Bite-size Case Study

EthicHub: value-creating blockchain

Published on November 30, 2023 Originally recorded 2023   7 min
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Let's see an example of blockchain usage where it creates value for participants in the ecosystem achieving social impact purposes as well as business purposes. EthicHub is a crowd-lending platform of high social impact, connecting small unbanked farming communities with international lenders and direct buyers with blockchain technology. In other words, EthicHub is a peer-to-peer marketplace which connects farmers with lenders and direct buyers. The company was founded in 2017 in Spain. The next year, it was awarded for the biggest impact project by the ship to be venture Capital Fund. Since then, the company has rapidly evolved. Recently, gained 400 farmers projects on the platform, transferred $2 million in loans, and has helped over 1,000 families in 21 communities.
Why they did it? The main purpose was to bridge the gap between investors around the world and unbanked farmers in developing countries, by minimizing interest paid by the farmers when returning the loans and maximizing profitability for investors. The main issue to be addressed was the exclusion problem in the traditional finance system. Sadly, the majority of the people excluded from the financial system are those who needed the most, the poorest. According to a world bank, they account for almost two billion people around the world or about a 1/4 of the global population. The majority of the unbanked are smallholder farmers. They're the cornerstone of our economy and produce more than a 1/3 of the global goods and services. Excluding them out of the financial system is not only immoral, it is also unfair, as modern technology can mitigate the risks associated with lending them capital. Decentralized finance and blockchain technology enable people around the world take part in solving this problem. How they did it? The company developed an international platform, which allowed to invest directly to local farmers. Based on blockchain technology, the solution provided clear and transparent ways for investments and built trust with investors. By creating collaborative and successful relationships, the platform has allowed to pull more investors in agricultural finance and help to build stable profit and economy what they wanted to achieve. More than 1 billion small farmers globally get an opportunity to build their own property, have a stable source of profit, and improve their welfare. A more inclusive and prosperous economy has created additional opportunities for investors.