Financial Inclusion for Unbanked Livestock Farmers
What pain point does Sentinel Chain solve?
Millions of people in developing countries in Asia and South America do not have access to standard formal banking services such as storage of funds, efficient payment channels, loans, insurance and investments. According to the world bank, it is estimated that over 73% of the world’s poor, or over 2 billion people in the wold have no access to formal financial services.
These unbanked and underserved communities (eg. farmers) are unable to secure a bank account due to a variety of factors; mainly a lack of a stable income, verifiable assets and formal credit score.
Livestock farmers especially, are in severe need of insurance as their livelihood is heavily dependent on farm animals such as cows and sheep, which are vulnerable to diseases and accidents. As the sales cycle for the meat and dairy products derived from these animals tend to be long, having access to loans will also help them tide through the interim period.
Sentinel Chain is a very interesting ICO project, with a noble mission of perpetuating global financial inclusion by providing the unbanked with an alternative gateway to much needed financial services at affordable rates. The Sentinel Chain project initially targets the niche group of livestock farmers.
This is achieved through a novel concept of tokenizing livestock such as cows, chickens and sheep etc. on the blockchain, thereby harnessing the hitherto untapped potential and value of livestock (known as ‘dead capital’) as usable and fungible assets and legally-recognized collateral.
Sentinel Chain is the world's 1st platform that allows the use of livestock as collateral.
Smartphone penetration rate in developing countries is surprisingly high, and farmers with smartphones will be able to utilize Sentinel Chain technology easily through the CrossPay mobile wallet app.
For Livestock Farmers
For financial service/insurance providers
Before the advent of blockchain technology and cryptocurrencies, such a concept is not possible, as centralized database cloud servers are nowhere near as effective as blockchain technology when it comes to recording data in an immutable way and providing natural incentives for a financial ecosystem to flourish.
Sentinel Chain has been in development since mid 2017.
Sentinel Chain has identified the following Southeast Asian countries as its initial target markets based on beneficiary needs, government receptivity, and the network and expertise of the team:
Laos, Cambodia, Myanmar, Indonesia, Philippines, Vietnam, Bangladesh. Other regions targeted in the pipeline include Latin America and the Caribbean.
Using cattle as an example, there are 15 million cows in Myanmar and 17 million cows in Bangladesh, with each cow valued at USD $500 on average. That amounts to $16 billion USD worth of untapped ‘dead capital’ that could be part of the Sentinel Chain ecosystem, in these 2 countries alone. Lenders working with Sentinel Chain can expect short term loans of 1 month – 6 months for USD $500.
Use Case Example for Sentinel Chain?
John is a livestock farmer with 2 dairy cows that produce milk for sale.
John joins Sentinel Chain’s pilot programme and tags both cows using Sentinel Chain’s tamper proof, time-stamped and geolocation-equipped RFID chips, with the assistance of livestock insurers. His cows are now tokenized on the Ethereum blockchain via Sentinel Chain and can be verified using the CrossPay mobile wallet app.
1 dairy cow contracted a disease and died overnight. John’s income suddenly diminishes. Fortunately, he had bought livestock insurance earlier from a local provider. This information is recorded on the blockchain via Sentinel Chain. The local insurer comes to the farm, and using Sentinel Chain technology verifies that the dead cow is insured. John receives $1000 USD as his insurance payout. This helps him quickly source for and buy another cow, while supplementing his existing income.
One day John wants to buy an oxen to plough the field and grow rice to sell, but he has no spare money, so he needs a loan. However, John has no bank account, no credit score and no friends or relatives are willing to lend him money. He is afraid of borrowing from illegal 'loan sharks' or gang syndicates, as doing so will compromise his family's safety and anyway interest rates offered are very high.
Instead, John approaches the regulated local lenders for capital, pledging 1 of his own cows as collateral. The local lender checks his Sentinel Chain profile, verifies on the blockchain record that he indeed owns a cow, and loans him the value of 1 cow (worth USD $500).
The local lender converts USD $500 worth of their local currency tokens (LCTs) into Fiat and passes it to John. The loan agreement is published on the CrossPay blockchain. Now John has money to buy an oxen, which increases his farming productivity and income and allows him to pay back the debt with interest in a few months.
In all situations, John the farmer does not need to deal with any complicated cryptocurrency process and he can handle transactions in Fiat currency.
