Tokenized real-world assets set to bridge $2.5T trade finance gap — Here’s how

Combining traditional and crypto liquidity on a blockchain-based platform, Tradeleaf makes global trading more accessible and efficient to SMEs underserved by conventional banks.

Despite being the primary source of financing for small and medium enterprises (SMEs), the traditional banking system rejects more than 45% of trade finance applications annually. Furthermore, application processes require a high level of documentation, especially in international trade.

Yet traditional trade finance remains open to fraud and human error from paper-based workflows. Research shows that the trade finance deficit reached $2.5 trillion in 2022 due in part to inefficiencies and risks arising from outdated practices.

Blockchain technology can digitize and automate trade processes to enhance transparency, efficiency and security while addressing traditional pain points like fraud and extensive paperwork.

Supporting SMEs overlooked by big banks

Tradeleaf, an all-in-one blockchain-based trade finance ecosystem, merges traditional and crypto liquidity to facilitate global trade. The platform employs smart contracts — self-executing agreement codes that ensure trust — to create an independent, secure and transparent trade finance network. Tradeleaf uses a digital ecosystem approach to innovate trade finance, making it affordable and interoperable at all stages of the deal and logistics lifecycle.

For example, when a T-shirt trade occurs between a supplier and a buyer who does not know each other, an insecure environment occurs. Tradeleaf uses digital assets as collateral to ensure mutual trust and fulfillment of obligations.

While the platform guarantees that the supplier will be paid upon delivery, it also assures the buyer of receiving their goods after payment. The buyer can continue to use his capital until the T-shirts are accepted, and in the meantime, the seller is protected from the risk of non-payment.

Tredeleaf offers an end-to-end platform where participants can take on three different roles. Source: Tradeleaf

The Tradeleaf platform provides a three-layered ecosystem that contains traders, service partners and liquidity providers.

The first layer of Tradeleaf includes sellers and buyers who publish commercial agreements and invoices to seek financing. They utilize Tradeleaf’s tools to digitize documents, communicate with counterparties in encrypted settlement rooms, analyze performance and track shipping processes. The platform meets parties whose buying and selling orders are matched, and liquidity providers come in next.

Tradeleaf offers a global network that grants traditional and alternative liquidity providers access to trade finance. While banks and financial institutions represent the conventional side, venture capitalists (VCs) and crypto investors using the decentralized finance (DeFi) model constitute alternative lenders.

At the final layer are service partners, software and service providers who provide personal expertise, industry knowledge and innovative tools to customers.

Integrating traditional business with crypto

Aiming to transform the trade finance industry, Tradeleaf enables holders of its native token, TLF, to participate in transactions backed by real-world assets (RWAs) — physical assets with intrinsic value. Tradeleaf’s tokenization model supports physical products traded and enables stakeholders to profit from transactions.

Tradeleaf aims to make global trade easier for everyone. Source: Tradeleaf

The winner of the best startup at the AIBC/SIGMA Summit 2023, Tradeleaf also announced partnerships with five banks that are committed to providing financing to customers using the native TLF token as collateral. Subsequently, TLF was listed on the MEXC exchange and Coinstore, generating over $1.25 million in revenue in 30 days.

Tradeleaf’s main goal is to close the huge trade finance gap through digital assets. With a network of over 1,000 regulated clients and over 500 brokers in over 100 countries, Tradeleaf works to integrate traditional fiat business methods with crypto efficiency.

As blockchain-based platforms broaden their networks and enhance their technological capabilities, the future of trade finance is poised to become more accessible and secure. This transformation can potentially streamline trade processes and reduce the constraints imposed by traditional financial systems.

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you with all important information that we could obtain in this sponsored article, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor can this article be considered as investment advice.