OtterTank | CropiFi | September 2023 Edition

foreign [Music] this might be the image that some of you think about when I say the word Farmland but the next slide um actually what's often overlooked that founded over the last few years has become a very internationally contested for asset class where it's a huge institutions as well as high net worth Ultra eye Network individuals such as Bill Gates are really competing with Farmers to to buy a family next slide please they do that for a variety of reasons very simply it's a supply and demand issue so we're growing population we only need to eat and farmers are main source of food at the same time funding is getting increasingly scarce due to urban areas expanding erosion Etc so that's a simple investment thesis next slide please caught up in the middle of all of this is Farmers like this guy behind me from from Friesland was also they're looking for alternative ways of financing their business and kind of competing in this new environment another group that's being left out are retail investors which are simply being priced out of founded Investments next slide please so that's where I come in with cropify I aim to we have shopifying to basically build a platform where I connect retail investors and and Farmers basically with financial products that benefit both parties next slide and yeah to to do that in my opinion tokenization of Farmland is the very first step and a key move to basically bring liquidity to this asset class next way and the farmer could set certain prerequisites to this deal in the smart contract before like a minimum holding period or the way he wants to basically distribute a premium to these investors for for the investment duration next slide please um yeah another nice benefit of tokenization and the blockchain is landing tools you could open Landing pools where Farmland owners whether they're retail investors or Farmers could collateralize their farmland and basically take out a loan and it's also maybe a nice tool to really incentivize sustainability you could open a pool where only stratified organic farmer could be collateralized and the pool could have a lower interest rate which might be maybe an interesting treasury management tool for a refi now um yeah to just burn it sustainable um let's say yield on your new capital next slide please um so yeah where am I with propify it's basically just me at this point so I'm really looking forward maybe to reach out to some people that are interested in agriculture and finance and blockchain uh to to come out to me and to speak to me I'm looking for for team members there's a lot of legal queries that need to be addressed if you have any advice for me on that and lastly development I have an agricultural background myself so if you have blockchain developer and you feel intrigued by that please reach out to me and that's it thank you very much foreign exactly what Farmers today is there a problem for funding a new performance or how are their financing Department today well today it's basically with with loans and interest rates I guess but I mean interest rates are coming up and they're just increasingly competing with huge investors that have institutional Capital available to snap up any fund that comes onto the market so I thought it would be a nice tool using the blockchain to basically connect retail investors with farmers and then together they could maybe yeah stand up against I mean I'm not trying to evaluate to make these huge institutions villains but I had to have a better chance in the in this market and what's your background exactly in agriculture so uh I've studied agribusiness and right now I'm doing a master in organic agriculture got it okay so today it's hard for Farmers to get a load at the bank and try to expand their land yeah yeah I would say so and also Banks often don't understand how sustainability works and how you could maybe incentivize that with yeah certain yeah like I said with the like a sustainable organically certified lending pool for example Banks don't really understand that how you could yeah off or use Finance as a tool to also incentivize sustainability in farming um and I think the blockchain and smart contracts Etc is really nice way to kind of put that into practice and also find an audience for that over the over the blockchain I was willing to to invest in it got it okay um and have you spoken and done any market research spoken to Farmers that are actually wanted to tokenize their farmland and so five monies mostly spoke to two investors um or basically to to retail investors um myself active in the Realty Community it is basically the same concept with residential real estate and I see a lot of people and want to invest in farmland and at the same time we have this farming background more or less from from my academic background and I just saw a perfect match to not just basically invest but also give it some kind of purpose um so I think it's a very good fit and the investors I read in the white paper that it's four to five percent interest on the Farmland if they invest is the yield right um so I think I grabbed that from there's one or two web two companies that do a similar kind of approach and I grabbed this kind of I grabbed it from them but you can have a whole range of different return on investments depending on we can check with the audience is there any in the audience that would take a four to five percent yield in crypto and investing in token as Farmland raise your hands so that's