SÃO PAULO — A Brazilian fintech firm, Tanssi, is rolling out a government-backed blockchain project that involves microloans for farmers in São Paulo, following the pilot of a local currency in the town of Santo Antônio da Alegria.
During an interview with CoinDesk at the Blockchain Conference Brasil in São Paulo, Tanssi’s Director of Business Development, Luis Dal Porto, revealed that the microlending service is set to be launched next month, with a mobile application for its use already being live.
The project, called TerraLogs, is backed by São Paulo’s city government and offers up to R$15,000 ($2,800) in fast loans to small-scale rural producers. The system runs on a blockchain infrastructure built with Tanssi, which lets developers create dedicated blockchains, or “appchains.”
According to Del Porto, the proje
While blockchain technology is used in the service, it’s done so only on the backend.
“In practice, the blockchain isn’t even seen. It is a mobile app that they offer to producers. They also have physical payment machines,” Dal Porto told CoinDesk. “It is an entirely closed ecosystem they offer to achieve more control of how the credit is used and to mitigate risk.”
The fintech behind the project chose Tanssi over public blockchains like Ethereum or Solana due to concerns over performance and cost, Dal Porto added. With public funds involved, the team prioritized predictable transaction fees and reliability, two things that are harder to guarantee on public, permissionless networks, which have in the past experienced issues with congestion, volatile transaction fees and, in some cases, downtime.
“A classic problem with any public blockchain is that there are moments of bottlenecks, moments of more expensive transactions. This takes away something that is very important to them: predictability,” Dal Porto explained. “They need to have the predictability that they will spend that specific capital, and it won’t be more than that. If they charge 5% and, for example, if the fee goes up or down, it is a cost they cannot predict.”
Although Brazil’s central bank has paused full deployment of its Drex digital currency, the project’s backers expect municipal and private blockchain initiatives to continue growing in parallel.
The Santo Antônio project was announced last year and uses a token system to distribute municipal aid, such as food benefits, through a closed ecosystem that restricts how and where the funds can be spent. The tokens, accessed via a mobile app or physical payment terminals, are programmed to block purchases unrelated to the aid’s intent, like gambling on sports betting apps.
The São Paulo microloan program is expected to go live next month.
