Blockchain And AgTech: Connected Platform for Farmers Meets CeDeFi
In 2021 alone, almost 1 billion people go to bed hungry every night. Experts say that by 2050, humanity will need to feed 9.7 billion people, our methods for changing this statistic need to change drastically. One-third of the world’s population are smallholder farmers, operating subsistence level farms, typically smaller than 5 hectares, and struggling to produce enough food to feed their own families.
When communities are struggling to sustain themselves, their impact on the economy of the region is diminished. Produced resources are spent to feed people within the community. Food, produced by small farmers in developing countries, is barely enough to satisfy their own needs. If equipped with a smarter approach to farming, technology, network, assistance, each farmer (small and big) could increase their harvest significantly, enough to successfully export some of their yield, it would positively impact the economy of the region — as well as the global community.
Blockchain and impact
Decentralized technology established itself as an alternative for underbanked and underfinanced. Residents of countries with weak financial systems and unstable economies can gain access to internationally accessible funds. However, currently many DeFi projects assume a stance of opposing institutional practices (like KYC), which leads to opposition from established centralized organizations.
For blockchain to deliver global impact, we need
- Cooperation of decentralized and centralized services: to get governments to encourage decentralized projects and participation and even leverage blockchain to improve economies — rather than redirect resources from national funds;
- Applications that are tailored to developing countries. By removing themselves from the struggles of the developing world, residents of wealthier countries are dragging themselves into the corner. Climate issues, world hunger, health threats affect the entire world, and developing countries simply happen to feel the burden most. However, it is the question of time — and according to experts, we are on a small timeline.
- Good causes meet strong business models. The blockchain community constantly talks about solving the tragedy of commons and contributing to charitable causes. A promising application is yet to come along. Public-good projects lack funding, transparency, expert guidance, network, and most importantly, a sustainable business model.
- Scalable technology. When the ecological challenges (soil infertility, natural disasters, pathogens etc.) make it difficult for the region to sustain communities, the technology helped propel the economy forward. We need a technology that can kickstart the “industrial revolution” in societies that rely on agriculture as their main way of sustenance. Could this be blockchain?
Revolutionizing the agriculture
Can technology bring a positive change?
History gives a positive answer. Technology helps alleviate the pressure created by ecological challenges, democratizes market interactions, assists in adhering to regulation. it is a powerful medium for education and a tool to automate operations and increase productivity.
It might seem that technology can’t have an immediate impact; after all, centuries ago, changes set in motion by the Industrial Revolution took a lot of time and didn’t have immediate positive impact on communities. However, now we are armed with the experience of past breakthroughs and much better technology. it is in our power to bring a technological revolution in agricultural communities that are still confined to old-fashioned, low-yield practices.
What about profitability and individual gains?
The opportunity to contribute to public good might appeal to some individuals, but others might be more concerned with their own well-being. Charitable projects often target low-income users and because of that, are confined to limited business models (grants, advertising, partnerships). Those who don’t cooperate, don’t risk ending up supporting a potentially underfinanced solution, and therefore, gain an advantage. A common issue in ESG-type strategies is underestimating the importance of stable profitability of its use cases.
To avoid losses for its users, a public-good-oriented application needs to find a dominant strategy — no matter how the public treats the social issue (if possible, with maximal independence from decision-makers) the application should bring value, both to users and investors. In other words, the goal is to make money for those who support the cause.
So, the goal is to generate profit for those who contribute to solving global hunger and improve lives in less-developed communities.
Blockchain as agriculture’s dominant strategy
If our goal is to benefit participants who contribute to the public good, we need an incentive that would appeal to the majority (millions or billions of participants). Financial rewards are the most universal ones — but which kind? Government currencies are backed by governments and their military services, so participants from different countries may object to using the same currency. The use of multi-currency rewards leads to the need for currency conversion, which in turn creates reliance on middlemen.
A decentralized solution has the potential to:
- Create a worldwide accessible environment for global participation with a digital token, accessible with no commission
- Distribute rewards to all participants with little to no commission with algorithm-controlled schedules and amounts
- Provide transparency on where the contributions go and immediately track results
- Reward everyone who contributes to the cause proportionately to the value of their contribution
- Connect participants in developed and developing countries, closing the gaps between better- and worse-off communities
- Become a secure, attack-proof, cryptography-protected environment for conducting a new revolution — from agricultural to AgTech
- Exploitation free and ecological shift — unlike with previous revolutions, the blockchain-driven one will not require immediate sacrifices like low wages, intense labor, and pollution
- Science-driven approach: decentralized community gathers some of the brightest minds who are working on creating ways to make a change by working smarter, not harder.
Why not another technology or system?
The definition of a dominant strategy is a situation where one player has an advantage regardless of how their opponent may play. In this context, it would be the solution that would be most effective, regardless of how other markets and technologies develop.
To disrupt agriculture, the dominant-strategy technology should be flexible enough to merge with other innovations (like AI, IoT, Cloud computing, biochemical, genetics innovations, etc.), adhere to various regulations, and respond to natural, social, economic shifts. The market of rewards, on which the solution will operate, should yield assets that are highly uncorrelated with traditional assets or have a negative correlation (those that grow in value when others go down).
