Trade finance is a type of financial service that allows businesses to pay for goods or services before they have received payment for their own goods or services. It is often used to fulfil short-term capital requirements.
Web3 natives, or those who are native to the decentralised web, have an opportunity to start a business in trade finance. By providing convenience to clients, these businesses can charge a premium for their services. This is especially important in the cryptocurrency space, where async communication and time-zone differences can lead to decreased productivity.
One way Web3 natives can stand out in the trade finance space is by offering fast turnaround times for large fund conversions to fiat currency. By doing so, they can provide a more convenient service than over-the-counter (OTC) trades.
However, there is always the risk of working with untrustworthy parties. To mitigate this risk, businesses can base their commissions on the track record of the trusted party. Those with a high liquidity and total value locked (TVL) may be charged a lower commission, as the risk is lower.
By building trust in the bear market, these trade finance businesses have the potential to become highly sought after in the bull market. By providing a valuable service, they can rise to the top and become leaders in the industry.
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