It is important to note that the process of deciding loan and interest amounts is a business decision by the insurance companies themselves, not Sentinel Chain. For example, to value how much the cow is worth, some important attributes include: breed, weight, age, milk content, purpose, size.
Sentinel chain merely provides the technology and platform to make this credit network more efficient and transparent.
Does the project have a MVP (minimum viable product)?
Yes, Sentinel Chain has already developed the CrossPay mobile wallet application, which is meant to be easily used by participants in the Sentinel Chain ecosystem, especially the unbanked. Currently, the mobile wallet is only available on Android.
The CrossPay Mobile wallet app provides identity, livestock asset tracking and financial services for the unbanked user. Users can track the identity of farmer, the geolocation of the livestock, the attestation body and the insurance expiry date.
Sentinel Chain has conducted a successful small-scale pilot run with livestock farmers. You can watch a demo of the CrossPay mobile wallet app and the tamper-proof RFID tagging here:
What is the utility of the token/s?
To understand the utility of SENC and LCT tokens, we first need to understand that on top of the base Ethereum blockchain, there are actually 2 blockchain layers in the Sentinel Chain ecosystem.
First, there is the consortium Sentinel Chain (based on top of the Ethereum blockchain), which facilitates the B2B financial services marketplace.
The next layer comprises the multiple local CrossPay blockchains (1 for each country), which facilitate transactions between the unbanked farmers and local lenders and livestock insurers.
Sentinel Chain is the bridge between the multiple CrossPay private chains (closed loop payments) in each country, the Ethereum blockchain on which Sentinel Chain is built on, and the financial service providers that the livestock farmers seek loans, insurance and other financial services from.
SENC is the currency used for transferring value globally across borders and it is the lifeblood of the Sentinel Chain ecosystem. SENC can be used to exchange for LCT - Local Currency Tokens.
LCT is pegged to the local currency of the different countries and is used within the multiple CrossPay private country chains.
When the farmer wants to insure his livestock and approaches an insurer, the livestock insurer purchases SENC tokens and converts them into LCTs on the local country's CrossPay blockchain and orders RFID tags as well to tag on insured animals. The livestock insurer also needs to pay in LCTs to store this information onto the CrossPay blockchain.
Foreign lenders purchase and lend SENC to local lenders and these SENC are converted to Crosspay LCTs (Local Currency Tokens), which in turn are converted into fiat as loans to their own customers/farmers.
SENC can also be used as a donation to sponsor local NGOs to build up critical physical infrastructure (clean water, proper roads) to a level where financial inclusion will be more effective.
In general, SENC tokens are utility tokens that can be used for 6 main services:
In our opinion, the team has taken pains to clearly show that SENC tokens function as utility tokens and do not behave like securities at all.
Sentinel Chain estimates that tokens will be transferable in early April. The team has hinted that they are already talking to a few exchanges.
Token allocation and use of funds
What are the team's credentials?
Sentinel Chain is founded and led by a seasoned Financial services and FinTech professional - CEO and CTO Roy Lai. Sentinel Chain is also backed by the parent FinTech company (also founded by Roy) called InfoCorp.
Roy Lai was the former project director for Singapore’s interbank money transfer project FAST, which enabled clients from participating banks to transfer money online with high speed (taking just a few seconds) and limited hassle. This specific FinTech experience and his vast network within the regional financial industry should serve him well in expanding Sentinel Chain’s presence in Southeast Asia.
Roy is very knowledgeable about his project's subject matter, as seen from his AMA. He also comes across as sincere and hardworking, making concerted efforts to answer the community's questions on Telegram.
In the recent KYC data leak debacle, Roy was also proactive in addressing the problem on Telegram and conducted himself with utmost professionalism.
There are 12 other members that make up the Sentinel Chain team, but only 1 person is in charge of Blockchain development. With proceeds from the crowdsale, we sincerely hope that CEO Roy will beef up the blockchain expertise in his team. For a blockchain project of such scale, 1 professional is definitely insufficient.
How reputable are their advisors?
Sentinel Chain has secured the advisory services of 2 well-known figures in the crypto space; angel investor Dr. David Lee and Bo Shen of Fenbushi Capital fame. Dr. David Lee has advised many wildly successful ICOs such as TenX, PundiX, and STK token, and it appears Bo Shen and the Fenbushi Capital money often wisely follow Dr Lee's lead in the selection of ICOs.
It is heartening to see that they have also engaged other advisors with legal, financial, innovation and country-specific expertise and experience.
