SENTINEL CHAIN.
A great opportunity for financial inclusion in South America.
Innovation at the service of small agricultural producers.
Sentinel Chain is a marketplace for financial services, which enables the use of livestock as collateral for loans and other services, to promote the financial inclusion for unbanked farmers around the world.
Based on “blockchain technology”, implementing “Internet of Things” techniques, and developing “cross-chain interoperable mechanism” (in partnership with VeChain Foundation), it provides an infrastructure that allows: first, to transform the livestock that is now “dead capital” in the hands of farmers into a fungible asset with a defined value in a transparent and clear way; Secondly, to create an open and efficient marketplace that connects these unbanked agents to the network of global financial providers.
Why is it an indispensable tool for the South American region?
This technological proposal is extremely important for South America, where the most important livestock stock in the world is located. More than 50% of rural households have livestock, and a large percentage of which is destined for sale and significantly contributes to the income of families.
As if that were not enough to demonstrate the importance of this industry in South America, consider that in Uruguay there are about 3.6 cows per person; in Paraguay 2.17; in Argentina 1,2; and in Brazil 1.02. During 2016 the livestock stock in the Mercosur countries (South America’s most important economic area) 300 million head of cattle.
However, being one of the main industries of the subcontinent, it has signs of extreme inefficiency that have a dramatic impact on the smallest producers. The Uruguayan Center for Economic Research, in an analysis of the meat chain of the Mercosur countries, recommended the development of innovation incentive programs aimed at articulating the chain, reducing information asymmetries between agents and developing quality, safe and traceable products.
Sentinel Chain’s proposal is clearly indispensable in South America, if we consider that the production structure of the livestock sector (primary production stage) is constituted by 40% by small producers that do not have more than 10 head of cattle and most of those lacking adequate access to credit lines. In the rural population of South America, the levels of unbanking are higher than 70%, being a sector deliberately omitted by financial institutions, which are concentrated in those segments of assured profitability.
Tokenization of livestock and traceability.
The Sentinel Chain ecosystem provides an already developed “tokenization” method, which integrates “Internet of Things” techniques through the use of its Livestock Identification Tag device, enabling the store of the geolocation information of the livestock with a timestamp into the Blockchain.
The information thus captured allows the construction of a simple and incorruptible traceability system, easily accessible not only for the rest of the agents of the meat supply chain (such as slaughterhouses, restaurants, etc), but also for consumers and regulatory bodies. phytosanitary, both in countries of production and destination.
This accessibility to information is not only manifested on a global scale, with which the improvement also impacts on the import — export processes, but it is available in real time.
Given the previously expressed characteristics, this traceability system stands as a method of innovation that surpasses all currently existing, in South America, whose failure has been evident both in terms of integration of systems between countries, as in their internal functioning, affecting not only this industry, by preventing exports to countries or areas such as the European Union with high levels of control, but also keeping the population at severe risk due to the absence of monitoring and supervision of episodes of animal diseases that conspire against basic food safety standards.
The advantages of decentralized information and in real time, before health emergencies.
In May 2000, animals infected with foot-and-mouth disease appeared in Argentina, illegally entered from Paraguay. This generated a strong economic impact: the United States and China banned the importation of Argentine meat. The analysis and control of what happened to take precise measures, took more than three months of exhaustive work for the Argentine control body (SENASA), who finally ordered the slaughter of more than 4,000 animals (a figure perhaps much higher than what would have been necessary to sacrifice).
These processes of detection of diseases, subdivisions and taking measures on livestock, can be strongly accelerated through the implementation of decentralized databases with global access and in real time, such as those proposed by Sentinel Chain.
Identity and record of livestock provenance (and a powerful partnership for data protection).
At the same time, when we consider the data that will run onto Sentinel Chain, it´s clear that there are two big types: public and private livestock provenance data. Therefore, we need differents treatment for each one.
