TradeShift Cash Tests MakerDAO (DAI) Stablecoin To Tokenize Unpaid Invoices
MakerDAO To Use Its Stable Coin DAI Through TradeShift To Speedup Payments For Small Business Owners
In an effort to popularize the ERC-20 based stable coin DAI, its developer MakerDAO has initiated a pilot program with a supply chain management startup called TradeShift. The two aim to create a system that will speed up payments of small business owners using the blockchain technology.
MakerDAO has announced that it is now testing its stablecoin DAI with the cash solution TradeShift Platform to try and tokenize unpaid invoices from small business owners. These invoices will then be sold to crypto investors at a discount enabling the business owners to receive their payments in advance.
TradeShift has also confirmed this announcement and is looking forward to its successful implementation. Currently Tradeshift Cash solution enables small business owners to discount their invoices as asset types to traditional investors. Investors get their profits from the margins when the invoices are paid for at their maturity. It is this same concept that the two platforms want to utilize but now on the blockchain.
MakerDAO’s DAI stable coin was launched back in December 2017. It is among the most popular stablecoins in this industry at the moment. Its developers designed it in such a manner that its value will always adjust to that of the U.S dollar despite the market shifts his avoid possibilities of volatility inherent with ordinary cryptocurrencies.
MakerDAO founder, Rune Christensen in an interview with CoinDesk said that this project is set to bring in more cryptocurrency investors to this type of asset using the existing TradeShift platform. The more investors, the more this asset type is set to grow.
According to Christensen, the process will be very simple. A small business owner will use the TradeShift platform to change an unpaid invoice into a DAI token at a discount. This token will then be sold to a crypto investor whose fund will then be converted to fiat currency and credited to the business owner’s account. The crypto investor will later cash in on the token when it is fully paid for and earn from the margin.
The project ties its hope to the hope that the price of a stablecoin such as DAI can remain constant for a relatively long period of time since it adjusts to the value of the dollar allowing more business owners to discount their invoices and receive upfront payments. Tradeshift co-founder Gert Sylvest said during the announcement that this discounting would be impossible to use in other digital currency considering the slim margins of the trade receivables. A volatile digital currency can not thus be used as an instrument of settlement.
While this is a promising development for both small business owners and crypto investors, MakerDAO and Tradeshift still have more for both investors. They additionally want to initiate a project in which the small business owners and the digital coins investors will have an open platform in which they will interact directly. This platform will further help to increase market liquidity. Christensen say that this platform will be ideal since it will present a lot of capital revenue to the business owners while the investors will have a lot of options to choose from.
It is good to note that this pilot project comes just a month after Tradeshift announced its plan that will see it expand into a blockchain after its $250 million Series E funding in which Goldman Sachs was at the forefront.