Why Can a Cow Become Digital Collateral

The usual problem for small farmers is that banks are reluctant to accept livestock as collateral, since it’s hard to verify. It normally requires sending an inspector to the farm in person, and lenders typically discount the appraised value by as much as 60% to offset the risk, leaving farmers able to borrow far less than their herd is actually worth.

Cowmed, a Brazilian agtech startup, solved this by fitting each cow with a “Smarty Collar,” an AI powered sensor collar that continuously tracks health, behavior, and location in real time. That data is encrypted and tied to a unique digital ID for each cow on the blockchain, letting lenders verify an animal’s identity and condition at any time without visiting the farm, while also preventing the same cow from being pledged as collateral more than once.

The Opportunity for Tokenization in Agriculture

Cowmed already tracks over 100,000 cows across more than 1,000 farms in Brazil and neighboring countries, worth a combined R$2 billion (about $395 million). The company estimates that if 20% of farms in its network adopt this model, it could unlock as much as R$400 million (about $77.6 million) in new agricultural credit.

This is a clear example of how RWA tokenization isn’t limited to stocks, bonds, or gold. It’s reaching tangible assets that are part of everyday life for people working in agriculture, opening a window into how RWA tokenization is being developed worldwide to give people who lack access to traditional finance a real way to reach capital.