We strongly feel that Sentinel Chain should bring on board an official advisor with deep knowledge of the Southeast Asian agriculture industry, specifically livestock, to better understand the needs of their target beneficiaries.
Who are their current and potential partners?
Fenbushi Capital and iGlobe Partners bring to the table the security and gravitas of traditional VC funding.
Making use of the strong networks forged during his financial career, Roy has managed to obtain a Memorandum of Understanding (MOU) with Malaysia's largest banking institution Maybank, for settlement and foreign exchange services. This is an impressive feat considering Malaysian's tough stance against cryptocurrencies last year.
Another partner secured is Medishares, the world’s first global marketplace for mutual aid. Medishares can be integrated into Sentinel Chain as a financial service provider.
Their biggest blockchain partnership so far is with VeChain. This partnership allows livestock data from the consortium Sentinel Chain and private CrossPay chains to be available on the public VeChain. Parties that are not part of the Sentinel Chain ecosystem can still verify where the livestock is coming from etc, along with other metadata.
Sentinel Chain has also partnered with attestation companies and as livestock insurance providers in these countries. There is already an extensive network of agents on the ground (typical of the agriculture industry in ASEAN countries), so Sentinel Chain deals with these middle-men instead of looking for and liaising with farmers directly.
Recently announced local business partners include CloudWell and Green Delta.
CloudWell is a FinTech company that will utilize the Sentinel Chain platform and technology for the tagging of livestock, while Green Delta is the biggest livestock insurance provider in Bangladesh and will provide insurance policies to livestock farmers through Sentinel Chain and the CrossPay mobile wallet application.
Based on their initial strategy for partnerships, it is clear that Sentinel Chain understands to a large extent the importance of having the right partners in ensuring their financial inclusion project is a success.
The local financial service providers on the ground especially, have to operate in a fair and transparent way, lest the unbanked farmers end up being exploited instead. These local agents are also in the best position to educate the farmers on basic financial literacy and how to use the CrossPay mobile wallet application.
In his AMA with OhHeyMatty, Roy mentioned that his team will continuously explore meaningful blockchain partnerships that can add more value to the Sentinel Chain ecosystem.
We believe some interesting collaborations could be with Bloom - which is creating a global credit score attestation system, and Kyber Network, which will allow any token to be converted into SENC tokens easily and vice versa, ensuring easy participation in the Sentinel Chain marketplace.
How good is their marketing and PR?
Overall, Sentinel Chain has a decent amount of online exposure, but there is still substantial room for improvement.
For instance, Sentinel Chain is not mentioned on any crypto-related media such as The Merkle, NewsBTC, CoinTelegraph or Coindesk etc. But at least they are featured in Chainhammer.io !
In terms of branding, though the term ‘Sentinel Chain’ sounds cool (somehow flashes of X-men Days of Future Past and Terminator comes to mind), it does not immediately relate to the project’s core value proposition – to further financial inclusion for the world’s unbanked livestock farmers.
Brand nomenclature in and of itself is not terribly important, if the overall branding and marketing is appropriate and suitable. However, it is evident that Sentinel Chain’s graphics and videos are rather cartoonish and simple, which fail to convey the serious nature of what Sentinel Chain is attempting to accomplish.
This is no doubt an attempt to reach out to a larger social community. But we believe in order attract the high level of institutional investors, financial service providers and media coverage required to nurture their fledgling FinTech/AgriTech project, Sentinel Chain needs to position themselves as a serious and credible outfit from the outset. After all, the livelihood and financial inclusion of millions of unbanked farmers are at stake.
They could have easily made a much better video for the RFID tag demo. Why are viewers made to look at the demo from the opposite end, upside down? Another instructional video should be made as well showing the end-to-end process of using the CrossPay mobile wallet application for other services.
We believe the interesting fact that Sentinel Chain is the world's 1st and #1 platform that allows the use of livestock as collateral is a really good marketing rallying point.
Some marketing resources have to be set aside to assist local agents in educating the unbanked masses on how to use the CrossPay mobile wallet app. It is better to err on the side of caution, rather than assume every farmer is able to grasp technology at the same pace.
How hyped is this project?
Sentinel currently has average hype, with only around 12,000 followers on Telegram and 1400 Twitter followers. However, there was a big rush to register for Sentinel Chain's KYC whitelist, causing the website servers to experience extremely heavy traffic load and the KYC to be postponed by a few days.