Blockchain has the potential to be a dominant strategy for agriculture because:
- it is been proven to converge well with many technologies, financial and economical models, and asset types
- Blockchain assets are uncorrelated with traditional assets like gold, real estate, stocks. Ideally, the blockchain asset should be uncorrelated with other crypto assets, which is also achievable.
- Blockchain, due to its decentralization, is highly flexible. it is possible to work on one chain or integrate many chains, or build a connecting chain that connects many ecosystems. With blockchain, it is easy to manage multiple modules, and include new ones anytime.
- Blockchain is highly accessible and is not confined to any location. it is common for blockchain startups to be supported by international communities and have no relation to a specific national economy.
- Decentralized Autonomous governance: DAO is an organization that is run by a decentralized community where everything is decided with a consensus. With smart contracts, decentralized modules, and proof-of-legitimacy algorithms, it is possible to reward legitimate participants and keep encouraging lawful collaboration.
- Increased objectivity: blockchain relies on algorithms and cryptography for running its operations. Rewards, governance and punishments are assigned by widely known rules. All participants can count on the cooperation of the majority. Blockchain is designed to make attacks nearly impossible by establishing strong consensus systems — and these design specifications derive origin from proven mathematical models.
Full decentralization, however, is an unrealistic option
We already established that expecting all participants to collaborate without a proper reward for doing so is unrealistic — even for the noblest cause. Now, we need to introduce a new constraint — interactions with the outside world.
To be decentralized and autonomous, blockchain is a self-confined technology. It uses its own rules without checking in with local regulations and traditions. However, participants do not live in a decentralized world: regulations and gatekeepers are a reality for farmers all over the world.
In agriculture, this gap between centralized and decentralized environment is especially clear — particularly in developing countries — and here’s why:
- Agriculture depends on unpredictable factors. Natural conditions, state regulations, crop specifics, cooperation with farmers and their employees are governed by complex and not easily computable interactions.
- Complex regulation. If a decentralized application is to have any substantial power, it has to comply with regulations on food quality, safety, land management, etc.
- The need for education, due to poor prior exposure to technology. Small farmers in developing countries don’t have enough resources to use sophisticated tools to manage their work. A solution, thus, should work even on a simple mobile phone — but without compromising the quality of support. Even if the solution is technically available, users will still need education — and this can be accomplished only in human-driven interactions, which are, once again, far out of code’s depth.
- Low trust for innovation. If communities have not been exposed to technology before, much less to the decentralized one, they will not be inclined to bet their livelihood on unknown innovation. Rather, they will turn to local mentors, organizations, unions, friends, or centralized institutions. Cooperation with locally established organizations is crucial for getting trust from participants.
- Preventing governmental reactions. Not all governments have been equally welcoming towards decentralization. In developed countries, regulators regularly voice concerns about the lack of oversight over the market. In developing countries, which are often governed by not-so-compromising regimes, the probability of a negative reaction is high. Decentralization that brands itself as the alternative to institutions will hardly be seen as neutral or positive by lawmakers.
So, this is a new challenge — not only a technical but also a regulatory one. The progress in cooperation with centralized authorities is what determines the actual depth of penetration of technology and its efficiency.
Ce + De: CeDeFi in Agriculture
The real-world challenge can be solved if the decentralized providers manage to get centralized actors on board. While the decentralized solution will solve as a backbone where individual and institutional actors can collaborate, the institutional providers will lend a hand when it is time to solve a pressing outside challenge that cannot be managed by an on-chain algorithm.
The collaboration between blockchain applications and financial solutions with institutions is known as CeDeFi. it is the cooperation of centralized and decentralized providers that benefits both parties.
Dimitra’s Approach To AgTech and CeDeFi
Dimitra is an established AgTech innovator that incorporates blockchain in its Connected Farmer Platform. The project is focused on decentralizing the key areas of farming and bringing them to small farmers in developing and developed countries. The modular architecture of the platform allows users to manage their finances, optimize workflows, join communities, educate themselves on best practices, and receive fair compensation in globally accessible rewards.
Dimitra’s blockchain is a network through which small farmers are connected to large-scale institutions. The Connected Platform is a CeDeFi ecosystem, which means it prioritizes full compliance and open collaboration with large-scale organizations.
- Decentralized modules, available on a mobile phone: farmers can manage their operations, keep up with certifications and regulations, generate reports and financial documentation, track efficiency, etc;
- A decentralized token: Dimitra’s token is a reward, issued to those who support the cause of the platform and can be used to gain access to unique agricultural offers, data feeds, analytics, scientific insights. The market, where Dimitra’s token will be running, will be valuable both to retail and institutional investors. With the growing variety of offers, the token value will increase accordingly, making the token an appreciating asset.
- DeFi + centralized collaboration = CeDeFi: ambitious blockchain projects can meet resistance from governments and banks if they fail to assure full compliance and negotiate fair cooperation. Dimitra, being incubated by ZenX (the first CeDeFi incubator) has a wide network of institutional partners and compliance experts. The decentralized technology will be supported by institutional opportunities, frameworks and infrastructure.
- Real-life impact. Prior to launching the token, Dimitra has already been supporting over one million farms and has signed up another 17 million all over the world. Introducing a decentralized ecosystem with a custom token even to existing users would be enough to create a large market with potentially enormous value and active participation. In this scenario, blockchain meets an already existing community of highly interested users. For years, Dimitra has worked on providing fertile soil for implementing big changes — and blockchain is the tool that allows setting in motion an incredible momentum.