This project is aimed at unlocking the potential of millions of micro and small businesses (MSMEs) worldwide, enabling them to sustain employment and to improve the distribution of income, ultimately democratizing global trade.
Global trade does have a problem, with a global trade finance gap of about $1.6 trillion globally (fact checked) and 56% of SME trade finance proposals are rejected. The root of the problem lies in the lack of trust between counterparties who don’t know each other and the typical solution is the letter of credit (LoC), that is outrageously costly (up to 10-15%) and involves a daunting process. Typically:
- After negotiation, buyer and seller sign a contract.
- The buyer’s bank supplies a credit letter to the seller’s bank, which guarantees the seller will be paid when certain conditions are met.
- The seller gives the goods to a carrier and receives a bill of lading.
- The seller provides the bill of lading to its bank and receives the payment.
- The bank gives the buyer the bill of lading, so that he can present it to the carrier and receive the goods.
In order to solve the global trade finance gap problem, i.e. the inability of financial institutions to support buyers and sellers of goods across countries, an open B2B ecosystem will be created. The ecosystem will consist of traders, 3rd party providers and 3rd party developers on the top of a smart-contract blockchain-based platform, currently in beta version.
In this way, MSMEs worldwide will be able to trade globally in trust, operating in a faster, secure and depersonalized way. They’ll be able to minimize trade hassles and to boost their revenues.
ModulTrade has already developed a prototype which is in beta.
ModulTrade’s Background and Team
The idea was born at MIT in the fall of 2016 and when the team was formed. They understood that blockchain could provide a solution, as smart contracts could be used to replace this workflow process in a blockchain-based B2B platform, replicating the LoC at a lower cost (let’s say 1% instead of 10-15%, with a faster, smoother end-to-end process).
Since then, our team has been passionately working on this project from the two sides of the Ocean, with the goal of giving all businesses, no matter their size or location, the same opportunity to build, develop and grow their companies in the same way as big corporations. The team has grown to over 15 professionals worldwide. According to Evgeny Kaplin, CEO of ModulTrade, the culture of the company is focused on freedom, agility, and flexibility and brings together diverse cultures and professional backgrounds.
One team member really stands out: Evgeny Kaplin. Kaplin is the CEO of ModulTrade and has spent over 17 years in trade finance business in large banks and corporates like Sberbank or Cargill and has experience of working for McKinsey. Besides that, he graduated with honors at the Russian State University in ‘Economy’.
Token Sale and Usage
Evgeny Kaplin: “We decided to launch a token distribution program since our crypto token, the MTRc, has its own reasons to exist beyond financing the project. It is designed to become a global B2B complementary currency, running parallel to the traditional fiat currencies. It has the role of a trade enabler and of a third-party application enabler on our B2B platform, meaning that every user will be able to execute trade in real-time, globally and in a cost-effective way and it will be used for charging usage fees for third parties’ solutions developed on the platform.“
Users on the platform will be able to trade in many fiat currencies and cryptocurrencies, while the commissions will only be charged in MTRc. In this way, its demand will also be linked to the trading volumes and to the new tech solutions developed on the platform.
ModulTrade’s market positioning is unique. Its most direct competitors are B2B marketplace platforms offering cross-border trade services. Indirect competitors include B2B e-commerce platforms, banks and decentralized supply chain platforms.
With few direct competitors and limited competition in its target market, ModulTrade has scope for maintaining a competitive advantage due to its ability to help users / customers build more effective supply chains for their business, by leveraging global value chains’ data and with its offering which is based on a wide range of services throughout the whole B2B trade cycle.
- There is indeed a big gap in the global trade finance where ModulTrade is a first mover to solve this issue.
- Users on the platform will be able to trade in many fiat currencies and cryptocurrencies.
- ModulTrade enables companies to have higher revenues and solves a lot of trust issues.
- Large pool of potential users because almost every company is eligible to join the platform.
- Beta version of platform is in place.
- Acquiring a substantial number of users is one of the biggest challenges. One of their first priorities is to reach a critical mass of users to enable self-maintained growth.
- Businesses tend to avoid big changes, especially changes to a new technology like blockchain.
Evgeny Kaplin told us, “We have developed the beta version of our product and we plan to launch a fully functioning platform in the first quarter of 2018 in three EU countries and to introduce a Trade&Reputational Network to the market, which will allow MTRc holders to finance and guarantee B2B trade in first half of 2018.
By the end of 2018 / 2019 we expect to reach a critical mass of users which will create a network effect in our ecosystem.”
In our opinion, ModulTrade has taken the advantage of being a first mover to try to close the gap in global trade finance. Blockchain will help in restoring those trust issues. However, it will be a tough challenge to acquire a substantial number of users. We do like the fact that it’s both possible to trade in fiat or cryptocurrencies. The team looks pretty promising with many industry experts and highly educated people involved. It’s also a big plus that the ICO has a beta version of the project.
More Info and Technical Details
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