Money is expensive. Mechanisms such as inflation and interest fees made fiat currencies an expensive mean. Worse, the price of cash varies around the world, and the most impoverished countries pay the heaviest toll. People living in countries with a weak fiat currency and large inflation, such as Argentina and its Pesos know by experience how it can affect their purchasing power.

Unsurprisingly, we observe a significant correlation between cryptocurrency adoption in a given country and inflation. Developing markets with unsteady financial systems, such as Nigeria or Zimbabwe are also quite active in the cryptocurrency ecosystem.

Central Bank Interest Rates around the world — 2011 (source)

Luckily, cryptocurrencies and decentralization are breaking the world barriers, and money will only be the first step. Many others are to come, but for today I would like to focus on one specific use case of money: lending for agricultural projects. It might seem highly specific, but it makes a lot of sense considering the patchwork of global financial services made available by cryptocurrencies.

PROBLEM

Farmers all around the globe frequently need access to financial services to develop their activity. Currently, they can only get their fiat currency (susceptible to inflation) and have to face extremely high-interest rates. Besides, a lot of farmers in developing countries are part of the “unbanked”, people without access to a bank account and the services it provides. Because of the lack of capital access in their geographical areas, they have to accept unreasonable interest rates to get the required financing to raise their crops.

At the other end, many private or institutional investors in developed countries now want to invest in socially responsible projects, but they don’t have direct access to it.

SOLUTION

EthicHub’s goal is to connect the dots. With the platform that will act as a decentralized intermediary, farmers will gain access to secure, accessible and ethical loans from investors across the globe to develop agricultural projects with a positive impact. On the other hand, investors will be able to invest directly in positive impact projects, offering competitive interest rates for the farmers with an affordable risk for the investor.

An overview of the main benefits of EthicHub (Source:Whitepaper)

Careful attention has been given to the platform’s mechanisms to ensure consistency with EthicHub’s philosophy:

Only positive impact projects are listed

are listed No intermediary: the money changes hand via Smart Contracts

Fund Recovery : in case of default, a fund will purchase investors’ credit rights in exchange for the principal amount. (see diagram on the left)

: in case of default, a fund will purchase investors’ credit rights in exchange for the principal amount. (see diagram on the left) Only-in-Success Fees : The fees on the platform are charged only at the time of repayment.

: The fees on the platform are charged only at the time of repayment. Local network and connections: the team is already active as producers, buyers and financial intermediaries of agricultural production in rural areas of Mexico, which will help to raise initial awareness around the project.

While the technical solution is well-thought of, the problem is not only a matter of code. Indeed, a local relationship will be needed for projects discovery and to identify high-quality projects. To that end, local nodes (project recruiters) will make the identification and evaluation of the projects since they know the borrowers personally.

TOKEN

In the future, the ETHIX, an ERC20 token will be the currency used on the platform. Here is a very clear overview (from the Whitepaper) of the investment flow. It lets you see the different actors, their roles, and the currency used for the different transfers: