Harbor recently launched an innovative Supply Chain Finance program utilizing decentralized finance for a leading manufacturer of flight simulation equipment. Decentralized Finance, or DeFi, is a financial system independent of centralized banking and currencies and is unchartered territory for supply chain finance.
Global trade finance provider Harbor launched the initiative with Centrifuge, which provides the gateway to access Decentralized Finance liquidity through their suite of open source tools.
The pilot program was structured under a two tranche SPV with Harbor taking the junior position, while several individual and institutional investors assumed the senior tranche. Although the capital was raised in DAI, which is a stablecoin, Harbor hedged the potential USD volatility through a 60 day forward to match maturities. Assets originated under the Supply Chain Finance program were tokenized and sold to the SPV under a true sale receivables purchase agreement.
Harbor joined forces with Centrifuge on the deal to gain a better understanding of the mechanics of DeFi and its application in financing trade. Although not Harbor’s core focus currently, they see potential in utilizing crypto assets as a source of liquidity for future trade finance facilities.
“For the last few years, Harbor has been interested in distributed ledger technology and its use case in international trade, but we’ve just been watching from the sidelines until now,” said Bryan Maloney, CEO, Harbor. “There has been a lot of conversation surrounding DLT and its role in trade finance. I believe that DeFi is the most relevant application of this technology as of today.”
Centrifuge is the protocol for decentralized asset finance. Asset Originators can access bankless liquidity, and investors can earn attractive yields from an open marketplace of asset pools. Centrifuge provides the gateway to access DeFi liquidity using their suite of open source tools: Tinlake, Centrifuge Chain and a P2P Protocol.
Powered by the community, DeFi aims to build the most efficient finance grid that distributes money in a fair and trustless way.