Avalanche is now powering the on-chain infrastructure behind India’s traditional credit system, which has long relied on paper receipts and slow verification. Arya. Ag, one of the country’s largest operators of agricultural warehousing and one of India’s most notable borrowers, is moving its financing infrastructure to a dedicated Avalanche Layer 1 developed with Finternet Labs.
Announced at the Global Fintech Festival in Mumbai by Infosys co-founder Nandan Nilekani, grain deposits, electronic warehouse receipts, collateral position, and loan records will be linked on a common ledger.
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From Paper Receipts to Verifiable Collateral
At the heart of this effort is the electronic Negotiable Warehouse Receipt, or e-NWR. A farmer deposits produce in a regulated warehouse and receives an e-NWR that establishes its title. That receipt can then be used as collateral, with credit accessible to the farmer, while they don’t have to sell immediately after harvest when prices tend to be lower.
Source: Binance
In practice yet verification has been slow and subject to fraud. Lenders have found it hard to tell whether grain is present or if its volume exceeds the receipt, and whether the same receipt has been pledged as collateral elsewhere.
Double-pledging and manual reconciliation have increased the risk and expense. The Avalanche network is designed to bridge that gap. Arya. Ag will run its own dedicated Layer 1, which it intends to open up to other warehouse companies; Finternet will provide a composite token encapsulating farmer, commodity, warehouse, and insurance information into a verifiable object to determine collateral risk.
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Pilot, Not Migration
Arya. Ag oversees over $2 billion of agricultural commodities in over 12,000 warehouses in the US. It enables $1.26 billion in loans annually, while its lending service, Aryadhan issues roughly $230 million each year. The lead consortium will reportedly consist of four to five lenders, including the startups, and three major banks are said to be participating in a pilot.
The billion figure reflects inventory held in storage, not loans onchain. It began earlier this year and a public launch has not been announced. As far as this launch is concerned, this should be viewed as an infrastructure piece that’s still in pilot mode not a complete migration.
For the blockchain industry, the real story is the use case, not tokenized Treasuries for institutions, but connecting infrastructure to producers and rural credit markets. That builds on the existing Indian structure for e-NWRs rather than creating a new form of ownership and may keep the project on the regulators’ good side.
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Operational Test Will Define Success
What comes next for tokenized ag finance the next step will be operational. Will repeat loans against onchain receipts be normal? Will verifications and costs fall noticeably? Will double-pledging decrease? Finternet’s model builds on proposed interoperable financial architectures by Nilekani and former Bank for International Settlements General Manager Agustin Carstens that set out consistent ledgers for tokenized assets. India’s policy environment is positive.
Source: Bombay Chamber
In December 2024, the government announced a 1,000 crore rupee Credit Guarantee Scheme for e-NWR-based pledge finance, to motivate banks to lend against crops stored in approved warehouses. If onchain verifications reduce risks, Finternet could help that guarantee. Obstacles remain. Blockchain doesn’t prevent commodity price risk, crop quality risk, or borrower credit risk. Warehouse quality and Transport insurance, and reliable supply chain data at entry, still matter.
Source: EQT Group
Tokenization doesn’t necessarily lower rates or speed approvals unless lenders alter underwriting. Mainly for investors, developers, and against rival Layer 1 ecosystems, the project is a benchmark. Proof-of-capacity for Avalanche would show that Layer 1s can handle regulated tasks. If the project can’t grow past a pilot, it adds to doubts that tokenization can deliver on its promise to scale.
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Ananthyka J is a market reporter at Tronweekly, reporting on cryptocurrency news. She covers cryptocurrency markets, blockchain technology, and digital asset regulation, focusing on Bitcoin, Ethereum, DeFi, altcoins, and crypto policy. Her reporting emphasizes clear and accurate market coverage, including crypto market movements, regulatory developments, and blockchain adoption. She holds a BA in Journalism and Mass Communication and an MA in Communication and Media Studies. She has also completed multiple media internships, follows strict editorial and fact-checking standards, and discloses potential conflicts of interest when reporting.