that's two out of two out of 50 maybe so 350. so yeah that's making a number to start with okay so I'm not going to head over to the next Church all right thank you I find it important um but from what I've read there is a lot of agritech out there that farmers just don't use that the technology is too overwhelming or it's just too burdensome to deal with how do you anticipate Farmers would use this if they use it yeah exactly that's why I basically started out this project thinking of investors and I think that would still be kind of a way to enter the market and then yeah get known to Farmers for basically buying farms and kind of have some kind of network effect um but yeah I think onboarding Farmers onto the blockchain is difficult um so yeah you have to make it yeah very easy not a techy environment if they need to download metamask and then do all these kind of steps I think then you already lost them so you need to have some kind of user experience that's very friendly and easy to use um and as someone who uses crowdfunding platforms I find it quite easy to do it without crypto and without blockchain so how do you intend to make it a good experience and necessary to use blockchain yeah so I I mean I see that and that process is basically the same but for me it's more about the opportunities you have afterwards so you have these here to be a transactions you you basically can do you can sell your shares you can collateralize your your assets and these things are not really possible and I mean they're possible in the web 2 environment but not in a peer-to-peer kind of manner right it's the company that's or the crowdfunding platform first has to allow it um and make it it's very centralized to basically their uh their reach whereas in the blockchain you it's more open there's can Capital can come in from all kinds of directions and so does the farmer have any token Holder have any decision making power over what happens with the land yeah and so I mean usually the way this works is that there's a minimum investment period so you would already have to kind of uh yeah communicate that there will be let's say 10-year investment period where the this Farmland is basically not bound by the farmer and then in that period it could be you could make it tradable on secondary markets maybe but then after 10 years it would somehow the farmer would have to be sold again in the real life um um I was asking about who is allowed like does the token holder get to make any decisions with how the land is used and um and I think you answered my other question yeah um I think it makes it more difficult but of course I think in the future uh there's so many governance kind of structures you could set up and and kind of interesting uh Dynamics and you could kind of introduce them to these environments crypto environments and make maybe make it a website where you can somehow incentivize users to use their tokens to vote on certain uh practices that are being used on the farm but I think that's more for the future than for now as now it's more the aesthetic kind of investment that you do once and then you maybe don't have that much control of what's happening at the farm level um but more you can still basically sell it on secondary markets or collateralize it that's basically what the options you have which are not usually given to you right now as an investor in the web 2 space in the family sector and my last question before the other judges uh ask theirs um you refer to the US often or mostly with your uh with your presentation do you intend to launch this in the US first how do you anticipate this being done or is that why you need a legal so I've faced all my legal uh research basically on Realty and they they exist in the US they do it in the US in the same way that I explained with these legal wrappers I know that this kind of way has never been challenged in court but it works uh so far um and also I have done uh some work for basically founded investing funds in the US so that's where I have a network of let's say land Brokers and I already know how it kind of works secondly it's also compared to let's say Europe Netherlands Germany Western Europe where we are right now U.S is much more interesting when it comes to agricultural Investments than than Europe and is one of the few geographies that also has pretty clear yeah regulations and iron clubs land rights whereas when you maybe go to somewhere else it's more difficult and then yeah okay um so I have a question for you yes and then I have some follow-up questions based on how you answer that question okay so so the question is this what advantages are there to using crop fire over a traditional fund structure you mean like the the structure that the fund is using or like as an investor because because what what cropfy is doing it reminds me of what a agricultural hedge fund or agricultural fund might do is they invest in different uh farmers and uh farmland and companies and so forth and then they have outside investors that come in and then have a share of the portfolio just like uh fanet does just like cyber Capital does for cryptocurrency right so because you still need to comply with the originations in terms of kyc and AML and minimum investment requirements which does mean that some of the narrative that was part of this presentation which was this type of egalitarian narrative yeah we can do this for the little guy I I don't think that's really true because it doesn't really change anything uh in that calculation