Foreword: Human beings have two of the most important collaboration tools, one is language and the other is currency. Humans are always looking for the best collaborative work for them. Just as there are many languages and they have been evolving, currencies from shells, cows, precious metals to banknotes … have been evolving. As humans enter the digital age, currencies will also evolve into digital currencies. Native digital currency, it has launched a new currency experiment. On the basis of Bitcoin's currency experiment, it is accompanied by blockchain technology.
Blockchain technology brings us a new way to record the truth of things through cryptography, consensus mechanisms, and peer-to-peer networks. But apart from digital currency and DAO, it seems that it is difficult for us to get the blockchain floating in the air to land. Blockchain in the new year, where to go from here? From the observation of Blue Fox Notes, there is no doubt that in the new year, it will be easier to make breakthroughs in native digital fields such as digital currency, open finance, and games. But at the same time, its connection with real assets has also begun to enter the stage of experimental advancement. Regardless of success or failure, let's see how it is experimental.
- Blockchain Internet: The "China Network" Opportunity for Network Infrastructure
- Institutions have laid out a blockchain consensus economy, and the Staking market will reach tens of billions of dollars.
- Beijing Securities Regulatory Bureau of the China Securities Regulatory Commission: Institutions and personnel in Beijing must not promote or promote relevant virtual currency projects or platforms
- Can the blockchain help “Yang Anze” to “send money” better?
- Knowing the food on the table, UPS traces the source of beef using blockchain technology
- Babbitt column | Thinking about blockchain from the perspective of database
At first glance, blockchain coffee is totally unreliable. But let's take a look at how others do it. A foreign startup has found Oscar Ramirez, a coffee grower in the EL Paraiso region of Honduras, and issued a coffee token CAFE (coffee in Spanish) to which the grower belongs. Currently, a total of 200 tokens are issued, totaling 200 Pound, one pound per token, the current price of a token is 0.098 ETH, and the price will change according to demand. (Blue Fox Note: EI Paraiso is one of the Honduran coffee producing areas, where the coffee is mainly acidic, such as green apple, peach and other flavors)
At present, it only has a total of 200 CAFE tokens. Its main purpose is to conduct a blockchain coffee landing attempt to run through the entire process, which is far from a mature model.
CAFE is currently an ERC-20 token, and 200 CAFEs represent 200 pounds of coffee produced by coffee grower Oscar Ramirez from EL Paraiso in Honduras. In other words, if you buy a CAFE token, you are equivalent to getting 1 pound of redemption right for the coffee.
When generating CAFE tokens, each CAFE token is mortgaged by one pound of green special coffee and Dai, and the mortgage rate reaches 150%, according to the current price of coffee products * 150%. That is to say, CAFE is not generated out of thin air, and Dai collateral is required first, which means that when CAFE is subsequently traded on Uniswap, it is liquid and it is also supported by physical coffee.
After these CAFE tokens are generated by collateral Dai, it will be stored in the wallet of the coffee grower, and these physical coffees will be given to the verifier who generates the tokens. Users who hold CAFE tokens can trade or destroy the Universe to redeem the physical coffee.
It can be traded on Uniswap, which also means that the price of CAFE is dynamic and it depends on the transaction demand. If its demand increases, then the price of CAFE will increase, and vice versa. In this way, CAFE can not only be used to exchange physical coffee, but it may also obtain a premium through transactions.
In short, the nature of blockchain coffee is the tokenization of coffee. At the same time, through tokenization, coffee growers can quickly obtain working capital, reduce the need for high interest rate loans, and get rid of poverty, which will be mentioned later.
From the picture above, it has not yet run through the process, and is currently still in the CAFE token sales stage. The entire time period is about 2 months, and CAFE tokens can be purchased, sold, and traded. However, it is currently not possible to trade on Uniswap.
(The price at the time of exchange is related to the demand)
Two months later, one CAFE token can be exchanged for a bag of freshly roasted specialty coffee. The specific exchange location can be at the ETHDenver host (Blue Fox Note: ETHDenver is a blockchain technology community in Colorado, USA. Free shipping), can also be sent to all parts of the world, but you need to pay for shipping. In order to get the freshest coffee, CAFE token holders are best to redeem the coffee with the tokens or sell the CAFE tokens to the Uniswap liquid pool after two months.
What are the benefits of blockchain coffee for growers?
For coffee farmers, the biggest advantage of blockchain coffee is that it can solve the problem of liquidity of their funds. Through CAFE tokens, funds can be obtained in advance, which is equivalent to pre-sale, which can get rid of high-interest loans and will not fall into the trap of poverty cycle.
Coffee growers often sell their coffee beans at the lowest price, such as less than $ 1 per pound, and they do not have enough cash flow to support their continued processing of green coffee beans. Processing can increase the price of coffee beans and make them more profitable. However, this requires more capital investment, and it is often difficult for growers to obtain loans. Even if they can obtain loans, the interest rate is very high, and the annualized interest rate is often above 18%. As a result, the cost of coffee growers has greatly increased, and profits from Weibo can not even afford the cost.
