1.Overview
Shipping is by its nature a decentralized industry. The bulk of shipping transactions are denominated in dollars and consist of cross-border predominantly dollar payments. Blockchain enabled payments due to their instant settlement will be a much-needed improvement to the current payment mechanism that involves intermediary banks, bank holidays, a lot of uncertainty on whether the payment will arrive on time, etc. A major advantage for the adoption of blockchain enabled payments in shipping is that the number of daily transaction is relatively low but value high, making it suitable for the number of transactions most blockchains can handle today. Whilst today our focus is bunkering, our ecosystem will rapidly grow and develop to offer solutions across other industries serving the financial requirements of the respective participants.
Linked with the fintech platform the staking platform bridges real-economy loan origination with stable coins. In other words, the staked funds form the capital to lend. The Nexum staking protocol is designed to eradicate agency issues and misalignment of interests that are prevalent in the current capital allocation process. It is built in such a manner that it can be easily integrated into third-party wallets and other lending platforms. Nexum’s goal is to offer yield to stable coin holders in a transparent bank disintermediated manner.
The lending platform is currently focused on bunker financing but can easily be adopted to cater to the needs of any invoice discounting business.
2.Bunkering as a use case
Bunkering is the process of supplying fuel and/or gasoil to be used to power the propulsion system of a ship. There are more than 60,000 ocean going vessels with varying daily consumption resulting in total marine fuel consumption that exceeds $500bn per annum.
Ship managers utilize bunker traders to arrange for bunkering operations at ports all over the world. Payment is predominantly in US dollars. Ship managers need to arrange in advance the bunkering operations of a vessel through a bunker trader. Traders utilise their network of local suppliers at the required port. The supplier makes a time-limited offer to the trader specifying port, fuel type, quantity, price per metric ton, days of credit (if any), date and time of supply. The trader adds profit margin on the price received and reverts with the offer to the ship manager. In these trades there is no price risk involved but there is a funding gap. The supplier can request pre-payment, cash on delivery or extend a few days credit, the ship managers expects usually 30 days credit but it is not uncommon to ask for 45 or 60 days. The average funding gap is c. 24 days meaning that the same capital can be lent on average 10 times per annum.
Due to the type and short-term nature of this trade, and the need to credit assess counterparties all over the globe, banks are not willing to fulfill this funding gap. Neither invoice financing (due to the risk of fraudulent transaction) nor factoring (due to the type and size of the bunker traders) works. Nexum lending platform is built to fill this gap by introducing a hybrid financing model of invoice discounting and factoring that avoids both problems and is able to deal with the intricacies of the decentralized nature of the shipping industry. The platform is therefore very much a pull product with the only limitation being availability of credit.
Bunkers supply under US law results in an in-rem claim on the vessel. That means that the physical asset is acting as collateral in any bunker related claim making the lending very secure.
The platform charges a variable margin over the prevailing fed-funding rate. All profits from the platform are provided to stakers of stablecoin (makingt he yield very attractive) and NEXM token holders who have staked token.
Shipping is by its nature a decentralized industry. The bulk of shipping transactions are denominated in dollars and consist of cross-border predominantly dollar payments. Blockchain enabled payments due to their instant settlement will be a much-needed improvement to the current payment mechanism that involves intermediary banks, bank holidays, a lot of uncertainty on whether the payment will arrive on time, etc. A major advantage for the adoption of blockchain enabled payments in shipping is that the number of daily transaction is relatively low but value high, making it suitable for the number of transactions most blockchains can handle today. Whilst today our focus is bunkering, our ecosystem will rapidly grow and develop to offer solutions across other industries serving the financial requirements of the respective participants.
Linked with the fintech platform the staking platform bridges real-economy loan origination with stable coins. In other words, the staked funds form the capital to lend. The Nexum staking protocol is designed to eradicate agency issues and misalignment of interests that are prevalent in the current capital allocation process. It is built in such a manner that it can be easily integrated into third-party wallets and other lending platforms. Nexum’s goal is to offer yield to stable coin holders in a transparent bank disintermediated manner.
The lending platform is currently focused on bunker financing but can easily be adopted to cater to the needs of any invoice discounting business.
2.Bunkering as a use case
Bunkering is the process of supplying fuel and/or gasoil to be used to power the propulsion system of a ship. There are more than 60,000 ocean going vessels with varying daily consumption resulting in total marine fuel consumption that exceeds $500bn per annum.
Ship managers utilize bunker traders to arrange for bunkering operations at ports all over the world. Payment is predominantly in US dollars. Ship managers need to arrange in advance the bunkering operations of a vessel through a bunker trader. Traders utilise their network of local suppliers at the required port. The supplier makes a time-limited offer to the trader specifying port, fuel type, quantity, price per metric ton, days of credit (if any), date and time of supply. The trader adds profit margin on the price received and reverts with the offer to the ship manager. In these trades there is no price risk involved but there is a funding gap. The supplier can request pre-payment, cash on delivery or extend a few days credit, the ship managers expects usually 30 days credit but it is not uncommon to ask for 45 or 60 days. The average funding gap is c. 24 days meaning that the same capital can be lent on average 10 times per annum.
Due to the type and short-term nature of this trade, and the need to credit assess counterparties all over the globe, banks are not willing to fulfill this funding gap. Neither invoice financing (due to the risk of fraudulent transaction) nor factoring (due to the type and size of the bunker traders) works. Nexum lending platform is built to fill this gap by introducing a hybrid financing model of invoice discounting and factoring that avoids both problems and is able to deal with the intricacies of the decentralized nature of the shipping industry. The platform is therefore very much a pull product with the only limitation being availability of credit.
Bunkers supply under US law results in an in-rem claim on the vessel. That means that the physical asset is acting as collateral in any bunker related claim making the lending very secure.
The platform charges a variable margin over the prevailing fed-funding rate. All profits from the platform are provided to stakers of stablecoin (makingt he yield very attractive) and NEXM token holders who have staked token.