right so you've been at minimum investment requirements there'll be a hundred thousand dollars in the case of the us but as Realty is doing 50 for example um there is Farmland funds this is a tokenized wrapper fund that's doing fifty dollars it's not for a hitch or ush fund it's basically you buy a single property every time so it's tokenized security okay but I I would apply the same skepticism there and I understand that these have not been challenged in court but I would argue that this is more like a temporary situation a form of regulatory Arbitrage because I believe that these are simply just Securities and will be treated as such right they are securities and that's why I have to do the kyc and the basically the white listing the AML things but you do apply basically a certain SEC exemptions that you can apply for such as I think regulation D or regulation assets but you could do all of that as a traditional fund as well right if you have enough size then you could Excel fifty dollars in business potentially yeah so then that's fine you push back on that egalitarian narrative good on you because I do like at least some of the goals of this project and I hope you find someone in this card that maybe you can work with Stu but I'll go back to the question now what advantage is there over qualify over using a traditional fund structure considering that you still need to comply with all of the same regulations and with all of the same requirements which eliminates a lot of the advantages of using a blockchain in the first place yeah um for me it is so right now there's a company called Farm together they do exactly what I just basically said but in web 2 and the way it works that you can buy a share of a farm I think it's they started like a 1 000 US dollars but that's it you cannot send that share your board to another investor you cannot collateralize it to take out a loan and basically these additional benefits they are not available to them right but collateralization in cryptocurrencies possible because there's no kyc because there's no Wireless thing you could just put it on a decentralized market and make it available for everyone like that's not possible with this it is possible it's on a white listed market and I think it's a nice way blockchain there will be in my opinion a little white listed Market is no different to say the traditional fund structure okay but then let's say you have just in the future you have everything running on blockchain maybe then you have your Market that's completely non-kyc and then you have people that kind of move between these markets I would say um and you have right now maybe people that are facing uh difficulties trying going back from the crypto ecosystem to their to the bank account and I think for the people that are already crypto native it's nice to have a real-world asset that they can invest in um I suppose I'm skeptical that this will be allowed in the long run um and and I think I have I tend to have a problem with a lot of quote unquote blockchain applications that touch the real world because they require enforcement in the real world so I mean who really gets aside the ownership of the farm is it the blockchain or is it the local courts that decide and I would argue it's the local courts and I think this is why you'll keep bumping your head against this type of Oracle problem so to speak and what is the important to rely but um yeah yeah this is very interesting though I'll pass it on to uh David here thank you all right um I have a few questions and points all right I think I think this is uh it's very good good idea I think you're still a very early stage uh so probably a bit more research is needed um but just on the comment that Justin might I think it is possible to have something like this on chain because usdc is essentially the same right so usdc is like the kyc essentially to put your USD on chain but then anyone in the world could use usdc right so I think I think this could be but but these tokens could be as well right if you tokenize the farm yeah it's specifically the specific tokens are tied to the specific properties if you could if you go to the US for example the Midwest of the US is mostly corn soy where you could more or less maybe great Farmland by its quality but it's the soil characteristics and then you could kind of make fundable tokens out of this because they're more or less the same and it's common is used for the same purposes and as um D5 native DJ um to wrap wrap these non-clanchables into some other other token to make a fun sport which will be interesting like an index of multiple farms around the world um but there's the same problem since 2017 is like the Oracle problem right so like how do you like you know someone uploads their funnel or tokenizes their farm and then some caught the science no or someone sues the owner of that farm you know then it's it's like it's horrible because maybe it is being used as collateral one are they or some Landing platform right then you basically destroy the collateralization ratio yeah how's that protocol so so that's that's a big um I don't think that's the reason that also exists in the real world right it indeed is um that yeah that's that's that's that's fair that's fair but yeah something I mean because I guess with USD usdt usdc it's it's a bit it feels a bit different this is like yeah USD say like you're trusting the banks that's so cool and coinbase use to properly like enforce at the U.S law right whereas it's fine like if you have