Ink Finance, Hylobiz, and Fluna: Transforming Trade Finance with Decentralized Syndication

In the fast-evolving landscape of decentralized finance (DeFi), a groundbreaking collaboration between Ink Finance, Hylobiz, and Fluna is pushing the boundaries of how trade finance is managed and executed. This strategic partnership leverages Ink Finance’s advanced decentralized governance framework to bring real-world trade finance into the on-chain environment, offering an innovative, compliant, and highly efficient solution for global supply chain borrowers and institutional lenders.

Redefining Tokenization in Trade Finance: The Role of Fluna

At the heart of this integration is Fluna, a leading provider of Purchase Order (PO) financing. Fluna specializes in providing working capital to businesses that need to fulfill large, confirmed purchase orders but require liquidity to prepare the goods. Traditionally, these loans are secured by physical collateral — such as the goods themselves or other commodities — which significantly limits the ability of borrowers with insufficient collateral to access necessary capital.

Fluna steps in as a fintech credit allocator, advancing payments to its clients, enabling them to fulfill their orders. However, like many businesses involved in trade finance, Fluna’s clients often face barriers in meeting full collateralization requirements, constraining their ability to access liquidity at critical moments. This is where the decentralized architecture provided by Ink Finance becomes a game changer, facilitating access to capital with minimal collateralization while maintaining transparency and legal security.

Hylobiz UAE: A Global Leader in Supply Chain Finance

Hylobiz plays a pivotal role in this integration, providing a cutting-edge debt clearing and servicing platform on-chain, which is integrated with INK’s fundraising and risk management facility. Meanwhile, it also acts as a prime source of high-quality borrowers for the various investors using the Ink Finance protocol, taking advantage of its decade-long deep expertise in supply chain finance. Hylobiz has built a reputation as a trusted partner for top-tier global enterprises, mid-market companies, and financial institutions. They bring to the table a steady flow of supply chain borrowers meeting stringent KYC (Know Your Customer) compliance, undergoing thorough credit analysis, and satisfying all due diligence requirements.

The integration of Ink Finance and Hylobiz allows for the seamless origination, syndication, servicing, and tracking of the loans, providing a robust foundation for on-chain trade finance. By connecting extensive borrower network with the decentralized capital available on Ink Finance’s platform, this partnership introduces a compliant, scalable, and transparent RWA use case that addresses the inefficiencies of the traditional models.

Ink Finance’s Decentralized Syndication Model

The true innovation lies in Ink Finance’s decentralized approach to loan syndication. Traditional trade finance platforms often rely on centralized risk managers and intermediaries to assess and approve loans, a model that becomes increasingly difficult to scale. In contrast, Ink Finance enables professional DAO (Decentralized Autonomous Organization) syndicates to directly negotiate, issue, and manage loans, putting control back in the hands of lenders and borrowers, while complying to regulations.

Key components of this approach include:

• DAO-Based Lending Syndicates: Ink Finance organizes decentralized lending syndicates composed of sophisticated investors, including family offices, commodity trading firms, corporate treasuries, and even social DAOs. These syndicates act as collective investors, pooling capital to fund trade loans for entities like Fluna and its clients. Unlike traditional models, these syndicates operate autonomously, managing the entire lending process without the need for centralized oversight.
• Loan Tokenization with NFTs: Ink Finance introduces an innovative loan tokenization mechanism using non-fungible tokens (NFTs). Once a loan is approved, both the borrower (Fluna’s client) and the lending DAO co-create and mint a loan token, which represents not just the loan agreement but also the underlying collateral, legal ownership rights, and real-world enforcement mechanisms. This structure guarantees that all parties involved in the transaction — borrowers, lenders, and risk managers — have verifiable, enforceable rights over the loan’s collateral in the event of a default.
• On-Chain Transparency and Risk Control: Every loan issued through Ink Finance is fully traceable on-chain, ensuring transparency throughout the lifecycle of the loan. From origination to repayment, all loan data is recorded in real time, allowing lenders to monitor loan performance and verify that all repayments are made according to the agreed-upon terms. Ink Finance’s DAO-elected risk managers oversee compliance and validate the legal and financial integrity of the loans, ensuring a high level of trust and accountability.

