Crowdz Avalon Marketplace White Paper Outlines an Exciting Future for Receivables Finance
With the goal of improving access to finance for small businesses, while opening up the receivables market to a whole new type of investor, Avalon Marketplace from Crowdz is revolutionising the traditional finance industry. By ledgering receivables using non-fungible token (NFT) technology, both buyers and sellers will be able to benefit from the security and efficiency provided by the blockchain platform.
Crowdz’s Avalon Marketplace white paper describes the problems Avalon is designed to address, the technology stack, tokenomics, and the roadmap. You can access the white paper here.
How does Avalon Marketplace work?
Avalon Marketplace is a decentralized marketplace built by Crowdz. It bridges receivables systems with the Decentralized Finance (DeFi) world, addressing the working capital gap in B2B supply chains by bringing investors and small- to medium-sized enterprises (SMEs) together.
Avalon Marketplace runs on two tokens: Non-Fungible Token receivables (NFTr) and native ecosystem tokens called Crowdz Token ($CRZ) which will be released later. Avalon will tap into the almost 12-figure DeFi liquidity channel for the buying and selling of receivables. This will have the potential to increase operational efficiency, create system rewards, and offer smart AI-enhanced scoring for the benefit of SMEs all over the globe.
Avalon uses leading blockchain dev platform Polygon to empower fast, secure transactions. Integration with Polygon unlocks low transaction fees, fast transactions, and real scalability for the marketplace, with the security benefits of the Ethereum mainnet.
What is Polygon?
Polygon hosts more than 19,000 decentralized apps and allows developers to gain easy access to some of the biggest solutions – including L2, sidechains, hybrid, stand-alone and enterprise chains, and data availability. On top of this, the platform is carbon-neutral and is aiming for carbon negativity, something Crowdz felt was important for both its users and the planet.
Building the Avalon Marketplace with Polygon creates a significant shift in technology and culture, far away from the often-outdated receivables industry. The shift is designed, and agrees with Crowdz’s mission, to benefit the SMEs that play such a vital role in local and global economies.
How does Avalon Marketplace benefit SMEs?
Avalon Marketplace by Crowdz is a secure and efficient environment where investors can buy, SMEs sell, and any receivable owner can trade receivables. The NFTr format will lend speed, clarity, and efficiency to all aspects of invoice finance. Saved costs and increased access to finance can solve cash flow problems for business leaders, unlocking flexibility and more plentiful opportunities for growth.
SMEs face the problems inherent in being smaller, including being on the wrong side of an imbalance of bargaining power. In terms of invoices, this means they often have to let their customers owe them money, interest-free, for long periods of time. A 60- to 90-day net might not seem like a long time for an enormous multinational conglomerate. But if you are a small business that can be a long time to wait for your cash, especially when you land that big account that brings in most of your working cash. If a bank cannot afford to offer interest-free loans at all, much less in amounts disproportionately large to their cash-on-hand, why does the global economy operate on the presumption that small businesses can and should operate this way?
So Crowdz set out to create a marketplace where actual, professional financiers and investors could offer finance on the value of those amounts owed by those large customers. Instead of lending the money to the small business at its unknown risk rate, the investor can buy, at a slight discount, the right to be paid directly by those huge customers when their bills come due. The resulting immediate cash infusion to the SME allows it to use the money it has earned right away, to keep the lights on during a crisis, or scale and thrive in the everyday. This transforms the net 60 or net 90 payment terms, which were unfavorable to the SME, into a favorable investment for a financier who is accustomed to waiting for a payout.
To allow businesses flexibility in the ways they can unlock the value in their receivables, the platform provides the following:
Facilitate complex transactions
Securitization of receivables will be quicker and easier, meaning finance decisions do not need to ride solely on one SME’s lonely, low-leverage, relatively unproven risk profile. Securitization means many investors can, at lower risk exposure and cost threshold levels, participate in the investment value of an SME’s single invoice. By aggregating many SMEs’ fractions of invoices, portfolios of risk-hedged value can be parameterized and automatically created, making SME invoices a lucrative and risk-adjusted investment tool. Furthermore, the blockchain will hold all data transparently, and can be offered to investors through decentralized platforms with streamlined processes. This makes all transactions more efficient and traceable. The new data patterns revealed are intended to give sturdy, honest small businesses unprecedented opportunity to be known for those attributes among finance sectors that would normally consider them too inconsequential to merit any investment risk. SMEs could create the type of credit track record previously only available to much larger enterprises.
It’s not just sellers who can benefit from improved cash flow. Investors can too. One problem with receivables, for finance, is they are just a legal and accounting concept—essentially an “IOU”—subject to terms that can be hard to easily track down and standardize for investment. Enter the distributed ledger with its automated smart contracts. By representing receivables as NFTs in a system, recording their terms and ownership on an easily referenced database, receivables can become a much more concrete opportunity. As they become easily tradeable, traceable, and secure, liquidity can increase across the whole market..
We award CRZ tokens to buyers and sellers on Avalon, knowing it encourages good trading behavior and rewards active use of the marketplace.
The future of Avalon Marketplace
The first iteration of Avalon will be released this year. Stage 1 will deliver an NFTr marketplace in which every invoice offered for sale will be assigned an NFT value, allowing buyers and sellers to conduct business through NFT receivables, utilizing fiat currencies.
After this, purchasers will be able to use a USD stablecoin to purchase invoices by NFTr, creating more opportunities to conduct on/off-ramp transactions. This then allows investors to sell the same invoice’s NFTr on the secondary market until the receivable’s payment date.
We will also introduce CRZ as the native token of Avalon, based on the ERC-20 token standard. After minting, we’ll use the token to drive the decentralized marketplace and reward users.
Future versions of Avalon will offer purchasers liquidity pools, subject to prior regulatory authorization. Liquidity pools will allow to fund fragments of receivables as opposed to fund the entire of it, allowing to better spread the risks and invest smaller amount of money.
The abilities and support Avalon is set to unlock are unparalleled. To learn all about the platform, and how it can benefit you, read the white paper today.