Crypto Cherries: Can Tokenization of Coffee Brew Dividends for Ethiopia’s Farmers?

Ethiopia’s foray into the crypto space could have the country’s premier agricultural export item, coffee, tokenized as an ambitious startup prepares to introduce a blockchain-powered platform into the supply chain. Waga, which translates to ‘Value’ in Amharic, is set to pilot the project in mid-2025 that adopts the ERC-1155 token standard on Ethereum’s blockchain. The Standard allows creating and transferring multiple token types (fungible and non-fungible) in a single transaction.

Waga looks to leverage smart contracts and IoT (Internet of Things) to bring about transparency, efficiency, and fair pricing for farmers, roasters, and consumers. Under development for the past four months, the Platform is expected to integrate smart contracts, a trading portal, and tokenization infrastructure upon completion. If successful, it will be a pioneer in the multi-billion-dollar industry, as well as in real-world asset (RWA) tokenization, the process of converting real-world assets into digital tokens stored on a blockchain.

Co-founders Emanuel Acho (PhD) and Hana Terefe were interning at Nethermind, a London-based blockchain research and software engineering company when they decided to work on Waga. While they initially planned to launch in Uganda, the size of the Ethiopian coffee supply chain proved too alluring in the end. Hana, who stumbled into the crypto space a little over three years ago became fascinated with the technology’s prospects immediately.

 “It only makes sense to bring this to Ethiopia, one of the world’s largest coffee producers,” she recalled to Shega.

The arrival of Bitcoin mining firms and the pending introduction of laws about crypto assets, combined with the growing acceptance of blockchain technology, also provided additional impetus, according to Hana.  However, she recognizes the need to demonstrate its value to both regulators and supply chain participants. 

“We have to prove ourselves,” she noted.

However, despite its potential, the project faces a major bottleneck beyond its need for a multimillion-dollar investment. Ethiopia has banned cryptocurrency trading in 2022. Even as the country paradoxically emerges as a Bitcoin mining hotspot, with over 20 licensed farms now operational, regulatory uncertainty persists. 

Nevertheless, the tokenization of agricultural products is slowly gaining traction in Africa with the likes of Kenyan startup Project Mocha which allows farmers to issue tokens representing economic rights to their coffee trees. The Company allows token holders to gain a percentage of coffee sales for up to ten years while farmers are granted access to financing opportunities. One Million Avocadoes, another Kenyan startup is employing a similar model at the regional level while tokenizing the trees into NFTs.

In Ethiopia, smallholder farmers (who produce 95% of Ethiopia’s coffee) often receive way less than of the commodity’s retail value due to opaque pricing, delayed payments, and reliance on intermediaries. Despite coffee being a major foreign exchange earner for Ethiopia, making up around one-third of the country's export revenues,  poverty remains endemic in the sector with most farmers ploughing on less than half a hectare.

WAGA aims to streamline trade, enhance transparency, and integrate farmers into decentralized finance (DeFi) markets.

“Decentralize the fragmented coffee supply chain, is the core essence.” Says Hana. “By digitizing coffee as tokens, every step from farm to cup becomes traceable. Farmers retain ownership of tokens, bypassing physical storage constraints and insulating themselves from price volatility upon sale.”

The Platform assigns each physical coffee batch a token on the Ethereum blockchain, with metadata (origin, certifications, processing methods) stored on IPFS, a decentralized storage network. Chainlink oracles verify both the existence of the coffee reserves and real-time market prices, ensuring tokens are tethered to tangible assets.

Farmers can sell these tokens directly to global buyers via smart contracts, which automate payments upon delivery confirmation, reducing transaction fees by up to 70% and eliminating payment delays, according to the founders.

WAGA will also integrate with decentralized financing tools (DeFi), enabling farmers to use tokenized coffee as collateral for loans on decentralized platforms, providing liquidity to farmers who lack access to traditional banking.

This could mitigate a longstanding barrier, where most of Ethiopia’s smallholder farmers are unbanked, relying on informal credit institutions. If scaled, WAGA’s model might also attract ethical investors, as global demand for traceable, sustainably sourced coffee grows a market projected to reach up to $30 billion by 2030.

Recognizing gaps in digital and financial literacy the startup looks to kick off Waga Academy, an initiative to demystify blockchain technology for farmers. Through a series of workshops and accessible courses, the Academy hopes to simplify the technical jargon into an easily adaptable format.

If WAGA delivers on its promise, it could set a precedent for other commodities, from cocoa to tea, to leverage blockchain for fairer trade. The platform’s roadmap includes testnet deployment, (which refers to the process of deploying a software application, typically a blockchain-based application like a smart contract onto a test network) by mid-2025, followed by a mainnet launch (the official launch of a fully functional and operational blockchain network.)  will reveal whether decentralized technology can indeed brew systemic change in one of the world’s oldest industries.

McKinsey predicts that the value of tokenized assets (excluding cryptocurrencies and stable coins) could reach $2 trillion by 2030. Coffee, however, presents unique complexities: price volatility, quality variance, and geopolitical risks. WAGA’s success hinges on proving that blockchain can add tangible value not just novelty to a sector plagued by inequity.

While WAGA aims to shield coffee farmers from price swings, a critical question remains, what happens if the token itself becomes volatile if it’s not pegged?

 “Our token’s value is tied directly to coffee. Which means its pegged with coffee” says Emmanuel Acho. He believes, by anchoring it to real-world coffee supplies and using blockchain to track every step of production, WAGA ensures transparency and stability. 

“Think of it as a digital ‘coffee reserve’ that holds its worth.” The co-founder told Shega.

The founders are focusing on enterprise use cases and partnering with local banks for fiat conversions. Compliance with evolving frameworks like the EU’s Markets in Crypto-Assets Regulation (MiCA) will also be critical for cross-border adoption, according to their white paper.