Amplify is a decentralized supply chain finance B2B2C infrastructure that runs on Ethereum. It aims to improve the traditional credit granting system for supply chain finance by making it easier to use and more accessible. On-chain fairness and transparency will make assuring asset value and legitimacy a painless process with the help of governance.
Compared with other Ethereum-based asset lending agreements in the space, Amplify is unique in
Supply chain finance (SCF) automates the entire process of performing transactions as well as tracking invoice approval and settlement processes.
This model provides multiple advantages for all parties concerned: buyers, suppliers, and financial institutions such as banks. Working capital is maximized, as invoices issued by suppliers to buyers can be used as a means to obtain short-term credit and reduce payment cycles.
SCF has several unique characteristics: loans in this practice are self-liquidating as they are repaid using the money generated by the assets used to purchase them.
Further, financial institutions typically hold ownership of companies’ goods as a guarantee for repayment, with the enterprise having to redeem the goods in batches through margin calls in order to sell them.
Lastly, in SCF, financial institutions would typically only grant credit to core enterprises, who would then allocate credit lines to upstream and downstream businesses throughout the supply chain.
According to a report from S&P Global Market Intelligence (2020), revenues from global SCF have grown to between $50 and $75 billion in 2019, with income continuing to grow in the sector by 3-4% even during the coronavirus-caused downturn in trade finance in the early months of 2020.
Looking towards Mainland China, the South China Morning Post reports that the Chinese market for SCF alone is poised to be worth $2.27 trillion, with a large swathe of growth attributable to the many small- and medium-sized enterprises that supply large blue-chip buyers.
Despite the many opportunities within the SCF market, digital asset technology remains an unleveraged strength for the market to further build upon.