By Sam
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Designed to create a low-cost cross-border financial infrastructure, Sentinel Chain will be a global B2B marketplace built on livestock as collateral for loans and insurance.  Sentinel Chain’s consortium blockchain will be connected to multiple CrossPay Blockchains.  This hub and spoke ecosystem is designed to provide liquidity to the local unbanked populations via an international and local network of financial providers.    

The Opportunity

According to the United Nation’s report on World Agriculture, the total demand for animal products in developing countries is expected to more than double by 2030.   There are several problems currently with verification of ownership of livestock including fraud and high credit risk associated with subsistence farming.  The inability to use livestock as collateral for poor farmers means that they are unable to utilise their only asset to mitigate financial hardship during periods of market or crop instability.  

The solution lies in the creation of a physically tamper-proof and digitally-immutable system capable of verifying livestock provenance and ownership.  With financial inclusion being a priority for developing countries, the Sentinel Chain project aims to transform livestock into ‘capital’ in the formal financial economy, creating a ‘new’ financial asset class that will increase investment and participation.

The Solution

The Sentinel Chain Ecosystem will have 5 main components:

  • Livestock Identification Tag used by unbanked farmer to register his livestock as an ‘asset’: This RFID-enabled livestock tag is tamper-proof and theft proof from both a material design and data level.  The tag stores the geolocation and time stamp information onto the Cross Pay Blockchain, thus creating a digital ‘passport’ that proves the existence and ownership of a specific entity and its origin.
  • CrossPay Mobile Application: A simple mobile interface built for Android and to be used with CrossPay Blockchain.  It will be designed to be a mobile wallet for checking balances and for transactions with other users and merchants.  (Video Link)
  • CrossPay Blockchain: A B2C financial ecosystem specifically designed to address the last mile problem of financial inclusion. The ecosystem will use a native cryptocurrency token called Local CrossPay Token or LCT.  LCT will be tied to the value of the country’s native currency and will not be subjected to the volatility of the cryptocurrency markets.
  • Sentinel Chain: The ecosystem which will allow global financial service providers and cryptocurrency holders to participate in the marketplace through the purchase of Sentinel Chain Token (SENC).
  • Sentinel Chain Token (SENC) – A utility token having 6 major features or applications.

SENC fuels the ecosystem by acting as the means of exchange for all transactions.

Opinion

The intention behind this project I think is hugely admirable and worthy of community and network adoption in many countries around the world.  The opportunity to address many societal problems and open new markets for financial inclusion are all good causes in and of themselves.  If Sentinel Chain could deliver the six features above even in one test market, this would be a hugely successful project.

Sentinel Chain also represents an interesting value proposition as a new asset class would be ‘created’ in markets where currently there is no way to mitigate credit risk in making loans to poor farmers.  This dilemma currently results in high-interest rates for farmers and high credit risk for loan providers.  The collateral would in many ways offer the opportunity to mitigate credit risk for financial providers, thus creating a much more attractive credit market.  

That said, I have reservations about delivering such an ambitious project from a technical perspective.  There is little detail about how the technical architecture of the platform or ecosystem will work in practice, especially when there are so many layers. Here are just few of my questions:

  • Does Sentinel Chain sit on top of the Ethereum blockchain as an application? Or are the tokens merely created using the Ethereum protocol?
  • Does CrossPay mobile app run on the Sentinel Chain for recording transactional data?  
  • Where is the transactional distributed ledger for each local CrossPay blockchain stored or for the whole ecosystem?    
  • Do the livestock tags verify if the ‘livestock’ is still alive or deceased? Do the tags verify if there is more than one tag on the animal? How are ownership transfers recorded or verified? Dead Capital here should not be used as collateral.  
  • Poor farmers will access CrossPay through their mobile phones, but how will they do this without data provision?  Data costs are notoriously high in under-developed areas for mobile phone users.  
  • How will the livestock tags be distributed and how will this distribution be funded?

I want to understand how the ecosystem layers interact with each other and where transactions are recorded on Sentinel Chain, Ethereum and/or on each local CrossPay Blockchain?  This is not clear in the project documentation; nor do they explain how the transaction data from the tags will be stored and who can access this data.

From a marketing perspective, I would like to understand their user acquisition strategy and the projected costs associated with this. For the ecosystem to work, you will need to acquire different user groups: insurance companies, unbanked farmers, local credit providers, and global financial providers.

Lastly, Sentinel Chain will insulate Local Community Tokens (LCT) from cryptocurrency volatility by pegging these to local currencies rather than SENC; however, it is unclear how this will mitigate foreign exchange risk for local providers and unbanked farmers.  In my opinion, the ecosystem only works if there is price stability and transparency around the conversion from SENC to LCTs and vice versa. 

The potential to do good here is huge. However, I am sceptical of the ability to deliver this project technically.  The lack of a clear marketing strategy around user acquisition is also a red flag for me.  If you build it, will they come?  That is the real question.

By CeAnn Simpson

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