How tokenized cows are revolutionizing agricultural finance in Brazil – Bitcoin News

Tokenized livestock loans begin in Brazil

Tokenization enables more use cases, providing innovative ways for small entrepreneurs to obtain financing in private credit markets.

The Engendro Velho Farm, located in Paraná, Brazil, received a loan of almost $20,000 using a herd of 10 cows as collateral, using decentralized technology to digitize each cow’s information.

The farmer received the Financial Rural Product Note (CPR-F) worth nearly $100,000 from BMP, a direct credit company, and the deliverables (each cow) were assigned to Target FIDC, a financial technology company that recorded the transaction using each animal’s data.

Although this type of transaction is not new, cow tokenization and tracking allows farmers to obtain better terms, as creditors can review the condition of the herd at any time, reducing the risks associated with such a loan.

Humberto Brenner, director of Target FIDC, pointed out that this element can cause a cow to fetch up to 2.5 times the price it would have in similar unmonitored deals. “Monitoring eliminates this uncertainty” he declared.

Thiago Martins, CEO of Cowmed, told Valor International that this was the first such transaction registered with B3, which is also preparing to launch tokenized stock trades, and that it opened a new opportunity for struggling farmers to access new sources of credit using live collateral.

“We took the cow, which is a real, tangible asset, and transformed it into a digital asset backed by a unique code monitored in real time. This digitization allows for formal registration with B3 as a personal asset.” Martins explained.

Monitoring also makes it possible to replace each cow with another in the event of the animal’s death, the loan being valid as long as there is a 120% guarantee.

“The transaction gives farmers access to credit with more attractive prices and higher limits. We want to connect farmers and financial institutions through a new alternative.” » he declared.

Cowmed provides live herd monitoring solutions, helping farmers receive heat alerts, identify health changes and track dietary trends. At the time of writing, it serves more than 1,400 farms, with more than 900,000 cows connected to its network, which uses smart collars to monitor each animal’s data.

Martins expects up to 20% of its monitored flock to be involved in loan transactions over the next two years, with credit volume of $78.5 million.