SÃO PAULO — A Brazilian financial technology company, Tanssi, is rolling out a government-backed blockchain project that involves microloans for farmers in São Paulo, following the pilot of a local currency in the city of Santo Antônio da Alegria.
During an interview with CoinDesk at the Blockchain Conference Brasil in São Paulo, Luis Dal Porto, Tanssi’s business development director, revealed that the microcredit service is expected to launch next month and that a mobile application for its use is already live.
The project, called TerraLogs, is supported by the municipality of São Paulo and offers up to R$15,000 ($2,800) in quick loans to small rural producers. The system runs on blockchain infrastructure built with Tanssi, which allows developers to create dedicated blockchains, or “appchains.”
According to Del Porto, the project
Although blockchain technology is used in the service, it only does so on the backend.
“In practice, the blockchain is not even visible. It is a mobile application that they offer to producers. They also have physical payment machines,” Dal Porto told CoinDesk. “It’s a completely closed ecosystem that they’re proposing to better control how credit is used and to mitigate risk.”
The fintech behind the project chose Tanssi over public blockchains like Ethereum or Solana due to concerns about performance and costs, Dal Porto added. With public funds involved, the team prioritized predictable transaction fees and reliability, two things that are harder to ensure on permissionless public networks, which have in the past experienced issues with congestion, volatile transaction fees and, in some cases, downtime.
“A classic problem with any public blockchain is that there are times of bottlenecks, times of more expensive transactions. This takes away something that is very important to them: predictability,” Dal Porto explained. “They need to be confident that they will spend this specific capital, and it won’t be more than that. If they charge 5% and, for example, the fees go up or down, that’s a cost they can’t predict.”
Although Brazil’s central bank has suspended the full rollout of its digital currency Drex, supporters of the project expect municipal and private blockchain initiatives to continue to develop in parallel.
The Santo Antônio Project was announced last year and uses a token system to distribute municipal aid, such as food aid, through a closed ecosystem that restricts how and where funds can be spent. The tokens, accessible through a mobile app or physical payment terminals, are programmed to block purchases unrelated to the intent of the aid, such as gambling on sports betting apps.
São Paulo’s microcredit program should be operational next month.
