, a blockchain TradFi protocol against tokenized real-world assets with commodity finance being our first chosen application solving billions of dollars of lending frauds in the commodity finance segment and bringing financial inclusion for small and medium farmers. Whrrl has already tokenised more than $500 million worth of assets on its blockchain protocol. While Bru Finance is an extension of the same application with centralised lenders being replaced by a DeFi protocol creating bank-less finance options for owners of real-world assets across the globe.
Our ELE Times correspondent Mayank Vashist took this opportunity to interact with Ashish Anand, Co-founder, and CEO, Bru.Finance. The conversation turned a bit exclusive and descriptive when Bru. Finance told us about their valuable solutions to the agritech industry too.
Excerpt:
ELE Times: Tell us about your journey behind the inception of Bru.finance.
Back in 2018, everybody was talking of tokenized assets bringing liquidity to markets like real estate, equity etc. That is when we realised that tokenization in itself can’t be a goal and will require lending protocols built around tokenized assets, way before even DeFi was a word.
That is when we decided to build Whrrl, our blockchain TradFi protocol against tokenized real-world assets with commodity finance being our first chosen application solving billions of dollars of lending frauds in the commodity finance segment and bringing financial inclusion for small and medium farmers. Whrrl has already tokenised more than $500 million worth of assets on its blockchain protocol.
Bru Finance is an extension of the same application with centralised lenders being replaced by a DeFi protocol creating bank-less finance options for owners of real-world assets across the globe.
ELE Times: What problems of the defi sector does Bru.finance solve and how?
The current lending DeFi ecosystem is built around highly over-collateralised crypto assets which serve only a small set of the crypto native population.
However, the majority of people earn their wages and hold assets denominated in Fiat Currency. They monetize these real-world asset holdings by pledging these assets to lenders. The current DeFi system is not serving this customer set at all ignoring $250 trillion worth of real assets that can be tokenized and collateralised there unlocking value at a global scale. Bru is working towards bringing the power of DeFi to these real assets and their holders thereby extending the wings of decentralised finance. In Addition, Bru is also creating social impact by channelising global high yield-seeking capital to serve the needs of 1.70 billion un/underbanked people and small businesses.
ELE Times: How does Whrrl impact the agritech sector of India? Does Bru.finance provide solutions to the problems of the agritech industry too through its defi products?
Bru’s sister concern Whrrl offers a blockchain integrated digital lending & trading platform that connects farmers, warehouses, and banks to help farmers obtain instant credit of loans against their crop deposits. This helps them avoid ‘distress sale’ of their products and get a fair share of the market price.
Whrrl’s Blockchain tokenization and lending fintech platform uses commodity-backed Non-fungible tokens (NFTs) to unlock credit flow to the farmers against the simple collateral of their harvest. Whrrl thus creates a digital post-harvest Agri supply chain financing infrastructure that uplifts small & marginal farmers’ livelihood by eradicating the menaces of distress sale, usurious moneylending & middlemen profiteering.
Solving the problems of the agriculture sector using DeFi is a natural extension of our existing offering in the sector. Bru will be bringing Decentralised Finance capital to the agriculture sector and will be disbursing this capital among the farmers through Whrrl’s existing platform. This will help us channelise a huge swathe of global capital to Indian agriculture thereby eradicating the reliance of farmers on high-cost informal sources of credit like moneylenders and middlemen.
ELE Times: Please help our uninitiated readers to understand Blockchain Technology.
In 2008, Satoshi Nakamoto, a pseudonym, published the white paper “Bitcoin- A Peer to Peer Electronic Cash System”. The idea of blockchain was first discussed in this white paper. Blockchain is a set of information blocks chained sequentially to one another. These blocks are immutable and tamper-proof providing transparency into any transaction.
