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Revolutionizing Trade Finance with Digital Promissory Notes

Oct 21, 24

Revolutionizing Trade Finance with Digital Promissory Notes

Switzerland – October 18th, 2024 – A pioneering trade finance transaction has successfully demonstrated how  digital asset technologies support trade financing. The transaction involved the purchase of USD 49,518 worth of fabric from China by Done, a Swiss buyer, and was financed by Commodity Polska sp. Z o.o., a Poland-based liquidity provider. The objective was to provide the buyer with 120-day short-term financing using a digital promissory note as collateral.

The transaction was digitised on the basis of IMDA’s TradeTrust framework and was tokenised on XDC Network. The promissory note was created on Yodaplus’ DocuTrade™and funded via XDC Trade Network (XTN)™, both compliant with ICC DSI and UNCITRAL’s MLETR. The promissory note was cryptographically signed and its ownership was transferred to the liquidity provider by XDC Trade Network to the funder. The funding process was supported by Propine, a digital custodian regulated by the Monetary Authority of Singapore (MAS). Propine secured the funding of the transaction in exchange for the title of the digital promissory note. This delivery-vs-payment process allowed the buyer to pay the seller upfront, ensuring liquidity and security for both parties.

Blockchain Innovations and Efficiency

This transaction introduced several technological advancements, such as “invisible wallets,” allowing users to sign and transfer documents without complex blockchain interactions. It also integrated with Propine, a MAS-regulated digital asset custodian, ensuring full KYC/AML compliance. The smart contract at the core of the system acted as a decentralized, trusted intermediary, facilitating secure, trustless transactions. The entire process was completed on XDC Network in less than five minutes, significantly reducing the time traditionally required for such transactions.

Key Benefits

This transaction demonstrated significant benefits, including time reduction, cost savings, and enhanced security. The transaction’s cost was negligible, with blockchain fees amounting to only $0.00000033. The blockchain’s tamper-proof nature ensured the integrity of the promissory note and maintained full ownership control throughout the transaction. Additionally, XDC Trade Network allowed global liquidity providers to access funding requests instantly, enhancing liquidity access and offering a secure, low-risk asset class for financiers.

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