How can tokenization support new supply chain finance business models?

1 Asset-backed tokens

Asset-backed tokens (ABTs) are tokens that represent the ownership or claim of an underlying asset, such as inventory, invoices, or receivables. ABTs can enable suppliers to access financing by selling their tokens to investors or lenders, who can benefit from the asset's value and cash flow. ABTs can also reduce the risk of fraud, double-spending, and default, as the tokens are verified and tracked on a blockchain. ABTs can create a more efficient and secure market for SCF assets, where buyers and suppliers can trade and finance their tokens without intermediaries or barriers.

2 Smart contracts

Smart contracts are self-executing agreements that are encoded on a blockchain and triggered by predefined conditions. Smart contracts can automate and streamline the SCF processes, such as invoice validation, payment execution, dispute resolution, and compliance verification. Smart contracts can also enable dynamic pricing, conditional discounts, and performance-based incentives for SCF participants. Smart contracts can reduce the operational costs, errors, and delays of SCF, as well as enhance the trust and transparency of the transactions.

4 Token standards

Token standards are specifications that define the rules and functions of tokens on a blockchain. Token standards can help ensure the interoperability, compatibility, and compliance of tokens across different platforms and protocols. Token standards can also support the creation and management of complex and customized tokens for SCF purposes. For example, token standards can enable the issuance and transfer of fractionalized, fungible, or non-fungible tokens for SCF assets. Token standards can also support the integration of features such as governance, identity, privacy, and security for SCF tokens.

5 Token ecosystems

Token ecosystems are networks of tokens that interact and exchange value with each other. Token ecosystems can create new possibilities and synergies for SCF business models. For example, token ecosystems can enable the cross-chain and cross-platform liquidity and mobility of SCF tokens. Token ecosystems can also enable the use of stablecoins, utility tokens, or governance tokens to facilitate the payment, reward, or governance of SCF transactions. Token ecosystems can also enable the collaboration and innovation of SCF stakeholders, such as industry associations, regulators, or developers.

Tokenization can support new SCF business models by transforming the way SCF assets are created, traded, financed, and managed. Tokenization can also improve the efficiency, security, transparency, and scalability of SCF solutions. Tokenization can also unlock new value and opportunities for SCF participants, such as suppliers, buyers, financiers, and service providers.