Introduction:
In a ground breaking move back in 2022, Santander Argentina, collaborated with Agrotoken, a startup, to offer loans backed by public blockchain stablecoins. These stablecoins are tied to agricultural commodities such as soya, corn, and wheat, and their value tracks the market prices of these commodities. Source
The Partnership:
Eduardo Novillo Astrada, CEO & Co-Founder of Agrotoken, expressed enthusiasm about the collaboration, stating that together with Santander, they aim to co-create various financial products. These products will enable agricultural producers to smoothly access a new credit system backed by their grains. The startup has also partnered with Accenture to design the business model, and within a short span, the token scaled to 30,000 tons.
How It Works:
The asset backing is confirmed via a Proof of Grain Reserve. Major exporters validate the existence of the grain, effectively locking the grain amount in storage. Asset-backed tokens are then issued. When grain is removed from storage, an equivalent amount of tokens are burned. The platform currently utilizes three blockchains: Ethereum, Polygon, and Algorand. All tokens are fungible, regardless of the produce’s location.
Agrotoken and algorand:
Initially, Agrotoken explored Ethereum for its proof-of-concept. However, due to unsustainable gas prices and transaction costs, they trialed a move to Polygon for testing integrations. It was only when they discovered Algorand that they found the ideal platform for their needs. Since then, all new tokenizations have been moved to Algorand. While Agrotoken still maintains a multi-chain approach for convenience (given that some of their significant partners are currently more familiar with Ethereum), they firmly believe that Algorand is the blockchain of both the present and the future.
The primary reasons for Agrotoken’s shift to Algorand include the platform’s speed and efficiency. Transactions on Algorand are completed in a matter of seconds, a stark contrast to the longer wait times experienced on Ethereum. This efficiency, combined with Algorand’s robust security features, makes it a preferred choice for Agrotoken’s operations.
In essence, Agrotoken’s utilization of Algorand showcases a real-world application of blockchain technology, bringing the concept of “tokenizing food” to life.
Santander’s Announcement:
On 7th March 2022, Santander and Agrotoken announced their joint venture, emphasizing it as the first global experience in backing loans with tokens related to agricultural commodities. A pilot test was conducted with Argentine farmers to validate the product’s technical and operational aspects. Fernando Bautista, head of Agribusiness at Santander Argentina, highlighted the bank’s focus on leveraging technology to expand the agricultural credit market. Source
Recent Developments:
While there haven’t been direct updates on the Santander and Agrotoken partnership, Santander has been active in warning its customers about potential scams. The bank has recently alerted its users about fraudsters asking for upfront payments for services, emphasizing the importance of being cautious and verifying any unsolicited requests. Source
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