In April 2021, SokoWatch (now Wasoko), in collaboration with Mercy Corps Ventures and IDEO, launched a trial program to get retailers who use its app to make orders for their supplies and to store their funds on the app-based wallet.
Sokowatch has established itself as a last-mile delivery and inventory for retail customers across East Africa, recently raising $125 million in a series B round. Using an app, low-income retailers in communities across Kenya, Rwanda, Uganda, and Tanzania, can select their basic supply of goods to sell, and Sokowatch delivery agents bring them to their doorstep.
East Africa is one of the biggest markets for mobile money usage in the world with leading players such as Safaricom’s M-PESA and MTN’s MoMo continuing to make gains in the region and mobile money wallets being favored to store money.
In their pilot, SokoWatch trialled having their retail customers store funds on the SokoWatch wallet.
Here is how they did it:
SokoWatch incentivized the retailers to store funds on the wallet by introducing a yield-earning product. Users who left yield on the app earned between 1 – 2% in yield every week.
The trial was made possible by a $50, 000 grant from Terra, which let SokoWatch stake 50, 000 UST, and earn between 18 – 20% annual percentage yield (APY).
According to SokoWatch, customers typically earn between 3 – 5% on their sales, so a yield between 1 – 2 % felt like a significant incentive.
Using Crypto Treasury
By depositing 50, 000 UST on Anchor protocol, a fast rising chain on Terra, SokoWatch was able to earn $2, 246 over the trial period.
The amount earned more than covered the rewards cost for retailer participation, which cost $989.
According to SokoWatch, the treasury held on Anchor required little management on their end and provided a lot more return given that savings accounts with traditional financial institutions in Rwanda generally offer less than 8% interest in a year.
While the solution seemed novel and demonstrated the potential to take advantage of the DeFi protcols to earn rewards, just 22% of retailers who signed up to the program actually took up the offer to leave funds in their SokoWatch wallet to earn rewards.
For those who made at least one prepayment and saw value and continued to use it, they, on average, added money 7 times over 10 weeks.
Nonetheless, since the cryptocurrency was held in a single SokoWatch treasury rather than individual crypto wallets for each merchant, they eliminated some of the biggest user challenges of owning a cryptocurrency account, which includes:
- Setting up the wallet
- Securing access (and being sure not to lose the key)
- Getting cash in and out of the wallet
According to SokoWatch and their partners, besides the impact that DeFi Treasuries can have, they also determined that the retailers who were in the pilot group were less interested in the opportunities for earnings, instead, asking SokoWatch for more improved services.
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