Product futures, tokenized or non-tokenized, can offer a range of advantages to businesses. We have published a series of articles on the tokenized variant on Medium. Below is an exert on product futures in general from our White Paper.
Financing and operations are deeply divided. Firms look to “investors” for financing and “consumers” for their markets. They often tout “bootstrapping” as the ideal but then largely ignore it because not all products can be designed, tested, made, and delivered under their existing operations models. Larger firms binge on cheap loans while ignoring their exposure to interest rate fluctuations—while some of their assets lay around under-utilized. Fundamentally, what firms are missing out is the opportunity to integrate financing and operations into a more robust business model, where bootstrapping is no longer the prerogative of startups and where assets can be “de-fixed”—all for greater agility in business models.
Product futures are goods and services to be delivered in the future. Some notable examples of presell-able products include fine wines, electronic components, vacation bookings, and software licenses, etc.
From the perspective of sellers, we provide a channel for them to sell product futures that allow them advanced market access and that protect them from market uncertainties. If the seller is also raising funds, they also get to leverage valuable aspects of their existing operations that have been regrettably overlooked as financing resources.
Notably, firms enjoy far greater agility in business models: Selling product futures makes possible early market access—before the capacity would catch up; it also reduces the seller’s exposure to demand and price uncertainties. Buying product futures of goods in the upper stream of a firm’s value chain allows the sourcing firm to hedge against supply and price uncertainties, particularly when the product is new or otherwise in high demand. Additionally, tokenized goods can be traded at little cost before delivery. Thus, low-demand and made-to-order products or other non-refundable orders can become more liquid, helping every stakeholder in the process. Firms can also monetize their fixed assets without losing them in the process.
To read more on our concept and how tokenization can benefit businesses more than existing alternatives, please read our White Paper.