Tokenization at Norilsk Nickel: current projects and plans for the future

MMC Norilsk Nickel became the first large company in Russia to use blockchain in a project to tokenize trading in commodity contracts. Norilsk Nickel introduced the Atomyze platform based on the Hyperledger blockchain in February 2020, and the first tokens were issued on it in December. In early 2021, ETC based on Nornickel’s palladium tokens began trading in Germany on the Deutsche Börse stock exchange. As Vladimir Gorgadze, head of the tokenization project, said at the IBM Blockchain Day conference, cooperation between Norilsk Nickel and IBM in the development of projects on the blockchain has made great progress in recent years, and joint initiatives look “very promising” both in Russia and abroad. Atomyze is the world's first large-scale initiative to create a platform for the tokenization of various assets. It will reduce reputational risks by confirming the origin of raw materials, and will also open up the possibility of monetizing long-term contracts. About tokenization The main advantages of blockchain for Norilsk Nickel are decentralization and lack of need for trust. This allows you to involve various market participants, including competing organizations, in tokenization projects.. One of the main goals of tokenization projects is to make investments in metals, metal-based products and contracts between market participants available to a wide range of people, including retail investors.. This will be useful both for the market and for Norilsk Nickel. Due to tokenization, the company gains access to non-debt financing on good terms and expands the circle of product sales. Norilsk Nickel will receive the full value of the sold metal, as well as additional income on commissions through transactions with tokens on the platform. The company will be able to refuse intermediaries, reduce transaction costs, optimize and digitize many processes. The pilot version of the Atomyze tokenization platform has already been tested by Norilsk Nickel among the company's partners, who have expressed their approval of the project. The main areas that the company implements within the framework of the platform: Tokenization of sales contracts – digitization of sales with the possibility of assignment of rights. Tokenization of the purchase of metal and metal-based products. This will simplify the turnover of products and attract more market participants interested in buying assets. Production chain tracking. Tracing the origin of metal is not only a “fashionable” trend. It allows all market participants to receive information about the quality of the metal, its origin and confirmation that unenvironmental and unethical methods were not used in the production process. In addition, Norilsk Nickel plans to launch another project in Russia – tokens based on services provided by the company's suppliers. “Tokens based on services are an innovation that we would like to test on the Russian market. Suppliers will document their services beyond the contract. This contract can be split, easily exchanged, monetized. This will lead to market flexibility, increase its efficiency, and for companies it will become a lever to promote the cost of products,” Gorgadze said. About choosing a platform Before settling on the IBM Hyperledger solution, Norilsk Nickel considered the various options available at that time. Gorgadze said: “Despite the emergence of new blockchains, we are still confident in the correctness of our choice.. Hyperledger technology is very flexible and allows us to implement many tools that we are interested in.. This is actually a blockchain constructor that makes it possible to create the blockchain that a business needs.. It allows flexible development of smart contracts. We are now exploring other smart contracts for other business applications, and we see that all this can be implemented on the Hyperledger platform.. The platform language allows you to implement many different functions that either cannot be created on other platforms, or this will cause difficulties in implementation. Hyperledger allows you to increase transaction speed and scalability. This is especially true in the financial sector, where Norilsk Nickel also plans to apply the technology. In particular, the need for fast payments can be easily implemented on the platform. In view of all these advantages, the company chose Hyperledger. About Blockchain In his speech, the head of the tokenization project noted that it is not easy to find blockchain specialists, as it is an emerging industry: “Technology, as always, develops faster than the pool of necessary specialists grows.. Therefore, it is necessary to organize training for specialists and run as quickly as possible in order to keep up with the times.” In June 2019, it became known that MIPT would launch a master's program in blockchain with the support of IBM and Norilsk Nickel. Gorgadze commented on the initiative and said that it was already the second year of study, and the institute, together with companies, was able to prepare “very good students.” “Students are promising, over time, the initiative can grow into a department that will train graduate students and conduct scientific work. We see great potential in the latter direction, since there are a lot of points in technology that require good, thorough research and documentation of processes.. We are also open to cooperation with other universities in Russia and abroad.” Gorgadze also expressed an opinion on how blockchain can be used for mining applications in Russia.. First of all, the technology will find application in the supply chain, where the blockchain will provide transparency for all participants.. This will help eliminate unfair competition among suppliers, as well as facilitate the assessment of product quality, its pricing, and make it easier for companies to control suppliers and their own resources. Blockchain will open up new opportunities for the global financial market by facilitating international transfers, mutual settlements and influencing other financial instruments.