Coffee is currently traded around the world using coffee futures prices. According to Affogato, a startup that issues CAFE tokens, only 30% of people who buy these coffee futures around the world actually buy coffee, and 70% of the price of coffee is determined by people who are not actually engaged in this industry . It abstracts the different varieties and different quality goods of dozens of countries into one commodity price.
By tokenizing coffee, first, growers can sell directly to consumers or other demanding entities. CAFE tokens can be used as collateral to apply for loans. CAFE tokens can also be placed in the liquidity pool. It sells in advance, quickly withdraws funds, and gets a higher price, making the coffee plantation business profitable.
At the same time, it is also good for consumers. Due to the reduction of intermediate links, consumers can buy cheaper coffee, and can distinguish between different varieties, different origins, and different qualities of coffee.
What are the benefits for startups?
Entrepreneurship is not philanthropy, so what are the benefits for a startup that helps coffee growers?
The startup Affogato is the team behind the issuance of CAFE tokens, and its goal is to provide a decentralized financial infrastructure for millions of coffee growers worldwide. Through CAFE, they get rid of predatory loans and get liquidity quickly, so as to avoid falling into a cycle of poverty, and as their profits increase, they are more motivated to grow and process better coffee.
For this startup, the ultimate goal is to try to build a decentralized coffee commodity exchange, that is, to continuously improve the current model of dynamically priced coffee sales by tokenizing coffee, and to try to adapt to different products and varieties. Wait for tokenization of different coffee batches, and eventually standardize and sell on a large scale.
In order to achieve the sale of different coffees, Affogato intends to convert the token model from ERC20 to ERC-1155. This token model combines the characteristics of NFT. The characteristics of the same batch of coffee are NFT, but the batch of coffee is available. Interchangeable.
In terms of business model, it will use Chai / rDai / cDai as collateral instead of Dai, which can generate sustainable income, because all three tokens can earn interest income. It is also a governance token that earns interest from a small percentage of coffee sales, and token holders have a recourse to that interest.
What infrastructure does blockchain coffee use?
First, it issued ERC20 tokens via Ethereum. This makes it a trusted token credential. (It is possible to use ERC-1155 technology later)
Secondly, through the Uniswap exchange, the exchange of CAFE tokens can be realized, the circulation can be realized in advance, and part of the premium can be realized. Uniswap is a decentralized exchange. It does not require a counterparty on it. It is a fund pool model with an automatic market maker mechanism. It can encourage liquidity providers (such as users who deposit tokens) to provide fluidity. As long as price spreads exist, liquidity providers will actively come in to provide liquidity. This is a decentralized liquidity incentive mechanism. Followed by the opportunity, Blue Fox Notes will specifically analyze the mechanism of Uniswap.
What problems does blockchain coffee face?
Because the redemption of blockchain coffee tokens involves physical exchange, it is different from the exchange between usdt and US dollars, not just the business of data information. The physical exchange of tokens involves the delivery of offline items and the process of token destruction. For example, if a user wants to exchange 1 CAFE of physical coffee, how does it carry out the exchange process? If the tokens are sent to the contract for destruction first, what if the goods are not received? If the goods are sent first, and then the smart contract is used to destroy the tokens, what if the holder does not initiate the destruction? If it is face-to-face redemption and redemption, unless there is an extremely large offline redemption network or courier network (such as home delivery, redeem physical objects and destroy tokens in person?), Otherwise the efficiency is too low. Involvement? Similar to payment intermediaries, once the exchange and redemption are initiated, the token will be entrusted to a third-party wallet for custody. Once it arrives, the token destruction process is triggered? These models are all traditional Internet models. Are they the best models? Or transition mode?
In addition, since products such as coffee are tokenized and are tokenized for specific varieties of coffee, will there be any speculation? How to ensure that it does not evolve into a feather?
Finally, one of the most important issues is trust. How can consumers believe that the tokens they hold correspond to a specific coffee 100%, and how can they guarantee the quality? This is a completely unresolved problem of the blockchain. No matter how the data is chained, it cannot solve the problem of 100% real goods, which is different from pure digital currencies. So, the third-party quality guarantee model is used in the early stage? These are traditional solutions. Is there a better model?
These are all issues that need to be considered in reality.
Blockchain coffee is just an exploratory attempt to blockchainize agricultural products (or all physical goods). If it can find an operational and mature path, it can be a grower, consumer, entrepreneur, and district. The participants of the blockchain system bring benefits.
Of course, at present, it is only a preliminary exploration, and this involves the physical exchange of tokens. Before the physical exchange network has been formed, it will face lower efficiency. At the same time, how to ensure the authenticity of the tokens Sex is also a huge challenge. In any case, perfection is impossible, but every step forward is progress.
Risk warning: All articles of Blue Fox Note can not be used as investment advice or recommendations. Investment is risky. Investment should consider personal risk tolerance. It is recommended to conduct in-depth inspection of the project and make good investment decisions.