One question I often encounter on twitter or in real life is: What are the use cases for defi? People love to say many things: money markets, NFTs, speculation, and tokenized real estate to name a few. Most of these are untested or unpredictable. LandX offers an intriguing value proposition — real farmland and the commodities grow on them (currently planning to offer Rice, Corn, Soy, and Wheat) as a different source of predictable yield and funding. All of this available through the Ethereum network (or rollups in the future).
I recently tried out their test network to get an idea how it worked from a n app perspective.
The first token offered on the site was the capability to exchange stablecoin (USDC) for a tokenized version of a commodity (see below).
That tokenized commodity can then be staked on the LandX website can be staked on the website in exchange for a yield equivalent to the market value of 1 kg of the product.
An alternative offering is to get exposure to the xBASKET token, which offers exposure to an index of the commodity tokens.
I think this is interesting, as it is “yield farming” in a real sense since the platform purports to own land which these crops grow on. That’s a differentiator from other yield in defi, which is usually based off speculative future value of a network/token. This could be a way to give defi-native app users other ways to hedge market volatility besides sitting in low interest stablecoin vaults or chasing alpha.
According to the USDA, “Agriculture, food, and related industries contributed $1.055 trillion to the U.S. gross domestic product (GDP) in 2020, a 5.0-percent share. The output of America’s farms contributed $134.7 billion of this sum — about 0.6 percent of GDP”. These are big numbers, and…