Loans secured by cryptocurrencies based on wheat, corn and soybeans. This is the new initiative of the financial giant Santander, showing its commitment to the blockchain sector. We take a look at this service, which is unique at the moment, and which will first be offered in Argentina.
Santander offers loans secured by agriculture tokens
As announced in a press release from Santander’s Argentine branch, these new loans are intended for players in the agricultural sector. The big news is that they will make use of tokens based on agricultural commodities.
The tokens wheat (WHEA), corn (CORA) and soybeans (SOYA) have thus been created, under the name of “crypto-grains”. The solution will allow farmers “to have easy and seamless access to a new financing system, expanding credit capacity, using tokenized grains,” according to Santander.
This is based on a partnership with startup Agrotoken, which specializes in tokenizing agricultural products such as grains and seeds. Each token tracks the price of the commodity, in US dollars. The firm has already tested the process with Argentine producers via a pilot in recent months.
According to Eduardo Novillo Astrada, CEO and co-founder of Agrotoken, this is a world first:
“This is the first global experiment in lending with tokens based on agricultural products. […] We are co-creating various financial products to provide agricultural producers with a service with which they can easily and seamlessly access a new credit system secured by their grain.”
A multi-channel infrastructure
The service is based on several blockchain solutions: Ethereum (ETH), Algorand (ALGO) and Polygon (MATIC). It includes a verification process called Proof of Grain Reserve (PoGR). Producers can use oracles to create PoGR certificates.
This allows them to produce (mint) the tokens in question, which are then used as collateral. The process connects concrete goods to the ecosystem of decentralized finance (DeFi). Agrotoken and Santander indeed want cryptocurrencies to be available on DeFi exchange platforms and apps.
If the project is successful, Santander could well be emulated by other major players. According to Fernando Bautista, the head of agribusiness at Santander Argentina, the group plans to continue offering this type of innovative product in any case:
“We count on technology and innovation to generate new business solutions that make life easier and expand opportunities for agricultural producers.”
