Tinlake, Centrifuge’s asset-backed lending protocol, has had a chance to prove DeFi’s responsiveness to pandemic: by getting money (quickly) into the supply chain deserving it desperately.
HappyFresh, a Singapore-based online grocery delivery platform, was financed via Centrifuge Tinlake and ShuttleOne during the Coronavirus Pandemic. Like many online grocery delivery platforms, they were hit with an overbearing number of orders during the shutdown. One of the biggest issues to deal with is keeping up with the capital: a 200+ employee labor spike was needed to keep their virtual shelves stocked. ShuttleOne creates financial services for different categories of consumers in all markets using blockchain technology and aims at reducing friction between digital assets and local currencies. To date, they provide remittance services for their 600k+ users and are building out their offering to advance early payments to their existing merchant portfolio. This includes offering collateralized loans to platforms like HappyFresh; using guaranteed payment (via invoices) as collateral, ShuttleOne is able to extend loans using Tinlake. Tinlake becomes the component that plugs ShuttleOne into DeFi liquidity.
“With ShuttleOne, we are making money borderless. Our customer HappyFresh, for example, operates in all major markets in South East Asia. To cater to increased demand, they need to have access to new liquidity markets fast. Combining our frictionless payments with Centrifuge Tinlake seemed like the logical step to access liquidity in DeFi.” — HongZhuang Lim, CEO of ShuttleOne
Why Would ShuttleOne Want to use DeFi in the First Place?
DeFi can optimize and improve on existing financial tools on Wall Street. More automation = less costly intermediaries, which is ShuttleOne’s engineering ethos — Automate Everything Finance. Fewer intermediaries also mean less trust involved in the process, leading to a much faster, cheaper and open system. Fast and cheap liquidity allows HappyFresh to respond to the rising demand for goods without skipping a beat.
After the success of HappyFresh, ShuttleOne used Centrifuge Tinlake to finance another merchant, Chow Feng. Chow Feng is a traditional manufacturing business based in Malaysia, dealing with timber products and factoring AR. Like many other companies, Chow Feng has now shifted focus for disaster relief response in order to support medical efforts.
ShuttleOne Tx Receipts
DeFi is building its own monetary system, backed by real assets. MakerDAO is leading this charge with the origination of Dai, a collateral-backed stablecoin. Currently, the majority of Dai is backed by ETH; but to scale this system and grow beyond the limit imposed by ETH as collateral, we need to onboard assets beyond the scope of cryptocurrency. We need to bring on Real-World Assets such as invoices, mortgages, royalties to open up the DeFi world to our current economy.
This starting point for DeFi opens up a world of financial tooling for a decentralized, blockchain-based future. What does that mean exactly? It means a financial system governed by people: not nation-states, governments, or banks.
Maker Foundation recently financed a new transaction with Tinlake and ConsolFreight, in an effort to bring new collateral types into DeFi. This was a mock-up of how the decentralized process of collateralizing Real-World Assets would look between MakerDAO and Tinlake.
ConsolFreight is a SaaS freight technology provider that empowers the digital transformation of the shipping industry. Similar to Shuttleone, they empower merchants (in this case freight forwarders) via financing. As the backbone of the supply chain, freight forwarders are highly stressed in a global crisis. Shipments need to keep moving smoothly to provide essential businesses with essential goods. Freight forwarders falling short on capital from tall orders should not keep them from crucial transportation. ConsolFreight has first-hand experience dealing with emergency shipments during the Coronavirus, including a massive 200k shipment of facemasks from China to Panama.
Recently, ConsolFreight completed a pilot transaction on Tinlake to explore how factoring in DeFi can pose a real alternative; the result ended up being not only cheaper, but substantially faster for them.
ConsolFreight’s ecosystem has enabled an 18 week, a shipment of hand sanitizer with a transport cost of $1.7m from Mexico to the USA that will start on April 25th.
“This [DeFi] is especially important in moments of emergency: disaster relief shipments need quick and reliable processing. Tinlake would allow us to increase operational efficiencies and decrease the operational cost on this future shipment.” — Alejandro Gutierrez, CSO/Co-Founder of ConsolFreight
Although these are just pilots, they show something much bigger: not only were our Tinlake V2 pilots successful, but they have showcased real potential to evolve our current financial systems. Starting with Bitcoin in 2008, 2008–2019 showed the world that blockchain is an opportunity, but 2020–2029 is going to show real blockchain solutions interacting with global finance.
Tinlake will play a role in bringing real-world debt to the blockchain. We are doing that with a unique set of tools in an efficient and safe way; TIN/DROP is our two token setup that implements a Junior and Senior tranche structure for financing. To learn more, check out this blogpost.
We believe that as more diverse collateral is onboarded to Multi Collateral Dai, the DeFi economy will scale. Black Thursday was a proof that DeFi works, but also a big wake-up call for diversification of Dai: Tinlake can play a key component in onboarding Real-World Assets to MCD, opening up billions worth of assets to DeFi.
We are already working on a sustainable way to onboard Real-World Assets into MCD: join the discussion of our assets as Collateral for MCD on Maker’s Forum.