Their partnership with the massively-hyped VeChain was a good decision both in terms of connecting their consortium Sentinel Chain to other blockchains outside its ecosystem for public cross-border access, as well as bringing more awareness to the plight of the unbanked in Southeast Asia and the Sentinel Chain mission of financial inclusion.
With the recently announced Proof-of-support campaign, we can expect to see Sentinel Chain being talked about more often in crypto-related media.
Risks and concerns? Competitors?
Risk of default
The most glaring risk involved is the risk of default by the unbanked farmers, who mostly do not have a credit history or credit score.
However, according to Roy in his AMA interview, farmers typically receive loans as part of a collective of farmers. If one farmer doesn’t pay, his neighbours and friends from the collective have to pay up on his behalf.
This translates to tremendous social pressure for the farmers to fulfil their debt obligations, contributing to an average default rate of only 2% in most areas.
In addition, farmers are putting up their tokenized livestock as collateral, which should allay the fears of many investors.
Weak Telecomm signal strength in rural areas
Although smart phone usage is surprisingly high even in rural farming areas, Telecomm signals might not be strong and extensive enough. This poses a critical problem for the effective use of any kind of FinTech, or web technology for that matter. There is no quick solution to this issue apart from the local government investing more resources to develop basic telecommunications and internet infrastructure.
Sentinel Chain should continue to work with local government representatives to lobby for projects that will aid the establishment of better infrastructure for the unbanked communities.
Sentinel chain is primarily a permissioned consortium chain, meaning apart from the unbanked, only validated enterprise/institutional parties with SENC tokens are able to participate in its ecosystem. SENC is probably going to be used mainly by businesses, which at this moment do not partake in heavy crypto usage, compared to retail investors.
The utility of SENC tokens appears to be only directed at solving the problem of unlocking livestock assets and helping livestock farmers. Sentinel Chain does not have an all-encompassing service to verify other physical goods, like what VeChain or Wabi or Waltoncoin is attempting.
However in our view, the agriculture industry is already very large and challenging enough to be lucrative and resource-intensive for Sentinel Chain.
There are other blockchain projects that share an agenda of financial inclusion and aim to provide financial services, especially credit, to the unbanked.
For instance philippines-based Hero Token, with its existing business PawnHero, is creating a peer-to-peer credit platform to provide the unbanked access to both collateralized and unsecured loans.
The Ripio Credit Network project focuses first on South America, providing a decentralized, smart contract-operated global unsecured loans ecosystem for the unbanked, with cosignors as local guarantors.
There is also the Telcoin project, which similar to Sentinel Chain, targets Southeast Asia. Telcoin distributes TEL to local mobile networks through an incentive model and Telcom operators will subseqeuntly sell it to their subscribers. Subscribers such as farmers without bank accounts will now have cryptocurrency that they can use for remittance and other financial services.
Sentinel Chain differentiates itself from the aforementioned offerings mainly by how it targets the niche problems faced by livestock farmers, and converting livestock into transferable, fungible digital assets on the blockchain.
Sentinel Chain also allows insurers to publish their policies and information on the blockchain via the Sentinel Chain dApp platform, with SENC /LCT tokens as payment.
Apart from its proprietary technology and expertise in this market, the Sentinel Chain project has strong partnerships with the existing local insurers. As such, there are very high barriers to entry for any future company that tries to compete with Sentinel Chain in this unique market.
Sentinel Chain is among the first movers in this untapped market. If the team is able to efficiently balance the needs of all the stakeholders in its ecosystem and become the primary blockchain and FinTech authority providing financial services to the unbanked, the potential upside can be very high.
We agree with Roy's strategy of enhancing the supply side first (farmer education and tech infrastructure) and negotiating with more lending companies later. Demand from lenders and insurers will soon follow if Sentinel Chain can demonstrate that its concept is successful in at least its first country project.
Sentinel Chain will have the opportunity to solidify more synergistic partnerships, both in the blockchain space and among mainstream businesses.
What is the project's purchase potential?
We applaud Roy and his team's efforts to create a more financially inclusive world.
What they are trying to achieve is very ambitious and a huge undertaking. If successful, Sentinel Chain will help improve the lives of millions of underprivileged farmers by leaps and bounds and truly show the world how blockchain can be a force for good.
Based on our Chainhammer weighted average scoring model, Sentinel Chain obtains a good 80.2% and we believe their mission is a worthy cause to support.
We wish you good fortune in the years to come!
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