Blockchain is a distributed ledger or a decentralized database that keeps a continuously updated record of data and its ownership. Rather than having a central administrator like a traditional database, a distributed ledger has a network of distributed databases, synchronized via the internet and visible to anyone within the network. Unlike the current networks that depend on trusted intermediaries for security and trust, Blockchain is truly a peer to peer technology that has no third party involved in the transactions, offering a clear-cut solution to the double-spend problem.
ELE Times: Please discuss how Blockchain is transforming the banking and agriculture ecosystem?
By utilizing digital records, tokenisation, cryptography and disintermediation of transactions, Blockchain has been improving both the Agricultural and Financial sectors in a number of ways. Lack of transparent information, absence of formal identification, inability to furnish clear title collateral, lack of credit histories and high transaction costs due to a long chain of intermediaries are just a few of the myriad obstacles found in both sectors.
The ability of the technology to trace a product’s provenance and ensure its authenticity brings a great impact on food safety, quality and sustainability while helping manage the risk within the interconnected global financial system. Unlike the traditional transactions which are dependent on central counterparties, Blockchain transactions are managed by a network of nodes which re-establishes the concept of trust without the need of a trusted third party. This disintermediation of transactions and use of smart contracts also enable frictionless and real-time payments for Agri financial services, facilitating cash flow and working capital for farmers which is usually tied up in complex paper-based settlement processes.
Furthermore, Blockchain has the potential to replace the multitude of consecutive models of data reconciliation and in building digital identities with recorded digital and physical assets, thereby providing more accurate data for actors in the value chain that can be used for better market decisions, accessing finance and also in enabling an environment with better-informed policies.
In the agriculture financing sector, Bru’s warehouse receipt finance Blockchain platform, through our TradFi Blockchain platform Whrrl, is the biggest success story across the globe with more than $500 Million worth of commodities tokenized on Whrrl platform.
ELE Times: The era of Pre- Covid and Post- Covid differ entirely in terms of offering and practising a more secure method of operations. Please elaborate on the changes from your perspective?
Covid-19 has led sectors or firms to undergo a forced experiment wherein they had to operate while being physically separated, provided they had abundant technological and digital security conditions. Now when the pandemic starts to fade, the post covid scenario leaves us with some potential benefits and also paves the way for new developments.
Technologies have opened up new opportunities, especially for digital financial services to drive financial inclusion. The mindset towards Fintech changed during the crisis and the ability of Fintechs to provide secure, low cost and contactless financial tools have become more apparent during the crisis. On the other hand, DeFi is emerging as an alternative financial model during the post covid era. We expect the two worlds of TradFi Fintech & DeFi to run hand-in-hand going further, hence enabling wider access to finance for the underbanked and unbanked population, as well as extending multitudes of financial opportunities for the ones who are already well-versed with the standard financial products.
ELE Times: How much time will it take for a country like India to have a fully adopted Blockchain space?
India has already emerged as a major player in the Blockchain space. Despite some regulatory uncertainty regarding cryptocurrencies, Blockchain as a technology is being adopted by both government and private sector at war footing level. In addition to RBI’s CBDC, Bru’s Warehouse Receipt Finance on Blockchain, Telecom sector’s Blockchain implementation to control spam texts and calls, Coffee board’s implementation of traceability solutions, Supply chain finance solution by a consortium of banks have been successfully implemented. In addition to this, India also boasts of the largest population of cryptocurrency owners. We are on the right path when it comes to Blockchain adoption.
ELE Times: What is the market scope for Bru.finance in the Indian blockchain ecosystem?
Agriculture supply chain finance in India requires annual disbursements to the tune of $100 Billion, however, the current post-harvest finance is worth less than $15 billion. This $85 Billion agricultural supply chain finance gap with an MSME lending gap of $219 Billion presents a $300 Billion market for Bru.Finance to address in India itself. In addition, we are working on expanding our footprints outside of India, in emerging markets across several continents. Being the only DeFi protocol with a strong TradFi Blockchain platform at the backend, Bru.Finance is going to emerge as one of the strongest Indian blockchain fintech in the segment.
Mayank Vashisht | Sub Editor | ELE Times
