Loan tokenization

Finance
Payments
Loans

The solution dramatically reduces the time, costs and complexity entailed in novation — the conversion of a debt into a debenture — by automating key processes and reducing the risk of counterfeiting by means of blockchain-powered smart contracts.

Loan tokenization
Problem

Major metals companies must simultaneously deal with a large number of contractors. A company’s treasury service is one of the divisions involved in operational cash flow management, interacting with other market participants.

Often, situations arise when a treasury service offers contractors conversion of a debt emerging from a sales or rent deal into a debenture. This is called novation and is governed by article 818 of Russia’s civil code.

Currently, novation involves the issuance of a paper contract. Meanwhile, paper document flow entails the following issues:

  • High labor costs of creation and execution control of debt obligations
  • Risk of loss or counterfeiting of paper documents
  • Low speed of operations involving paper documents
Solution
  • An automated system based on the Waves Enterprise platform has been created. Unlike the current procedure of treasury services’ interaction with contractors, in which a paper debt bill is issued and transferred to a contractor, treasury employees can run a digital document flow in the system’s account for the conversion of contractors’ debts into debentures.
  • The E-Loan system combines digital document flow, a distributed data storage registry and distributed transparent business logic executed by smart contracts.
  • The system’s decentralized architecture facilitates transparency and reliability of mutual payments between participants, as well as fail safety for the entire system.
  • All operations for debt novation into a debenture with subsequent digitalization and repayment are controlled by smart contracts that ensure the observance of all conditions written into them.
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Business value

Implementation of the system’s business logic by blockchain-based smart contracts facilitates substantially reduced transaction processing costs, ensuring full transparency and confidentiality of transactions.

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All data is stored on the blockchain and is accessible to system participants in accordance with their access rights.