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Envoy Group, a blockchain-based supply chain and trade finance startup, has raised $13.5 million investment from Alcedo Digital Ventures, GTR reported.
The company will be using the money to expand its services beyond Latin America. According to Finextra, Envoy is already onboarding Latin American clients and the new funding will allow it to explore other major trade corridors.
According to the official website, Envoy uses R3's Corda blockchain platform to reduce the massive inefficiencies that strangle global trade and inject liquidity. The platform is designed to facilitate seamless integration with legacy data systems and third-party blockchains, allowing buyers and sellers to better manage global trade logistics and find new funding sources.
Tokenised Payment System
“The fastest way to solve the trade finance gap is to enable the flow of new funds available from financial institutions,” says Lee Tarone, CEO of Envoy. “We built the solution from the ground up, which uses a tokenised payment system to deal with multiple currencies from multiple financiers across variant risk/reward profiles. This opens up rapid and efficient access to the R3 network through our Corda node.”
Envoy basically connects buyers, seller and financiers and allows all parties to view counterparty rating and make informed decisions. How this process works is that buyers, sellers, and financiers are first required to purchase NVOY, a cryptocurrency running on the Stellar network, and then deposit and stake it to become an Envoy member.
Speaking to GTR, Tarone explained that there are two reasons for this tokenised system:
“One, it enables multiple currencies, so this doesn’t just have to be focused on dollars. This creates more liquidity for exporters in developing markets that struggle with local currency availability. We have built a cross-border payment solution that enables us to utilise global payments at endpoints, so wherever it is, we are able to adopt local currency and change that to a tokenised payment solution to then exit in whichever currency you want. The second reason is that through tokenisation we are not governed purely by the banking system.”
Once a purchase order enter the Envoy marketplace, the relevant parties can agree on financing terms, resulting the creation of smart contracts. These contracts are immediately sent off-chain to Corda for financial transactions, digital bills of lading validation and goods verification checks from internet of things (IoT) providers.
In the case of settlement, such as when a shipper ships goods, or a buyer receives goods, a record of the activity is stored on the blockchain. Envoy then pulls this information onto the marketplace and is presented on user dashboards.
“The transparency of the Envoy platform reduces the risk of trade finance fraud which often relies on the fragility of the manual processes and paper documents of the traditional system. Nefarious attempts by both the buyer and seller to double finance a trade will be all too easy to read on the blockchain. Users need only do their KYC due diligence offline thanks to Envoy’s enterprise-grade credit risk rating system,” the company says in a statement.
Envoy's blockchain-powered trade finance platform is set to go live in the second quarter of 2020.
