Building a Blockchain Ecosystem for Supply Chains
Initial Coin Offering (ICO) for Origin Trail’s Open-Source Supply Chain Protocol Built on Blockchain
“The more global supply chains get complex, the bigger the trust gap we have.” — Ziga Drev, Co-Founder of Origin Trail
Supply chains are complex. Especially in food and agriculture where we deal with a perishable product from a wide variety of sources (farms).
The Founders of Origin Trail started working together years ago to help companies solve some of their supply chain pain points. Working in areas such as meat and dairy, they helped clients develop processes to bring transparency to the origin (provenance) of these products, and to the data that is collected along the way.
Seeing the tremendous possibilities of blockchain, a technology that provides a shared and trusted ledger of assets and transactions, they went to work developing a protocol for using this technology in supply chains.
These efforts lead to pilots that included allowing European shoppers to use a mobile app to scan a barcode at their grocery store to see the origin of their food items. In another use case, they partnered with a Chinese company that used blockchain to monitor the temperature of food as it moved through the supply chain for food safety purposes.
This is just the very tip of the iceberg of potential use cases for blockchain in agricultural supply chains. Rather than create a “one-size-fits-all” solution for all problems, Origin Trail is creating an open-source, decentralized protocol for utilization of blockchain in supply chains.
“We want to create an environment where stakeholders will have an incentive to create this data. Because right now, when you talk about farmers, they’re either giving up their data without knowing what it is used for and they’re not getting the value out of it, or they’re taking the alternative route of not sharing anything and losing out on the value that could be created from the system as a whole. So there is a clear need to create a better way to share data in supply chains” — Tomaz Levak, Co-Founder of Origin Trail
But, there are plenty of other companies attempting to leverage data in supply chains (Farmer’s Business Network, for example). What makes this story unique?
First, the decentralized nature of the blockchain is a game-changer. There is no company, investment group, etc. at the middle of all this. How is that even possible? See the discussion on token economics below.
Second, the creation of the protocol itself and whatever applications get built on the protocol is complete open source. In other words, this is not proprietary. Origin Trail wants to include as many potential stakeholders into the process as possible in order to create a protocol that can be tailored to fit the needs of everyone in the supply chain.
If this all sounds a little utopian, I get it. The natural question is: this all sounds great, but what incentives are there for everyone to participate and work towards this shared vision? In the past, a decentralized and open source project would either have to be purely voluntary or funded through a government or some other wealthy entity.
Enter token economics.
This is an aspect of blockchain that can be confusing. Essentially, what Origin Trail is creating is an ecosystem where participants are incentivized to contribute to the protocol. Those incentives come in the form of tokens (called “Trace”) that can be purchased in order to use to interact with the protocol.
Tomaz Levak explains how this works on the podcast:
“Origin Trail protocol, because it’s decentralized, it needs a certain token in order to enable compensation between the users of the protocol and the nodes within this decentralized network…The development of the platform is financed through the initial token sale that we are going to be making in the next month (January 2018). Then, any future development can be made out of the tokens that are retained by the token sale entity for future development, but that is not owned by the team itself, it’s owned by the community. So, the community has to be a part of the decision. If they agree to develop the protocol as the next step in a certain way, or if they want to just keep it as it is. So, it creates a completely new dynamic in how we approach open source projects, and that is why it is so new and so different from what we are used to.”
He goes on to explain a little bit more about how Trace works:
“Trace is the token that we are going to be using for Origin Trail protocol. We stripped it down for everything else besides you using the token for interacting with the protocol. So if you want to write or store some data on the protocol or if you want to read from the protocol, you’ll be using Trace as well. Any additional functionalities are left for the application layer if needed. What it does is it creates this ecosystem of everybody using Trace that links them together, and it creates, in a way, something that is independent from the outside world. Because it’s open source still, it’s very collaborative. So in a way, you are incentivized to enter and to use all of the benefits and the value you are getting out of it, and in the same way you are joining in a family of different stakeholders that are already using the protocol and all of you are benefitting from your usage of the protocol through the token, because you are holders of the token as well. It’s not a share of the company because there is no company. It’s not a security. It’s a very utility-based asset in a way, that’s used to interact with the protocol, but at the same time it creates incentives for different stakeholders in the environment.”
I find this concept of creating and fostering ecosystems really fascinating. It’s a totally different paradigm about how value can be created and distributed. All of this is made possible through blockchain technology.
The end result will hopefully be a protocol that has benefitted from a variety of contributors with different supply chain interests. This protocol will then have individual applications (“apps”) built on it for various use cases.
This makes sense to me, because while there are overarching supply chain problems, there is no way to have a “one-size-fits-all” solution. So, rather than everyone working independently, this system allow for collaboration but still the flexibility to adapt the outcome to meet the specific circumstances.
Learn more about Origin Trail by visiting their website, and make sure you listen to the full podcast interview with Tomaz Levak and Ziga Drev here:
