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LDC’s Blockchain Journey

13/02/2019

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Today’s agenda

Industry painpoints
Sharing our experience
Digital transformation (i.e. impact of blockchain & digital technologies)
Scale & adoption of digital technologies

Cryptocurrencies
Blockchain technology options (Ethereum vs. Corda vs. Hyperledger, etc.)
Cost of building a platform

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The Context

Shared issues and common pain points

Lacking standards Limited visibility Paper-based


in common on end-to-end flow industry

Manual & repetitive Labor-intensive Long processing


processes reconciliations times

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The Objective

From a complex industry…

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The Objective

… to an orchestrated ecosystem

 Data-driven  Secured
business & auditable

 Standardized  Seamless
terms & clauses transfer of information

 Efficiencies  Reduced
available to all manual interferences

 Automated  Real-time
cross validation visibility

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Our journey started 18 months ago…

Our goal was to innovate and explore how a blockchain-based platform could work

In a joint effort between LDC and 3 partner banks (ING, Société Générale, ABN AMRO)
with experience in building blockchain prototypes, we developed the solution over 6 months

We implemented a permissioned-based platform using a “fork” of Ethereum (Quorum)

We then tested the technology to learn how to apply it to our operations


and evaluate the opportunity to scale

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LDC Pilot – What’s it all about?

The pilot was conducted in December 2017


for a soybean sale from the US to China

Sells
LDC GUANGXI BOHI
Buys

CONTRACT
Smart contract
applicable (i.e. • US No.2 soybeans
transaction based on
defined conditions) • 64kMT +/-10% at Seller’s option

• Delivery in November
Parallel run (i.e. we • USC146 over CBOT Nov17 CNF
were able to measure
the benefits at each • Quality: Protein 34.5% Basis / 34% Min, Oil
18.5% Basis / 18% Min, Moisture 14% Max
step)
• Phytosanitary requirements

• Other specifications
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Proof of concept scope

Out of scope

Contract Notices Docs


LC process
management (nominations) instructions

Appointment of
3rd party Docs issued Docs presented Payment
providers

Customs Load/discharge
Lay-time LOI process
clearing logistics

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Buyer & seller agree on contract terms & sign digitally

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Buyer triggers LC request & seller’s bank confirms digitally

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Agents & inspectors are appointed & input relevant data

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Auto matching digital docs & LC terms

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Payment can be made

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Observed benefits

LC process is 6x faster BENEFITS

• Secured data driven model


(no loss of or changes to information)

• Transparency & authenticity


All participants benefit (approx. 80% time
reduction)
• Real-time visibility on transaction
progress

• Faster processing time

LOI (Letter of Indemnity) events are close to


non-existent, reducing operational risk and
demurrage for missing documents

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Lessons learned…

The complexity comes


There is an What works with a
from the transition
opportunity to build happy flow
from paper to digital.
The on the momentum will be complex to
technology works. created by “blockchain Other useful industrialize.
fever” to accelerate technologies exist and
Baby steps
the move to digital. should be considered
are required!
(i.e. OCR, IA).

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The path to scale & adoption

Select the right technology and ensure it


benefits all participants in the Accept that the market will progressively transition from
ecosystem paper to digital (adopt a “hybrid” solution)

Be ready to collaborate with


Build a platform based on open standards to enable inter-
your competitors to drive
operability
industry standardization

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Our long-term vision: An ecosystem of interconnected platforms

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Recommendations for the sugar industry

Don’t
Identify your pain re-invent
Investigate ways Promote an Seek broad
points & the real the wheel!
to standardize industry-wide participation from
business
operations for the effort, avoiding all parties to drive Leverage the
problems your
benefit the entire mono-branded an adoption & critical mass that
industry wants to
industry initiatives network effect other initiatives
solve
can bring

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