Cambodia is home to more than 3 million farmers, who represent almost 20% of its total population, while its agricultural industry accounts for more than 22% of the country’s Gross Domestic Product (GDP). While the agricultural industry is a critical component of Cambodia’s economy, very few of the country’s farmers have insurance policies to cover their crops. Without access to reliable crop insurance, hundreds of thousands of farmers risk becoming destitute following extreme weather events such as natural disasters, droughts, and floods. That’s why Arbol is working to bring parametric coverage to thousands of smallholder farmers across Cambodia in partnership with AGRIBUDDY.

To support this initiative, we are pleased to announce that the Chainlink Community Grant Program is awarding Arbol a grant to develop a fully decentralized parametric coverage program. As a result of this work, Cambodian farmers will be able to hedge against weather risks and protect their economic livelihoods in a trustless manner by using blockchain-based parametric coverage products facilitated by smart contracts. 

One key factor holding back crop insurance adoption in Cambodia is the skepticism of many farmers as to whether centralized insurance companies will fulfill their contractual obligations. With blockchain-based parametric insurance, real-world data automatically triggers payments to policyholders once predefined weather conditions occur, meaning no party can avoid its contractual obligations. Arbol’s insurtech platform intends to make the contract creation, evaluation, and execution processes completely decentralized and transparent, enabling farmers to verify that their contracts will execute as defined rather than placing trust in a centralized entity.

Arbol aims to complete the following objectives as part of this grant initiative:

1. Develop a custom-built Chainlink External Adapter to access IPFS data and compute parametric insurance contract payouts according to real-world data inputs. 
2. Deploy a high-availability Chainlink node to host the custom External Adapter while also providing Arbol and dClimate’s decentralized climate data network with a node for future Chainlink integrations.
3. Develop and deploy hybrid smart contracts with Arbol to implement numerous weather-based parametric protection contracts.

Arbol is working in partnership with Agribuddy and dClimate to make this vision a reality. dClimate is a Chainlinked decentralized climate data marketplace and ecosystem which serves as the settlement base layer for the Arbol platform. dClimate has supported over $200 million of parametric climate protection contracts in 2021. 

Agribuddy is an agritech platform that offers cashless financial services to farmers in a package of fertilizers, pesticides, seeds, drones, harvesters, agronomy advisory, and tractor services and lets them pay for them at the end of the harvest by selling their crops to Agribuddy. Since its inception, Agribuddy has reached more than 10 thousand farmers cumulatively.

Once completed, Arbol’s fully decentralized parametric coverage service will facilitate a derivative product for a cashless financial services provider in Cambodia to help protect farmers from inclement weather. If this pilot project is successful, the cashless financial services provider will increase operating capacity in rural areas of Cambodia. At the same time, the successful program would serve as a template for Arbol and Agribuddy to use to bring parametric coverage solutions to the rest of the world.

Commenting on the grant, Siddhartha Jha, Founder and CEO of Arbol, stated, “We are honored to receive this grant to develop a fully decentralized parametric coverage solution which leverages Chainlink’s leading decentralized oracle network and dClimate’s premier climate data ecosystem to trigger rapid payouts to policyholders. Since Chainlink’s architecture is transparent, any policyholder can verify that the data triggering their parametric contract is accurate, creating an improved and efficient experience for farmers as they are no longer required to rely on a centralized, subjective entity to pay out their claims.” 

Through the Community Grants Program, Chainlink continues to empower innovative teams, academics, and social impact projects that research and develop key tools and infrastructure to accelerate the adoption of hybrid smart contracts, secure oracle networks, and cutting-edge technology capable of creating a more economically fair world.

About the Chainlink Grant Program

If you want to learn more about the Chainlink Community Grant Program, check out our recent blog post that further expands upon its goals and the criteria for submission. We encourage talented individual developers and development teams to apply to the grant program here, or if you’re a researcher and want to collaborate, contact us. Chainlink Community Grants are provided in cash and/or LINK.