The VeChain Foundation announced a deal with UK inventory monetization fintech Supply@ME (SYME) to use the VeChainThor public blockchain. So far, SYME’s solution has used a private blockchain, and it has worked with major Italian tech infrastructure SIA.
With ongoing supply chain disruption, many companies need to keep higher stock levels than usual, which ties up a lot of funds.
Together VeChain and SYME now plan to use public blockchain, stablecoins and NFTs as part of the solution. Ultimately the goal is to tap into a different group of investors, people interested in digital assets and cryptocurrency. Doubtless, one of the arguments will be that there are physical assets that underpin this.
Traditionally the financiers have been banks, specialist trade finance firms and hedge funds. But SYME turns the inventory into investible funds, which are also sold to family offices. Currently – unrelated to the VeChain deal – the company has around £165 million in warehoused goods to be financed in its pipeline.
While trade finance typically has low default rates, there have been some massive fraud events relating to warehouse inventory financing, with big banks losing billions.
VeChain will provide up to $10 million of investment to finance the initial transactions.
The concept behind SYME’s ‘non-credit financing model’ is the company with the stock sells the inventory to financiers and repurchases it when it’s ready to use or sell it.
If a company tried to finance inventory sitting in its own stockroom, the risk of fraud would be very significant. Instead, SYME’s subsidiaries have created a series of funds that either invest in goods held in third-party warehouses or goods that are imported goods that are currently in transit on container ships.
While one might imagine that the stock is tracked using IoT, that’s only on SYME’s agenda for 2024. In the meantime, it integrates with ERP and warehouse management systems, as well as manual files. The frauds we referred to earlier were committed when companies pledged warehouse receipts more than once.
The initial VeChain trial transaction will take place next month, with a full inventory monetization platform by December this year, including NFTs representing ownership of physical stock items, DeFi applications and a governance protocol.
Meanwhile, VeChain focused on business applications from its original launch in China. It has partnered with several high profile brands, including Walmart China, Bayer China, BMW Group and has strategic partnerships with quality assurance firm DNV and PWC.