This past weekend, I spent 24hrs with my favorite blockchain developers competing in St. Louis at the Distributed: Trade 2017 Hackathon. The goal: to build the future of finance, supply chain, and trade networks using blockchain technology. By the end of the hackathon, we had built Depot. This post will dive into how we approached the problems facing supply chain and logistics and how we solved them.
Let’s start with the problem. Supply chain and logistics is going to be a $15.5 trillion market characterized by manual entry. Our goods get from point A to point B through spreadsheets and emails. Second, the vast majority of companies don’t have full visibility across the supply chain. This means that once the goods are in transit, companies don’t know for sure where the goods are. And, finally, because goods are shipped manually with low visibility, the system is very rigid. This prevents the system from handling any sort of disruptions. This has lead to $350 Billion in economic loss over a year’s time period.
Depot solves these problems by coordinating global trade with tokens through decentralized networks. We built a supply chain and logistics protocol that could connect every company across the globe. This required creating a protocol capable of vertically and horizontally integrating customers and competitors in a collaborative way. But, how?
We decided to find the common thread across all of the supply chain: space. Depot quantifies and qualifies all of the available space from warehouses and semis, to shipping containers and airplanes through time and space and put it on a public blockchain marketplace.
To do so, we used a non-ICO ethereum ERC20 token and agreement protocol that anyone in the world could access. Within the protocol, we have tokens that represent cubic space. This cubic space is put on to the blockchain marketplace as available for use by those entities who have it. In our system, these entities were called providers and could be companies like FedEx, Walmart, Maersk, etc.
Furthermore, this tokenized space has unlimited attributes such as time, distance, weight, temperature, hazardous capabilities, etc. No matter the space type, from transportation like trains, planes, and container ships, to storage space like warehouses, a provider of the space could represent it on the blockchain to any entity who would need it.
This space would then have a price attached to it based on what the provider of the space believed it to be worth and current market rates.
In addition to space, the protocol has “agreements” that track the spaces current state and allows for IoT integration to provide real-time visibility. This IoT integration point allows the protocol to adapt as the future of supply chains progress and become more automated.
Once space is on the marketplace, entities who need the space, called requestors, would go to the marketplace and use automated procurement tools to reserve space based on price, locations, etc. through internal metrics. So, for instance, let’s say that a furniture manufacturer needs to ship a sofa from Memphis to NYC. They would go to the marketplace and choose specific transportation space and storage space to get to the end point by the time they need it. This could mean selecting FedEx to ship the sofa from Memphis through air freight; sitting the sofa at any available warehouse in Newark for a few days; and then utilizing a box truck company to get it from the warehouse to the end point.
In a sense, you can think of this as Golem Project for the supply chain. Instead of utilizing computers with extra computing capacity, Depot utilizes excess transportation and storage space across the globe. This capability gives small and medium size companies the ability to have a supply chain and logistics network as capable as Amazon’s to move their goods.
Same-day delivery is now democratized across the supply chain because of the new value networks that are created. These value networks were previously impossible because of the middleman overhead and inability to trust an unknown entity on the other side of the world. No longer will you need volume to have access to reasonably priced transportation and storage space. Depot connects parties through its protocol and protects those parties through the blockchain.
Additionally, this protocol flattens supply and demand spikes by distributing loads across the network in a more liquid fashion. This protocol eliminates the silos of individual transportation and storage companies. Customers and competitors now all work together towards a common goal. Collaboration is now a requirement.
Depot ended up taking home the 2nd place price, 3k in Bitcoin and an opportunity to present in front of the Distributed: Trade 2017 Conference.