The Envoy model represents a revolution in the trade finance industry, getting rid of paper, giving access to more businesses, offering transparency and security and speeding up the process to boot. But one of Envoy’s most exciting innovations is the potential for institutional trade finance experts or fund manager to spin up tokenised funds that would focus on a specific trade finance product or a mix of products.
Envoy makes this a possibility with the ENgage Gateway, which such funds could use to plug directly into Envoy and start trading on the platform. Creating such a security-tokenised fund (STF) would provide many benefits over more traditionally structured funds:
*They are asset-backed, and so institutions are able to quickly raise capital through the sale of their security token.
*The token itself can inherently track ownership, profit and net asset value (NAV).
*A system can be created that automates dividend/incentive distribution.
*The fund structure is more secure and precise, lowering administrative strains and costs.
By its very nature, an STF will be consistently reflective of the NAV. Records of these values are then immutable, time-stamped, traceable and highly secure due to the nature of the underlying blockchain the security token is built upon.
This level of accuracy allows for a simple calculation of monthly (just as easily, daily or hourly) NAV. It can be set up such that automatic non-periodic payments can be made to investors as a return of capital/dividend income based upon meeting incremental NAV benchmarks (high-water mark), or as an immediate percentage of profits from each completed contract. Further, the contributions and distributions can easily be tracked through the purchase or redemption of security tokens.
Once configured, the ENgage Gateway can act as an automated bridge. It will allow the third-party funds to exchange their security tokens or other deposited value for NVOY tokens and use that value as collateral (as a financier) for financing. The STF would then be able to engage with Envoy’s AI through the ENgage Gateway to find contracts and balance portfolio investments according to their specified investment strategy and risk profile.
The Gateway would be able to match these preferences against the various trade finance types available and take into account the ENsure risk ratings of the contracts within each product class. After the contracts are claimed and executed off-platform, the data from these transactions will be fed back to the Envoy platform and the ENgage Gateway will relay the profits earned back to the fund.
Once the first fund has been created, multiple funds, with varying portfolio strategies or risk profiles, can be quickly and easily copied, pasted and immediately plugged into Envoy’s ENgage Gateway to take advantage of different trade finance products. These can even be run autonomously through Envoy’s AI.
If you weren’t convinced yet that introducing blockchain into the world of trade finance is a game changer, the possibilities of initiatives like STFs should get you there. Envoy is a platform for direct trading, but the potential for STFs to be created and function through Envoy using the ENgage Gateway makes it highly flexible, catering to the needs of specific experts and managers.
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