20 September 2021

Decentralized Impact Organizations for the Climate

'Olliten' has writen an essay proposing that a pilot Decentralized Impact Organization be formed to test the Social Policy Bond concept as applied to climate change:

Crypto has transformed grassroots-level organizing. For the first time in history, it is possible to economically align networks of strangers into working together by using programmable incentives and by providing them with tools to make decisions and govern shared resources in a decentralized manner. These new organisms are called by many “DAOs”, Decentralized Autonomous Organizations.

[A Social Policy Bond]and its bondholders together form an entity very similar to a DAO: the bondholders form a grassroots level organization and share an economic fate via the bonds they own. What is special about this type of "DAO" is that its token (the bond) derives its value from the quality of a public good. To distinguish them from generic DAOs, we’ll call these organizations "DIOs", Decentralized Impact Organizations.

The technology for creating crypto-native DIOs already exists. Six months ago, UMA Protocol launched a new crypto-derivatives product called "Key Performance Indicator Options". KPI options were originally created so that crypto protocols could trustlessly guarantee that their community receives rewards for hitting milestones such as increasing Total Value Locked (TVL). However, their design allows them to be used for SPBs, too.

KPI options are synthetic (ERC-20) tokens that will pay out rewards if a KPI reaches predetermined targets before the given expiry date. Every KPI option holder has an incentive to improve that KPI because then their option will be worth more.

The complete essay can be found here.

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