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Problem

  1. Access to working capital for FPO and also farmers

    1. Farmers and therefore FPO as well are credit invisible

    2. Credit assessment or risk models don’t exist

    3. No prior information to create new models

  2. Cost of capital high (interest rates high)

    1. Because lack of access to formal financing options

    2. High risk associated with agriculture business

    3. lack of transparency and business plan

Crypto ideas

Assumptions

  1. Conventional financial organisations will never deal directly in cryptocurrencies/ tokens

  2. Farmers won’t understand decentralisation concepts and won’t be able to participate in native crypto currencies like bitcoin (like putting resources to do mining to ear bitcoin)

  3. There are investors around the world in crypto space who would want to invest in a philanthropic plus less risky return

Module 1: Data entry for KisanCoin (KC)

  • Who can mint KC:

    • Farmers when they

      • Enter data:

        • slowly changing data: contact details, farm details, livestock info, equipment and

        • every season data: farming activity like input procurement, selling information, materials and consumables….

      • Earn rating and positive reviews from data consumers

      • Contribute to the data pool that could be with farmer collective (some percentage of total coins)

      • Some percentage of <base coins> is deposited back

    • Curators (within farming or rural community at large)

      • Enter data on other farmer’s behalf

      • Verify/ validate data

      • Earn rating and positive reviews from farmers and/or data consumers

  • The coins are given for each type of information entered as per an algo tailored to ag specific thing

    • There are fixed coins for slowly changing info like contact details or farm (add one more farm or livestock and you get x coins) - called base coins

    • The changing information for each season can earn a total amount of coins like X and these get divided by some number for previous seasons, for example 2: so if I have been entering for last four seasons the complete farming activity information the total tokens would be X(1+0.5+0.25+0.125) = 1.75X. This creates a reward for recent info but do not let the rewards for previous entries to become zero.

    • The coins can also be earned for entering information about the other farmer (some percentage) thereby incentivising the local curators

    • Farmers can also be verifiers and they can verify the information entered

  • KC is a “transferrable” linear coin, that is, it is created and then used for some transaction which can burn it but it is also transferrable to certain actors

  • Transactions:

    • Directly transfer the data: KC will be associated with data entries made and each data being accessed leads to KC being burnt and the value is determined by the market. Note that some percentage is back with the farmer for unchanging data.

    • Transfer from the pool/ collective:

      • Type 1 transactions are raw data accessed by someone through the pool/collective

        • KCs are burnt

      • Type 2 transactions are aggregate data accessed by someone about the pool/ collective

        • KCs are not burnt but the amount contributed to the pool defines the dividend

    • A KC holder with data (farmer) can buy KC from another farmer (whose KC will be burnt)

      • This is to provide a way for the farmers in a geography or crop where there are not many institutional buyers to buy KC

Module 2: Liquidity pool using INRT or local stablecoin

  • INRT is a stable coin which is always equal to INR

    • It can be used by people to pay just like INR but through the app not involving any bank or anything

  • The FPO can create a requirement of liquidity pool (money that they need as working capital) and they can get in INR from INRT on an exchange

  • The FPO also has details of member farmer’s data (non personal) and also some rating and reviews

  • Alice is a user in crypto world and she has 10 Ethers which are currently valued as 10000 USD at 1000 USD each, she sees a philanthropic drive which helps farmers in India with some returns (not very high but something that is not risky and decent return she can’t get easily in US)

  • Alice converts her Ether as a collateral to get some INRT (let’s say 1 USD = 75 INR, so a total of 750000 INRT, she gets 700000 INRT and rest is kept)

  • Bob gets referred and commit 5 more ethers and so on

  • The FPO or any farmer group gets INRT in their account

  • The way liquidity pool works is that the INRT is given without interest but transaction fee is charged for every transaction which is minimal and the amount is disbursed at specific time for specific activity. For example, a farmer needs INR 10000 for buying seeds, he/she takes that amount by paying INR 100 as transaction fee. Next he needs 30000 for labour, he/she takes that amount from the liquidity pool by paying INR 100 as transaction fee and so on. When they return the money they pay 100 ruppe as transaction again

  • The transaction charges go as the return to Alice along with the amount whenever is given back, so she gets her 700000 plus lets 300*100= 30000 for 300 transactions done

  • Alice goes back after six months, convert 700000 INRT to 10 ethers which had probably shot up to 1100 USD and she earned ~ 5 % extra return

Module 3: Margin position for FPO stock

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