Tórónet’s concept of AgriFi entails how blockchain technology can provide cost-effective solutions to some of the key challenges facing agriculture in the Global South.
Bolaji Akinboro, a Nigerian co-founder of Tórónet, is one of the leading advocates of AgriFi.
In the North Eastern part of Nigeria, Bolaji’s home country, thousands of smallholder farmers still use camels to get their farm produce to the market and the lack of access to credit facilities continues to hinder productivity.
Across the Global South, there are millions of smallholder farmers who face such difficulties. Governments across the Global South, the UN, and NGOs have formulated policies to tackle these lingering problems but have failed to effectively address them.
True to my conviction that blockchain's enormous disruptive potential can change the status quo, I recently sat down with Bolaji to explore AgriFi and Tórónet, its underlying protocol.
Mr Bolaji, how did your journey to blockchain begin?
Being a blockchain entrepreneur was the natural next step in my fintech journey. The first phase of fintech on the continent pertains to using technology to expand access and opportunities for people. This is where my journey started when I co-founded Cellulant back in 2004.
The second phase pertains to embedding fintech to be part of business workflows, with a focus on enterprise customers. This is what we see today as most thriving, large-scale businesses rely on some form of fintech.
The third phase of fintech is about communities, connections, and disintermediation. This is the phase we are pioneering, and only blockchains enable communities to bridge the divide between the physical world and the digital world in the most efficient way.
What exactly is Tórónet?
Tórónet, Africa's first Layer-1 blockchain protocol, was specifically designed to power the tokenized economies of the future.
It sits at the intersection of decentralized finance and traditional finance, aiming to empower the many rather than the privileged 1% in achieving their aspirations for real-world assets.
Tórónet delivers the necessary infrastructure and tools to create customized tokenized economies unrestricted by geography that foster shared prosperity.
Just as Voice over Internet Protocol (VOIP) and mobile phones revolutionized communications, Tórónet (money over Internet protocol) will transform aspirations for shelter, energy, consumer electronics, food, a healthy environment (circular economy), healthcare, transportation, and an Ubuntu (equal opportunity) society through various projects on the chain.
Tórónet is owned by a decentralized autonomous organization (DAO) instead of a corporation or single entity; it is governed by community members holding TóróGs, the platform's governance tokens.
These tokens represent the ownership keys of the layer-1 protocol. They enable users to propose and vote on initiatives, the ability to launch smart contracts, and effectively make their holders the owners of the network.
Co-founding Tórónet must have come at a great price. Can you tell us how it all started?
We observed that the majority of people in Africa and the Global South struggle to rise from the bottom of the pyramid to the middle class. They often live paycheck to paycheck, with daily or seasonal income, and face the challenge of realizing their aspirations.
Acquiring real-world assets, enhancing household incomes, and ensuring family security remain elusive dreams for many.
Although digital payments and financial services are gaining traction in Africa, the existing business model and system (high-interest rates, transaction costs, and currency debasement) perpetuate an unequal wealth distribution designed to keep millions in poverty.
Web 3.0, powered by blockchain infrastructure, can change this.
We looked at the current formulation of Web 3.0 infrastructure, and we decided that the Global South needed to build on the learnings from the Global North and create this addition to the global Web 3.0 infrastructure; that is what we call Tórónet.
What were the early challenges you faced in building Tórónet?
The project to launch an alternative layer-1 that is useful for everyday use cases in Africa came to us in 2017. One of the big challenges we have faced was explaining to people why we chose to build an alternative layer-1 and why it had to be different from existing ones.
Some of our choices and criticisms of existing solutions were unconventional at the time. Remember, these were the days when projects raised gigantic amounts of capital based on nothing but promises about the future in a text document.
We’ve advocated for solid tokenomics based on value creation instead of printing tokens out of thin air; we said from the start that without being connected to value creation in the real world, it would be hard to have a sustainable network.
We’ve advocated for a Proof-of-Stake consensus mechanism, a native token that is a stablecoin in order to provide stability, and a stakeholder model where users and value creators co-own the network instead of venture capitalists.
Our focus has always been: how do we make this great technology readily available so that it can benefit people beyond speculative trading? It has been interesting to see that years later, a lot of the space has been moving toward our initial claims.
Let's talk about AgriFi and how the Tórónet protocol is designed to serve it. What's AgriFi?
Smallholder farmers often lack knowledge of available funding, market linkages, and how to access various forms of capital.
AgriFi is addressing this issue by unlocking capital flows and opportunities in agriculture, leveraging blockchain technology to make millions of nano-farms investable.
Unlike other sectors, agriculture provides investors with annual exits, making it an attractive investment option.
Agriculture is a $125 billion sector in Nigeria, accounting for 25% of GDP. In comparison, financial services represent a $10 billion segment (2.5% of GDP), and oil and gas, including other extractive industries, account for $50 billion (10% of GDP).
However, agriculture attracts less than 1% of capital inflows into Nigeria.
AgriFi connects farmers to suitable capital providers and markets, enabling them to achieve the best value for their crops.
What are the main challenges in AgriFi?
The main challenge is identity management and trust. Smallholder farmers typically have problems with getting businesses to trust them. We solve this by bringing together a network of partners that serve as real-world validators to bring these farmers on-chain.
We’ve got USAID extension service partners on the ground, local banks, food aggregators, crop insurers, input suppliers and tech experts all working together around AgriFi.
How is blockchain technology capable of addressing them?
We are using the concept of soul-bound tokens to create, for every farmer on Agrifi, a digital business profile. This is an NFT token that is unique to the farmer and serves as his global identity and business profile.
The underlying data is created by validators who are extension partners that are based in the community. This construct makes the invisible farmer visible to everyone that needs to interact with the farmer.
Tórónet as a layer 1 blockchain protocol is feasible in a growth market like Africa. How do you explain its potential for growth in your country?
The potential is huge; this, in my view, is a trillion-dollar impact technology that will unleash economic opportunity that hitherto could not be unleashed.
What, in your view, is the biggest challenge facing the implementation of blockchain technology?
The bad stuff that has happened with the cryptocurrency use case is giving blockchain as a technology a bad reputation. We need to do a lot of user education so that people can realize that there are millions of other use cases.
Many people think crypto is blockchain, but it’s just the first blockchain use case.
Any parting words?
At Tórónet, we believe the future will be tokenized, and that this is a natural evolution of the Internet. We also believe that African economies can use this technology to leapfrog their path of development to gain prosperity in the age of digitalization.
Yesterday, the Federal Government of Nigeria approved the national blockchain policy. We make a call to the FGN to set itself up on Tórónet so that its vision of sovereignty can be achieved.
We call on those who want to be part of this journey to join us in shaping the economies of the future.