Tokenization-enabled sustainable deep-tier supply chain finance

Deeptier supply chain finance (DTSCF) extends financing beyond firsttier suppliers to small and medium-sized enterprises (SMEs), supporting fullchain environmental, social, and governance (ESG)objectives. This study is the first to integrate blockchain-enabled invoice tokenization into a three-tier game-theoretic model of a green supply chain, jointly capturing credit and liquidity risks under demand uncertainty. We derive closed-form equilibria to quantify how tokenization, with and without factoring, affects operational decisions, green investment, and profits. Our results present three key findings: (1) with moderate liquidity, invoice tokenization significantly enhances supply chain efficiency and increases profits for all parties by resolving credit traps, particularly when combined with factoring; (2) with high liquidity, tokenization stimulates increased production and green investments among tier-2 suppliers and improves supply chain efficiency, though it does not influence tier-2’s factoring decisions; (3) with low liquidity, tokenization offer limited value in encouraging factoring, thereby contributing minimally to supply chain resilience. This research highlights the transformative potential of blockchain-enabled invoice tokenization in promoting sustainable financial practices within supply chains.