In order to implement these fine- tuning measures and give to the ecosystem the accurate data protection, Sentinel entered into a strategic alliance with VeChain Fundation (“VeChain”), a well-established public blockchain platform.
Through this partnership, VeChain will integrate with Sentinel Chain to publish public livestock provenance data on to VeChain’s public blockchain platform. This will enable businesses and individual users a seamless access to public livestock provenance data. Private livestock provenance data however will remain on Sentinel Chain and accessible only to the local networks via cross-chain interoperability techniques. This solution will also leverage on security features to ensure that data stored on Sentinel Chain remains private. Through this partnership, VeChain will work together with Sentinel Chain to facilitate financial services for farmers as well as the digital identity of livestock — while at the same time maintaining the security of the private data.
Sentinel Chain proposes a method of extreme security that solves this problem in a systematically way. In addition to identifying each livestock unit unalterably through the RFID devices, in relation to its owner, and updated each time the cattle change hands, it achieves it at a very low cost, making its implementation economically feasible, even in rural areas with scarce resources and infrastructure.
Unlocking “Dead Capital”.
Simultaneously, this system captures accurate information about who owns the cattle incorporated into the tokenization process, triggering another powerful effect: the formation of a “title and a property registry” that in turn opens the way to a greater depth financial, unlocking the “dead capital” that is in the hands of these small producers, and that is usually the only or most important heritage that they have. “Dead capital” are the assets that lack a formal title and a clear registry system are prevented from circulating nimbly in the commercial traffic and being used in financial operations as a means of guarantee to generate a flow of credit for its owner.
This is what happens to numerous families and small producers of the Mercosur, where banks have no incentive to lend them money, given the legal uncertainty on the ownership of these assets.
Sentinel Chain is going to set up an affordable highway to make that any kind of farmers’ assets are able to flow faster and safer than ever.
Atomization and fungibility.
The Sentinel Chain tokenization model, in addition to providing a simple, unalterable and very low-cost registration system, allows all this information in digital format to be decentralized and protected both in its existence and in its circulation by cryptographic processes, allowing to unfold without frictions these financial potentialities of the goods.
Another great advantage that is provided is that once the cattle are registered in the blockchain, it can be atomized into as many digital certificates as desired to represent their total value. That is to say, a cattle whose value is estimated at US $ 1,000, can be represented in 1,000 digital certificates of value US $ 1 each. In this way an atomization and fungibility never before seen is achieved, providing greater probabilities and financing opportunities.
Added to this ecosystem are the tokens flowing through the Sentinel Chain ecosystem (the SENC and LCT tokens), as instruments of payments and transfers, which will generate enormous liquidity conditions to leverage the natural growth of this market.
In this way, Sentinel Chain is shown as an ideal environment for the convergence of multiple financial services, such as p2p loans, insurance, e-payments or crowdfunding, among many others, in favor of this large population of small producers in South America, which today are marginalized from all the benefits of financial services.
Moving from bottom to top.
The simplicity and robustness of the data handling and record management systems developed by Sentinel Chain is the key of this new paradigm that could undoubtedly bring radical improvements to a huge sector of the South American population, and at the same time overcome central failures in the livestock industry.
More importantly, this change is generated, unlike all the innovations tested, in a “bottom-up” direction.
In general, it is expected that improvements in corporate efficiencies or large organizations “trickle down” their benefits to the rest of the population. Sentinel Chain, begins improving the sector directly by its main and weakest links. This technological environment provides special conditions to boost and deepen the financial dimension in a sector that is absurdly backward in South America.
Sources:
http://www.fao.org/americas/noticias/ver/es/c/421098/
https://es.alltech.com/blog/posts/la-ganaderia-y-sus-desafios-en-america-latina-y-el-caribe
http://www.fao.org/tempref/GI/Reserved/FTP_FaoRlc/old/prior/comagric/pdf/agroindu/trazauru.pdf
http://www.fao.org/tempref/GI/Reserved/FTP_FaoRlc/old/prior/comagric/pdf/agroindu/trazauru.pdf