Fluna and Hylobiz’s Synergy: Reduced Collateralization, Enhanced Yield

Through this partnership, Fluna’s clients can access trade loans with reduced collateralization requirements, easing the liquidity constraints that often hamper their operations. Fluna acts as an intermediary, advancing payments to its clients, while pledging these loans — backed by physical goods and commodities — as collateral to the lending DAO. This structure allows the DAO to inherit the legal ownership of the loan and its collateral, ensuring a high degree of security for lenders.

At the same time, the yield payments to lenders are managed through the DAO, providing a stable and predictable return on investment for investors. For Fluna’s clients, this integration offers a flexible, scalable way to access liquidity while maintaining the security of their physical assets.

The Role of Hylobiz’s On-Chain Loan Servicing System

Hylobiz’s proprietary VDP (Vayana Debt Platform) is integrated into Ink Finance’s infrastructure, serving as the on-chain loan servicing system for borrowers. This ensures a seamless, end-to-end process for loan origination, servicing, and compliance, allowing Hylobiz’s network of borrowers to efficiently access capital while adhering to strict due diligence and regulatory requirements.

The integration of Hylobiz’s VDP with Ink Finance’s decentralized governance platform creates a powerful synergy, combining institutional-grade compliance with the flexibility of decentralized capital markets.

Key Features of the Integration

1. Lending DAO: Ink Finance’s decentralized lending pools are composed of commodity trading firms, corporate treasuries, family offices, and other sophisticated investors seeking high-quality yield opportunities in real-world trade finance.
2. On-Chain Credit Lines: The platform enables on-chain credit lines, allowing lending clients to establish credit facilities for their borrowing clients, effectively creating decentralized trade banks.
3. Flexible Loan Terms: Borrowers and lenders can negotiate customizable loan terms, including the interest rate, duration, and collateralization requirements. This flexibility ensures that the terms of each loan are tailored to the specific needs of both parties.
4. Legal Enforceability: Ink Finance addresses the critical issue of legal enforceability in DeFi. In the event of a borrower default, the Lead Syndicate representing the lending DAO can enforce the loan’s collateral through legal channels, offering a real-world solution to an issue that has long plagued DeFi platforms.
5. Loan Pool Size and Yield: The initial lending pool for this integration is projected to be $300,000 to $400,000, with a 3-month loan term and an annual yield of 10%. The investment vault on Ink Finance was concluded at the end of September, 2024, with the first disbursement expected to be credited by mid October.

Scaling Decentralized Trade Finance with Ink Finance

Unlike traditional platforms that face scalability issues due to centralized control, Ink Finance’s decentralized structure allows for exponential scalability. The ability to form independent lending syndicates and negotiate bespoke loan terms without relying on a central authority opens the door to true decentralization in trade finance. Whether for Fluna, Hylobiz, or future partners, Ink Finance provides a flexible and scalable platform capable of accommodating diverse borrower-lender relationships across multiple sectors.

A New Chapter in Trade Finance and RWA

The Ink Finance x Hylobiz x Fluna integration marks a paradigm shift in how trade finance is conducted. By combining decentralized governance, real-world asset tokenization, and transparent on-chain risk management, this collaboration creates a scalable and compliant solution for global supply chain finance. Ink Finance’s ability to connect institutional capital with real-world borrowers through decentralized mechanisms positions it as a leading player in the DeFi space.

As this integration scales, it not only highlights the power of decentralized finance but also underscores the potential for DeFi to become a bridge to the real economy, unlocking new capital flows and creating opportunities for businesses and investors alike. This partnership is a clear demonstration that the future of trade finance lies in decentralized, transparent, and scalable platforms like Ink Finance.