InkSight 2: Innovations in Supply Chain Finance with DeFi Liquidity
An interview with INK’s partner, Piyush Gupta, founder of Polytrade
Background: Polytrade bridges the gaps in traditional receivables financing by accessing untapped crypto liquidity. It provides real world borrowers access to low interest and swift financing to free up critical working capital, tapped from crypto lenders. Last week Ink Finance is partnered with Polytrade to deliver innovation in supply chain finance with DeFi liquidity.
Polytrade is a pioneer of bringing real-world assets to the crypto world, allowing traditional credited borrowers to gain liquidity from DeFi investors. It is an ambitious and innovative endeavor, congratulations to your team on the recent successful launch. When did you start to have the idea and how did you launch the project from scratch?
I’ve been in Trade Finance for more than 10 years: I found it fascinating when Sandeep Nailwal, Polygon’s Founder, suggested to me to tap into the huge crypto liquidity: we wanted to create a platform aimed to help SMEs (small and mid-sized enterprises) access affordable funding. Leveraging blockchain technology to finance SMEs worldwide had a double implication: democratizing the access to this asset class, allowing retail investors to earn profits on their crypto assets. In a global trade financing gap of ~$1.8 trillions, I founded Polytrade in the first quarter of 2021, a platform that facilitates invoice financing by connecting companies with crypto investors.
Crypto world is still going through explosive growth and being trail blazed. As a bridge between the tightly regulated traditional finance and the under regulated DeFi, how do you manage the challenges from both sides?
With the crypto revolution going mainstream, we created a dual-insurance model, not only offering the classic smart contract insurance; we definitely wanted to offer a product with 0% of default rate, providing credit insurance covering the whole financing and factoring process. While protocols seem to be in a perpetual struggle with regulations regarding the assets tokenization and the deployment of crypto capital into the centralized-finance world, Polytrade keeps its license and headquarter in Singapore, buying credits in a fully regulated process.
The easy plug-and-play for any FinTech and Bank, the transparency, the sustainability and the social responsibility related to the SMEs we are financing, these values have been the main game changer in attracting investors from the centralized and traditional world.
In a different gradient of decentralization, which widely differs among all the DeFi applications, we can assume that stablecoins are the bridge between the decentralized practice and the traditional and centralized one: that’s why they are also used, in the pair of trading in the automated market makers ‘AMM’, as the comparative asset to measure the volatility of the speculative one.
Their double nature of decentralized but not-so-much decentralized, their ability to survive the crypto winter and not dump during the bear market, their central role in facilitating trading, lending and borrowing in the DeFi space, is actually what is making stablecoins a strong safe haven asset class, taking the current market cap to ~$180B.
What roles do you see DAOs can play in the Polytrade ecosystem?
DAOs are enabling a focus on community, rather than just profit; a distributed network of autonomous stakeholders, with transparency where the blockchain captures everything and the organization can’t be manipulated: this is the democratic process we are building to guarantee working capital to worldwide SMEs.
Polytrade has partnerships all over the real-world and in the decentralized-world too. We are financing SMEs directly, as per our pre-existing network in India and Singapore, but we also partner with several blockchain and artificial intelligence driven platforms: this allows us to reach SMEs worldwide. Regarding the DeFi space, we are willing to manage all the invoices’ life-cycle of Polygon $MATIC and tap into the vast liquidity stored in lending and staking protocols which have stagnant amounts and don’t know how to deploy the capital avoiding risks.
The DAO that we, at Polytrade, are building, is an amalgamation of our partners, advisors and investors, from CeFi and DeFi: we see investment banks, funds, clubs, companies, all stitched together via cooperation and commitments.
When you work with an important partner, what are the most critical elements that you look for, aside from the products and services offered by them?
In a partnership, we always expect to be aligned on core values; we are a solution for real-world people, made by real-world people: we expect from the Partner the main integrity and social responsibility that leads our passion and work; we want to see the main commitment, respect and responsibility. We like to see Polytrade and the partner as a small piece in a big picture, on a long term collaboration, aimed to create a safe and trustful Web3 space.
Ink Finance is a financial governance DAO tool. What are some of the specific features that make you decide that it will serve Polytrade the best?
Ink Finance provides a suitable governance framework in which our depositors are protected in any circumstances. It provides the best coverage in terms of financial and fiscal duties, and its comprehensive and rigorous risk management facilities reflect a true understanding of supply chain finance issues. With its Multichain Module, INK will also be able to help us rapidly establish our cross-chain reputation while reaching users on other networks.
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