a farm and I don't know in Africa somewhere in Europe or China or the US right like what lower jurisdiction right it's a it's a farm in Africa going to be seized or is the one in Europe going to be seized so there's like it's a hard problem to solve um and the last thing is um around apys like five percent in D5 is nothing like you get like let's say the risk-free rate of ethereum staking like five six percent maybe more right let's say usdc like minimum will probably have two percent or something so like with this with Associated risk of the Oracle problem yeah at least probably like 10 15 right so so I think you have to think of how to optimize that sign yeah I mean I'm not saying it's like a silver bullet to to invest in and get rich or that's what it's the opposite but I think it could very well give a very fundamental base to the tvl that you have in D5 because Farmland over the years has has been a really phenomenal stable asset compared to other asset classes it has one of the best risk adjusted returns um and I think it could be a very nice let's say TBL floor that you could have in D5 that always guarantees a minimum uh kind of yield and then yeah you could maybe not invest your whole portfolio in it but parts of it to you the parts that you maybe considered for Less risky uh approaches yeah yeah I mean so I agree that like real world assets like everyone's trying to move toward assets on train and it's needed for the specification CBL all those sort of reasons um yeah but it's it's still still I'm it's very difficult yeah so I agree um have you looked into like what maker GAO is doing or Central Beach yeah right now uh Central to the tokenizing bonds basically right well assets so sexually is working with Ave and then make it out has things and sub-dials and they have a specifically real world asset uh what's up now um and they brought it for like so it's nice like billions in real world assets and they're looking to like scale that up significantly so advice or a suggestion would be to talk to someone in Minecraft uh because maybe there's you know that they have a capital and you don't have to like don't don't work with like retail investors like gather pennies like you're not going to be at a wild family that way like it's a hard slot yeah like it's not it's not where it's not how you succeed in different right you need like a lot of money right because you can't just buy one phone you're going to buy a lot a lot yeah yeah but also if you look at the tvl of Realty also during the bear Market they have been steadily growing they're around 100 million now and then so for retail investors of course that could be one Institutional Investor uh but it's also possible I think yeah real hard work to to return it sure but like how long has Realty been around 2018 I think 2018 yeah yeah are they've been around since 2020 and I reached 20 billion plenty bill right so like 100 million is like good like it's good but and you know already my makers I bought on like two three billion of everyone assets so my point is I like don't look at real tea as like the the necessary good example they're probably one of the like early players and they did well but I think there's better ways to do it yeah but yeah thank you thank you thank you thank you same as before I'm going to ask you to put a final grade anybody from the crowd has a direct question scream it yeah yeah I have three questions maybe the three largest Pharma slash um which are the Supreme Euro Pharmacy to know about the green deal let me three three corporations it's a remote conferences all conferences so I personally have been to the global hack investing but that's in the US they have one in the Europe too but I've been to that one um there's going to be one in Hanover about agriculture and Technology it's gonna it's gonna come up it's going to be soon so do this I'm assuming that you are going to Farmers and you talk to that I'm assuming this and you want to have some investors and to follow up on them but do you can you show me what foreign just making sure you know people you know hey how are you doing anything it's very important that we want to have customers if you wanted to talk to somebody you need to make sure it's very important yeah yeah um I got some new questions from the crowd here or someone said one of the key benefits of a product like this is a bargaining power the farmer retains he is not at the mercy of pressures of large investors so that would be again going towards your retail angle and the question here why do you think the way to go is to reach out to investors wouldn't it be better to find a small client and focus on solving their problem and building an MVP small client as a farmer probably yeah all right otters give me your your grades foreign [Music] David David yeah six six nice so just one comment ahead was um I think I think this is a big problem for D5 needed but it's not a big problem with Farmers or you haven't shown that at least so I think that's what I need to work on and that's probably similar to the other comment around the MVP like get a farmer jumped by their Farm or something so I have to live up to the expectation of being a harsh judge here so uh I will go over four but uh I like what you're doing I I do and actually I do want you to succeed because I would like to be wrong on this one it's one of those cases so yeah good sign thank you we are going to resume that for a break everybody go and enjoy the bar we'll be back in 30 minutes to listen to Poseidon and sango