Bringing Agribusinesses On-chain
Understanding Africa’s First DeFi and NFT Solution for Agribusiness and Warehousing
DeFi. NFTs. Crypto. Blockchain. These are words that have permeated our news sources over the last 12 months, grabbing the attention of many and evoking the criticism of others. Even if you don’t know what these terms mean exactly, you’ll still probably have heard of them and the stories of wealth that surround them. These technologies are revolutionizing business, and the positive impacts are being felt the most in emerging economies.
At the same time large populations are finding financial independence for the first time thanks to DeFi, the persistent challenges of poverty remain. In Africa, where crypto adoption rates are the highest, people still struggle to feed themselves — despite Africa’s abundant arable land. The agribusinesses that are best positioned to solve this challenge are held back by outdated business models and process inefficiencies that cost them time and money, and ultimately waste precious agricultural resources.
It’s clear that there is something wrong with traditional agribusiness. But is there a way to improve agribusiness practices and create a more efficient system? And is it possible to leverage blockchain to help businesses across Africa to ultimately make food more affordable for all?
Solving these challenges is FarmBit’s core mission.
Understanding DeFi and NFTs
FarmBit leverages DeFi and NFT technologies to provide liquidity and financing to agribusinesses. To understand how we do this, and why these methods are superior, we first need to look at what DeFi and NFTs are.
What is DeFi?
Decentralized Finance, or DeFi for short, is a grouping of financial products and services built on blockchains. DeFi is best compared with traditional, centralized financial systems — these are the ones we are most familiar with historically. Centralized financial systems are usually centrally controlled, either by governments, central banks or other organizations. The rules that govern them vary from jurisdiction to jurisdiction, making cross-border arrangements difficult, and inefficient regulations make simple processes slow and painful.
DeFi instead has no central governance — it is, as the name suggests, decentralized. Because there are no central regulations, DeFi protocols are highly efficient. They’re kept honest by the transparency afforded by the blockchain, and new developments in technology are matched equally as fast by innovative ideas in the space. Anyone from anywhere can use any DeFi protocol, and so most exist in a market of efficient competition. For those in emerging economies, DeFi is an opportunity to participate in finance that was previously only available to wealthy nations.
What are NFTs?
Non-Fungible Tokens, or NFTs, are a type of crypto asset. The idea of fungibility refers to an asset’s ability to be interchanged. Regular currency, for example, is almost always fungible — that is, one unit of currency is exactly the same as another unit of the same value. If someone lends you $100, you simply need to return $100 — it doesn’t have to be the exact same notes or coins.
Non-fungible assets instead lack this property. Paintings, for example, are non-fungible. If someone lends you a work of art, they’ll probably expect the same work of art back. You can’t swap it for another and say the two are the same.
NFTs, by extension, are unique digital items, stored and secured on the blockchain. Art is a common use case, but in reality any unique asset can be associated to an NFT. Contracts, identification, serial numbers associated with real-world objects — anything that has some kind of unique property can be made into an NFT, with its origin and history stored forever on the blockchain.
FarmBit — The Modern Solution for Agribusinesses
FarmBit is Africa’s first agribusiness and warehousing financing protocol built using DeFi and NFT technology. We utilize these new technologies to increase process efficiencies, improve transparency and to widen the availability of financing to more people. With FarmBit, NFTs and DeFi are used to improve the livelihoods of farmers, warehouse asset custodians, agribusiness originators and investors everywhere.
Using NFTs and DeFi solves some key challenges that agribusiness financing has traditionally faced. First, FarmBit’s solution is highly efficient. DeFi protocols enabled by blockchain-based smart contracts can be agreed on and executed instantly and trustlessly. There is no need for someone behind a desk to manually assess paperwork — with smart contracts, certain outcomes follow certain events.
NFTs linked to assets are themselves highly secure. Once an NFT is minted it is virtually impossible to tamper with it. Once an NFT is assigned to warehoused goods on FarmBit, the real-world assets are forever linked to the blockchain — it’s impossible to alter or change the details after the fact.
Finally, FarmBit’s solution is scalable. Existing warehouses and agribusiness originators can be onboarded quickly and easily, and the technology implemented anywhere. Most importantly for those who need financing, FarmBit’s protocol is easily accessible regardless of your existing financial solutions. For farmers in some of the poorest parts of the world, financing is finally available for them to expand their business and improve the livelihoods of their families and communities.
Building an agribusiness financing protocol for Africa
FarmBit is just getting started, and we’re excited to be contributing to fairer outcomes for people everywhere. Over the coming weeks we’re going to explore the FarmBit protocol, our DeFi and NFT solution, our crypto token $FMB as well as some other exciting innovations we’re bringing to market. Be sure to follow us on all our social channels so that you don’t miss a thing.