PRODIGI is a fintech startup with a strong focus on supply-chain management located in Kyiv, Ukraine. The PRODIGI team has a primary focus on developing an integrated management system for issuance, circulation, safekeeping, and settlement of electronic warehouse receipts on a blockchain network.
- 1 Background/History
- 2 Mission and Vision
- 3 Problem Statement
- 4 Product
- 5 Value Proposition
- 6 Team
- 7 Competitive Landscape
- 8 SWOT
- 9 Milestones/Results
- 10 External Links
PRODIGI formed in 2019 when Dmitry and Vlad, two colleagues from a blockchain development company Attic Lab, teamed up to pursuit a ripening opportunity on the Ukrainian commodities market. The team plans to validate the viability of the solution by making a successful case for PRODIGI locally and then showcase it during further expansion to other markets, with North America and MENA being top priorities.
Mission and Vision
Leverage fintech to grow and enhance underlying securities, derivatives, and commodity markets through their digitalization.
Become a pioneering leader in transforming financial markets by drawing on fully digital and seamless infrastructure.
The presidential election and the subsequent parliamentary election of 2019 brought new people into power in Ukraine. Their support of Ukraine's National Securities and Stock Market Commission (NSSMC) efforts to introduce the much-needed and well-anticipated regulation to the financial and commodities markets facilitates the passage of the specialized legislation. Its adoption will lay a legal basis for the development of financial infrastructure as well as the introduction of new instruments. Although NSSMC develops technology-agnostic legislation, there is currently no technology that would bring its advancements to the market. PRODIGI draws on a favorable political and regulatory environment to bridge this gap with its integrated management system for electronic warehouse receipts.
The PRODIGI team initially focused on warehouse receipts over traditional financial instruments (e.g., securities, derivatives, or fixed income), because the commodities market of Ukraine is much more developed than its financial market. With base metals and grains accounting for 21% and 15% of the country's $47 billion exports, Ukraine continually ranks among the world's largest commodities producers and exporters. As reported by the World Steel Association, Ukraine was the 13th largest crude steel producer in 2018. Besides, the UN's Food and Agriculture Organization lists Ukraine among TOP-10 exporters of wheat (#5), maize (#4), barley (#3), soybeans (#7), rye (#9), and rapeseed (#3). Such robust production capacity results in a vast demand for energy, and, according to BP, the country is the world's 39th oil consumer, 31st natural gas consumer, and 28th producer of electricity.
PRODIGI prioritizes grain, leguminous, and industrial crops over other commodities not only because of their multi-billion dollar trading volumes but also since warehouse receipts circulate only on the agricultural market in Ukraine. While the market size is essential for achieving a break-even point in operations, the instrument's long-standing presence in a paper format on the market makes it familiar to the existing players, thus, simplifying their onboarding to PRODIGI. The current use of paper warehouse receipts proves to be inefficient because of:
- excessive & bureaucratic documentary flow
- lack of supervision
- lower liquidity
- noncompetitive price formation
- low velocity of commodities in warehouses
- fraud and forgery
A warehouse receipt is a type of documentation that serves as evidence of title to the stored goods and specifies their essential characteristics. Generally, only approved or "eligible" storage facilities are allowed to issue them. Warehouse receipts are widely utilized in the commodities markets, and their primary uses encompass:
- Trading. As a proof-of-ownership document, warehouse receipts enable traders to settle contracts without having to move commodities physically;
- Financing. If issued in negotiable form, warehouse receipts are eligible as collateral for borrowing funds;
- Futures Markets. Rather than moving an underlying asset, warehouse receipts are used to settle futures contracts for physical delivery.
The PRODIGI team does not invent a new financial or warehousing instrument. Instead, their solution rethinks how the technology can assemble different uses of something that has been on the market for over 50 years into a seamless user experience. For that, PRODIGI applies the blockchain technology to tokenize property and non-property rights on the underlying commodities in the form of electronic warehouse receipts that exist as tokens on the blockchain-based network. The PRODIGI team develops two primary products:
- financial infrastructure for issuance, circulation, safekeeping, and settlement of electronic warehouse receipts; and
- a custodian wallet for end-users, which serves a GUI of the system.
PRODIGI as Infrastructure
PRODIGI premises its infrastructure on a private blockchain network, which authorities and financial intermediaries join by passing a regular onboarding procedure. At this level, PRODIGI plays the role of the technology provider and charges authorities, CSDs, CCPs, brokers, custodians, and exchanges monthly maintenance fees for servicing their nodes and supporting the network. Their amount varies depending on the number of transactions and dollar value of held electronic warehouse receipts.
PRODIGI as a Custodian
PRODIGI operates its wallet as a custodian, thus, being a financial intermediary to farmers, traders, storage services providers, brokers, and other end-users. As a custodian, PRODIGI competes with other custodians that use PRODIGI infrastructure and charges transaction and safekeeping fees for its services.
