Whitepaper

The Ideal Payment Infrastructure for Physical Asset Chain Financing

Preface

In recent years, driven by global trade and digital transformation, the market size of supply chain finance has continued to grow. In 2023, the global supply chain finance market is estimated to be approximately 10 trillion,and it is expected to grow to nearly 10 trillion, and it is expected to grow to nearly 20 trillion by 2027. This includes traditional supply chain financing tools (such as factoring, reverse factoring, bill financing, etc.) and emerging digital supply chain finance solutions (such as blockchain-based supply chain financing, AI-driven financial products, etc.).

Since its inception, supply chain finance has rapidly gained popularity in the market due to its unique model. However, its potential has not been fully realized due to certain limitations.

Specifically, bank credit is often restricted to a limited number of entities, core enterprises lack sufficient technological support, and transaction processes are not transparent. These issues have become bottlenecks in the development of supply chain finance. Blockchain technology, with its features of distributed accounting, storage, immutability, decentralization, and openness, offers a solution to these problems. Therefore, exploring the application of blockchain technology in supply chain finance is highly significant.

Supply chain finance involves the intervention of commercial banks, leveraging the credit of core enterprises to introduce low-cost capital flows to upstream and downstream small and medium-sized enterprises (SMEs) in the supply chain, thereby addressing their funding gaps and maintaining the efficient operation of the entire supply chain's capital flow.

However, in the actual development of business operations, traditional supply chain finance still faces several challenges:

1. Information Blind Spots in the Supply Chain

2. Limited Number of Creditworthy Enterprises

3. Inability to Verify Information Authenticity

   • The authenticity of information is questionable, making it difficult for financial institutions to accurately assess asset logistics information and define risk levels.

   • This may lead to trust crises between enterprises and between enterprises and banks.

4. Opaque Transaction Processes and Low Costs of Fabrication

These issues have significantly constrained the further development of supply chain finance. There is an urgent need for new technologies to address these challenges, and blockchain technology has emerged as a solution in this context.