EthicHub connects DeFi to real world businesses needing capital

0:01i'm ashton addison from block west capital for investmentpitch media in the Crypto Coin Show and today on blockchain interviews we have gabriella chang and jory armbruster from ethic hub welcome both of you to the show thank you so much for taking the time to come on and i'm really looking forward to speaking today thank you ashton nice to meet you thank

0:21you for inviting us here you're very welcome i know there's a lot of initiatives to try and plug defy and blockchain into the real world so we can actually help people you know better their lives and especially people that aren't familiar with blockchain and cryptocurrency yet bringing this beautiful technology to them i know ethic hub is working on a lot of

0:42initiatives like that i would love gabriella if you could start by just giving an overview of what is ethic hub and what are the solutions that you're driving into the real world and then we can dive into those details thank you epihave is a d5 protocol to secure lending for sustainable impact that is solving the maybe the biggest problem of the current financial system that left

1:06out almost a quarter of the world population so we believe blockchain has the ability to mend this terrible dysfunction and what we do is connect economic regions to benefit both by interacting like anyone can lend these small farmers money to increase their productivity and raise their their income and their living standard through their own productivity and

1:32parallel to this we also provide the warranties the collateral to secure those land at that lending so the investors feel secure when investing in these farmers like connecting people to generate wealth for both very cool great intro gabriella and yeah you're right there's a lot of people in developing nations and small farmers as

2:00you mentioned there especially that just don't have access to the traditional financial system and even if they do it's an antiquated system that just isn't working very well for them so for them to get the capital they need to grow their businesses or even just to sustain life and live and i would love to hear a little bit more about that are you guys specifically targeting

2:24farmers in specific regions or really how did this how did this come about so we started with coffee in mexico because this is what we really know we both have a history behind coffee and we both are half mexican and we are creating farmers because at the end most of these excluded from the traditional financial system the

2:52so-called and banks are are farmers small of the farmers in developing economies and we are targeting coffee not only because we know about coffee but also because in coffee and cocoa is where are two markets that are presuming a predominant for small for the farmers okay great and how long has your team been working on this now

3:21we started the like a idea in 2017 we had a small pc in 2018 we launched the mvp by mid 2018 my far before a d5 was a thing and in 2020 we released the ethics and today the system is like

3:4825 times collateralized with the compensation system made with essex ethics and now you can lend not only to this smart holder farmers in mexico but also in honduras and brazil wow very cool and that i feel like that's a great place to start and you know there's two sides of this that i sort of want to dive into a little bit more there's the farmers

4:14side and then there's the investors so let's just say that i was a farmer in mexico with a coffee plantation and i needed capital to start growing my business how does that work approaching ethic hub and getting capital well it's not like starting a business we are providing working capital to a very safe activity these people are experts producing coffee but they don't have the money

4:41because i think if you have a harvest that goes once a year you need to borrow to eat to tend your land so you need to ask for money and if the only money do you find it's over 100 interest when you sell the coffee you pay back the debt and then you have money to live one two months and then you have to borrow again that's called the poverty cycle so what

5:04happened we are breaking this poverty cycle by injecting affordable money the farmers get get in contact with what we call and loan originator that helps them organize and validates that the money that's going to be lent is going to be used in productive activities that is almost civil zero risk because you are injecting money into something that was

5:28already productive you know you are not taking risk like entrepreneurship or something it's it's hey who are these lonery natives this could normally that is a cooperatives or could be a distributors or fertilizers or could be traders buying the coffee of these farmers and exporting whoever who has a is an actor in the value chain and works

5:57directly with the farmers with a positive business model not for these farmers is able to ask for a loan in essence and then there has to be a due diligence we are the first auditor looking for new loaner investors and providing audit a auditing and we stake our own ethics as collateral for these lunar inaugurators that we i made the

6:26audit for the due diligence but now we are just speaking with new potential loan and auditors that will bring many more loan orienters into the system very cool and yeah great to differentiate explain that better that these aren't high risk loans for people that don't know what they're doing with the low chance of paying them back this is for established you know

6:55business people that already have businesses but just because of the financial system they don't have access to that capital so it sounds a lot more efficient than entrepreneurship is definitely risky in trying to get the capital back if there's a chance that the business is going to fail so thank you i would like to point out ashton that the perceived risk is way higher than

7:18the real one after more than three years working with these farmers and lending them over 1.5 million dollars the default rate is less than one percent it's very safe to work with them but additionally to reduce this perception of risk we develop or throughout collateral for crowd lending so the investors are no longer in risk even this one percent is covered by our

7:46compensation system i think that's the huge innovation we did first we start a pioneer using blockchain to finance these small farmers and now we are pioneers providing a collateral very cool okay that's great to know and yeah i want to know more about on this investor side you mentioned that there's a compensation pool it's over collateralized and there's also the

