A unique approach of LandX to bring commodities onchain
In this Twitter space, Citizen Capital is joined by LandX to discuss how LandX works, how it gives opportunities to farmers around the world and more.
Read our notes below to learn more.
About LandX
It provides a token that allows a user to stake it and receive yield that is coming from real farmlands.
A farmer makes a promise to pay crop share obligation for the part of the harvest.
The maximum allowable crop share is around 10% of the harvest.
The farmer gets an NFT in exchange for his obligation, the NFT specifies the amount of the xTokens that will be minted as a result of the farmer giving this obligation.
When a farmer deposits the NFT into a smart contract, the smart contract will produce a certain amount of xTokens and it will give them to the farmer.
When an investor stakes a xToken, he receives a yield which is from the total amount the farmer has to pay to the platform for its yearly harvest then the yield is paid in cToken.
The cToken price is pegged to the price of soybeans in the global market at any time.
An investor can claim cTokens at any time then bring them to the treasury and exchange them for stablecoins like $USDC or use them as collateral for a loan.
Investor Protection
The first layer of protection is the maximum allowable crop share which the farmer cannot tokenize more than the protocol would allow him.
The farmer doesn’t have the ability to mint too many xTokens that will make incentive to pay that continuous crop share into the protocol.
The second layer of protection is, the farmer has to prepay 12 months of rent and that 12 months of pre-payment is taken out of the total amount of xTokens that he receives upfront in exchange for his NFT that he deposits into the smart contract.
The yield that they’re producing goes to form a premium for the crop share that the farmer will get on a portion of his crop that he pledges to the protocol.
The crop share that comes into the protocol will be protected by crop share insurance.
TODAY’S EDITION IS BROUGHT TO YOU BY TREZOR HARDWARE WALLET
Navigating the waters of crypto is risky; even the biggest CEXs & stablecoins can have huge risks…
This Christmas you can help onboard your friends & family in the best way, by introducing them to self-custody. Don’t trust CEXs or wallet providers, trust yourself.
Act now, click the link below & give the gift of security.
Liquidity of LandX
They have around $4.2M from the seed raise that they did with a view to keep these funds to seed liquidity pools for four major tokens plus xBasket.
xBasket is an index fund of the four xTokens.
xBasket takes equal amounts of xSoy, xRice, xWheat and xCorn then the yield that these xTokens receive gets sold into the treasury and the $USDC earned is used to buy more of the xTokens of the liquidity pools.
They are setting up deep liquidity pools with an amount of $500k-$1M for every xToken.
The xBasket is a self compounding vault that grows by itself over time.
Real world use case
It gives the ability of users of the commodities to be able to claim the actual physical commodity in exchange for the cTokens that they’ve yielded by staking out the xToken.
Q&A
Q: What can you tell us about the regulations behind this service or protocol?
They have a legal opinion from a legal firm that looks at what we do and there is a demarcation line of the U.S. having the Howey test as basis to determine whether something is a security or not.
LandX would not probably pass the Howey test would be his best guess.
Their legal advice is not to offer the LandX products to U.S. investors or farmers.
They’re setting up a structure in Bulgaria where the validator is a licensed entity that provides credit that uses LandX infrastructure and access to the DeFi platform as a backbone for its upstream finance.
LandX uses geospatial imagery and what’s called NDVI indexes that shows the level of vegetation on a particular block of land over time.
We’re kind of ahead of the curve in terms of legal framework but definitely not selling securities.
Q: Can you tell us a bit more about the fundraising history?
The seed investors have a very long term view in the space.
Their cliff is 4 years from TGE and another 4 years vesting period.
Q: What has been the most challenging aspect of building this project?
The hardest part was to align everybody along the same narrow vision because there’s so many things you could do.
The most difficult was to drill things down to four crops.
Their business plan is to cover 1,000,000 hectares in 5 years.
Check out these important links
TODAY’S EDITION IS BROUGHT TO YOU BY TREZOR HARDWARE WALLET
Navigating the waters of crypto is risky; even the biggest CEXs & stablecoins can have huge risks…
This Christmas you can help onboard your friends & family in the best way, by introducing them to self-custody. Don’t trust CEXs or wallet providers, trust yourself.
Act now, click the link below & give the gift of security.