Today, three types of players engage in transactions with paper warehouse receipts on the Ukrainian agricultural market: storage services operators, farmers, and traders. PRODIGI accounts for their characteristics and pain points to cater to each group relevant value:
- Storage services operators. The regulation obliges storage services operators to keep copies of paper warehouse receipts for at least three years after their issuance, thus, adding bookkeeping overheads. Besides, paper format deteriorates the ability to analyze performance. Another distinguishing feature of a typical storage facility lies in its business model - although storage is the core service, it is not the core revenue stream. Storage facilities generate the majority of their revenue on transshipment by charging separate fees for uploading and unloading grains. Therefore, the management of warehouses sets the goal to maintain high velocity (i.e., turnover of stored grains) rather than provide long-term storage services. PRODIGI tackles the first pain point by issuing warehouse receipts on the blockchain network to make their storage convenient, organized, and suitable for analysis, thus cutting the bookkeeping cost and enhancing audibility. Simultaneously, the circulation of receipts in electronic format on the same network helps buyers and sellers find each other faster, thus, accelerating trades. Swift trades boost velocity as they result in a substantial decrease in time needed for grains to find their way into the hands of a buyer that eventually unloads them from the warehouse for export or consumption purposes.
- Farmers. Crop producers enjoy economies of scale. As a result, agricultural holdings can afford to have their storage facilities and sell their crops to large exporters directly. In contrast, medium- and small-sized farmers rely heavily on third-party infrastructure in their distribution activity and traders in their sales activity. According to the consensus assumption, it is economically infeasible for a farmer in Ukraine to build and maintain a storage facility for less than 7 thousand hectares of land, which corresponds to the size of an above-average producer. Regardless of the scale, crop producers pursue the same goals: they want to sell crops instantly at the moment they assume to be favorable and ensure that the quality of uploaded and unloaded grains corresponds to one another. By providing a single platform for issuing, storing, and transferring electronic warehouse receipts, PRODIGI aggregates liquidity and accelerates trades. In this way, farmers can sell their crops quicker at prices they consider fair. Additionally, PRODIGI provides tamper-resistant proof of goods quality that can serve evidence in legal disputes.
- Traders. Regardless of their size, specialization, or operations area, traders do their business primarily on the OTC market and share common risks and pain points. With no other means than telephone and email, they usually spent days negotiating prices and terms with their counterparts. Lengthy negotiations convert into the risk of not fulfilling trading contracts with wholesale buyers, exporters, or overseas consumers. Moreover, the failure to make a timely shipment is subject to penalties. PRODIGI puts owners of grain, leguminous, and industrial crops onto the same network and provides an OTC desk to traders, thus, decreasing the time needed to fulfill contracts.
Besides market players that already use warehouse receipts in paper format, PRODIGI aims at bringing electronic warehouse receipts to the financial market, availing themselves of the upcoming changes in legislation. A developed PRODIGI ecosystem would bring new clients to CSDs, CCPs, brokers, custodians, and exchanges.
PRODIGI team members come from financial and engineering backgrounds and have experience in business and software development. They have been actively engaged in the EOS ecosystem since the pre-mainnet times (Spring, 2018). Besides EOS Block Producer, PRODIGI team members have participated in the development of a staking service Everstake.
Dmitriy Chernobay, CEO
Dmitry has extensive experience in corporate finance, IB, and industry. He holds two MBA degrees in International Banking & Finance (Birmingham, UK) and International Business (Bled, Slovenia). He held senior positions both in the Government and private sector: Bank Société Générale as Head of Corporate Banking, UkrGasBank as Deputy Chairman, the largest automotive producer/distributor Eurocar Group as Board member in charge of strategy & alliances, and FPP Asset Management (London, UK) as independent Board Director.
Vladyslav Makarov, COO
Vlad studied computer science and software engineering at School 42 (Fremont, CA) and took the Blockchain Fundamentals DeCal at UC Berkeley (Berkeley, CA) in 2017. His previous experience in consulting and research yielded an in-depth knowledge of both the business and technical sides of the blockchain technology. At PRODIGI, Vlad is in charge of product development and operations.
Max Gavriuk, CTO
With over 15 years of experience in software development and management, Max is an entrepreneur with a strong technical background in fintech, blockchain, AI/ML, and hands-on expertise in SCM, automotive, educational, and medical industries. Throughout his professional career, Max has had significant engagements as CEO of Midgard Technologies (technology development & integration), Engineering Manager in Klën Inc (AI/ML & data science provider), and CIO of OmniSynapse (software development).
Many projects have been actively exploring the uses of blockchain in agriculture since the nascence of the technology. The main focus has been on IoT, post-trade execution of deals, and supply chain management, which puts PRODIGI's primarily trading solution out of the direct competition. However, given the number of resources that some companies possess coupled with their expertise, PRODIGI may face fierce direct competition in the future. PRODIGI's most notable competitors are listed in the table below.
Less significant competitors include TradeShift Cash, DLT Ledgers, Agriledger, Agrichain, Whrrl, Agridigital.
|Goal Set||Goal||Target Date||Result|
|August 9, 2020||PoC development and active business development with warehouses (onboarding 1 terminal warehouse at the port and 2-3 elevators in the mainland)||June 30, 2021||Pending|