8:09ethics token that's involved in that maybe you could explain that a little bit more in terms of how the investors are getting involved yeah so basically we have like two a kind of investors the low risk low return eight percent that provide the loans to the farmers and is very secure because there are other more savvy risk investors who buy the ethics and stake on behalf of

8:37the farmers providing collateral for the farm so if there is a default these guys are taking the risk and up today there was one percent default and was 100 compensated by the compensation system but previous to the state from the ethic hovers is it is the state of the own law narrator he has to have some skin in the game and we as an auditor have to have

9:03also still in the game so our ethics were sold not not them they their ethics are only sold when there is not enough with the loan originator and our ethics okay good to know well it sounds like so far you're making an incredible impact in these farmers and in business people that are needing capital what is the trajectory moving forward

9:30with ethic hub are you just continuing to do the same and get more loans out while also collecting more from investors to have that pool of capital or are you also expanding in other ways we for sure we are starting to scale and looking for new loan originators looking for new adventures so they can bring new learners we are also starting to grow

9:55into the lending side no so we have more and more investors we have more than 1 500 already and this is growing and in the long term or medium term what we want to become is kind of gamifying this system that is so kind of a farming a real real life farm build where you invest into the farmers and you buy them tractors and lands and you help them and you compete and you play

10:24to improve the world that's our vision that's our dream very cool and i know you've already been working on this as you mentioned for almost five years in 2017. up five years from now where do you see ethic hub i wish that we are already impacting millions of smaller farmers and the

10:53ethics is already in the top 100 at least of the market but especially i think we would love to set the reference that is possible to use this amazing tool that is blockchain to improve the world to make a better living for everyone and to make a balance between the opportunities to invest and the opportunities to get access to the economy to the general economy so

11:19if we prove it can be done in a major scale then others will follow and i think that's our goal to attract more people into using top 10 for good that's great to hear gabriella and on the flip side of that as well you know i feel like there will be some technical barriers perhaps for farmers or maybe there's other obstacles that you would need to overcome to

11:46grow exponentially what kind of obstacles do you foresee as you continue to grow into the same space well we don't interact directly with the farmers so technology is not a problem and because they understand money comes from internet and they receive it in touch because there is this as hot explaining this figure which is the originator and he this entity

12:09interacts with the smart contracts not the farmers so we make that easy because precisely we are working with the base of the environment and quite often they don't have connectivity or other means to access directly the platform so that wouldn't be a problem our main challenge i would say is credibility is to prove what we are doing is scalable so we are right

12:32now in our siege round precisely to scale we already got the new collaboration of the bitlock the igb lab the inter-american development bank and so with this c-ram we are doing now we are drawing the metrics to prove this can be scalable and that means being scalable in loan originator in investors and in stickers so we need to prove the skin grow on the three legs

13:01as we call it i think that's the main challenge right now but we are confident we are going to do it as we did already more difficult part imagine in 2018 trying to explain every hub to impact investors who thought bitcoin was something weird to say the least so we are used to overcome difficulties when in the vision innovating so we are we are comfortable with that

13:28definitely yeah let's hope that the hardest part is behind you guys but yeah we will see great and so right now as you continue to grow out are you just looking for you mentioned that you have the seed round there for more investors but also more farmers and also more people to put into the pool is there anything else that you guys are needing for growth

13:51of course at the end we need a lot of support from media and influencers to make the project known at the end one this is very difficult to communicate what we are doing and we need a lot of help in this regard we've been focused on developing the solution and now we need to spread word of it obviously all of this time we are

14:20barely spending marketing because we've been focused on developing we have our own developers team so we are quite in that way but we are not need to open the solution we already did and communicate to the rest of the workshop in that sense we are very happy with we've been here with you and have the chance for more people to listen about this so we invite them all to take a

14:45look and see what other things are going on with blockchain and development definitely yeah and for those viewers and for any parties that could be interested or could benefit from ethic hub what is the best way for them to learn more and to reach out and get involved so you can go to our webpage there is a lot of information on directly over there and we can you can

15:12follow us on twitter or facebook or instagram and more specifically you can join telegram in telegram we are very active active supportive knowing whatever question you have in less than one hour you are answered for sure so but everything can be reached from our web page it's etihab.com so we invite them all to visit there and

15:40there you can find information regarding the ethics the impact and for now the coffee the farmers are producing because we are not only financing them but also opening markets for the harvest so they benefit from lower lower rates and higher prices we think we need to rethink the supply chain because it is pre internet there are so many intermediaries that

16:06are not needed so the farmers are always the weakest link and also somehow the buyer so we designed a new block a new supply chain with less links where every link adds value so this is part of the of the whole system so you can also enjoy the specialty coffee they are producing thanks to your contributions to the platform amazing very cool i like that and

16:31thank you for those links both of you i will put the website link for ethic hub and the socials that you mentioned as well in the description box below for the viewers thank you so much for taking the time to come on and talk about ethic hub all the best with the continued growth with the farmers the investors and the rest and let's follow up in the near

16:51future thank you very much for inviting and all the best you