Traxia Unlocks Trade Financing for SME; Aims to Use Cardano Blockchain
The project is counting on blockchain technologies to liberalize the system of trade financing.
Those who have started a business know that small and medium-sized enterprises (SMEs) are not welcomed with open arms by banks when it comes to securing credit lines and trade financing. Lenders prefer big companies with extensive assets and proven creditworthiness.
Even though the share of SMEs reaches 99% in some economies (according to Eurostat data), they often struggle to survive, deprived of the favorable conditions available for their larger rivals. Access to finance is among the most critical problems for SMEs in East Asia, according to a World Bank survey, and the situation in other regions is not much different.
Using blockchain technologies such as smart contracts to build a standardized financing system will allow SMEs to obtain low-cost financing issuing digital assets collateralized by a trade, which is the equivalent to commercial paper and an instrument so far available only to large corporations.
Traxia is a solution set to level the playing field in trade financing by reducing the complexity of structured financial products and providing additional liquidity to this market segment.
Traxia in a nutshell
- Sellers upload their invoices to the system and use them as collateral to get financing in fiat money for a small fee.
- Buyers review the invoices and confirm that they are willing to pay them in due time as agreed by the real-life contract between the seller and the buyer.
- Issuing providers convert confirmed invoices into smart contracts. They act as intermediaries, representing the interests of both buyers and sellers and taking care of due diligence and the technical process.
- Liquidity providers are funds or institutional investors. They provide financing to the sellers and then re-sell those obligations in a marketplace to smaller investors, earning the spread.
- Listing providers are exchanges that accept issued smart contracts onto their marketplace and make them available to professional investors.
- Investors come to the marketplace to trade the digitalized invoices with the aim of earning a profit.
The project currently utilizes the Ethereum network but will migrate to the Cardano blockchain in Q4 2018.
The Traxia token (TMT) is purely a membership token giving access to the platform and the services. Each time a seller adds a new invoice to the system, TMT has to be bought at an exchange to settle access fees. Within the ecosystem, tokens are used to reward issuing and providers offering technical services and maintenance of the platform.
Traxia ICO details
The Traxia Foundation launched a crowdfunding campaign targeting proceeds of $15 million. The ICO was supposed to be live until June 2, but the hard cap was met 3 weeks ahead of schedule. Now, TMT tokens are expected to be distributed on June 4 and start trading on exchanges on June 6.