Linklogis Inc., a notable player in the digital supply chain financing sector, is set to adopt XRP Ledger (XRPL) to facilitate digital transactions as the company seeks to navigate the challenges stemming from a prolonged slump in China’s real estate market. This strategic move reflects their broader objectives to diversify and enhance revenue sources away from traditional market dependencies.
In a recent announcement, Linklogis detailed its plans to integrate its supply chain finance platform into XRPL’s blockchain network. This collaboration aims to streamline the circulation and cross-border settlement of digital assets linked to actual trade flows. By tokenizing invoices for legitimate international trade transactions, Linklogis hopes to make supply chain finance more efficient while simultaneously reducing the potential for fraud.
At the heart of supply chain finance is a model where companies leverage their creditworthiness to help suppliers secure needed financing through unpaid invoices. This arrangement benefits both parties—the company, often referred to as the “anchor,” gains additional time for bill payments, while suppliers receive immediate cash to support their operations. Linklogis serves as the intermediary, purchasing these unpaid bills at a discount and profiting when they are settled.
The integration of blockchain technology into this process can significantly enhance transparency and traceability, which are critical in preventing fraud and resolving disputes. Moreover, blockchain can cut operational costs by minimizing manual tasks and speed up transactions by removing intermediaries. Linklogis has already adopted blockchain for its “Multi-tier Transfer Cloud” product, which has rapidly become its most significant revenue generator since its launch in 2017.
The first half of this year saw the company process 54% more supply chain assets on its platform compared to the previous year, further underlining its industry shift towards digitalization. Although the specifics on how the XRPL collaboration will unfold are still limited, expectations are high that it will deepen Linklogis’ capabilities in blockchain solutions.
XRPL, established in 2012, is particularly noted for its efficient transaction processes, eliminating the need for energy-intensive mining through its pre-determined supply of the XRP token. This positions XRP as an attractive option for real-time international payments, contributing to Ripple’s stature as one of the top three cryptocurrencies by market capitalization.
Moreover, Linklogis is eyeing future collaborations in areas such as stablecoins and the integration of artificial intelligence with blockchain technology for global trade financing. As the company strives to pivot away from its dependence on the struggling real estate sector, the enhancement of its blockchain services is viewed as crucial.
Despite the positive movement in transaction volumes through its digital services, Linklogis has faced challenges regarding profit margins. As the company expands its blockchain offerings, it must also contend with the low transaction fees that come with digitalized services, which can diminish profit potential. A recent report shows that Linklogis’ net loss increased by 58% to about 378 million yuan ($53 million) during the first half of the year, despite growing demand for its digital financing solutions.
Amidst these challenges, investors have shown optimism toward Linklogis, with shares increasing over 50% in the past month following the announcement of the XRPL partnership. However, the company remains under pressure, particularly as the Chinese property market continues to exhibit signs of instability. While Linklogis is actively seeking new avenues for growth through blockchain technology, it remains to be seen if these initiatives will yield timely results in the current economic climate.
