Impact Market Founder on Decentralized Income Distribution to the World's Poorest
Detailed interview with the Founder on creating the largest decentralized UBI program
Just give them money, it’s the most effective research proven way to help people living in extreme poverty. GiveDirectly a US nonprofit has been doing just that by making direct cash transfers to people living in poverty for 10 years now. There is a new organization on the block that’s doing similar work but in a radically new way, achieving hyper scale and impact using a blockchain.
Meet Impact Market
Impact Market is an organization based out of Portugal distributing unconditional basic income in cryptocurrency (cUSD) directly to people living in extreme poverty. Impact Market uses smart contracts ( self-executing computer program with contract rules written into lines of code) to distribute unconditional basic income (UBI). In just over a year they have distributed money to 40K people across 30+countries. Funds are deposited directly into the wallets of people that are hard to access in places like Afghanistan, Venezuela, Congo, Ghana, Zimbabwe, Togo, Mali. Most of the countries on their list are war stricken, hyper-inflated economies where the dollar can make the most difference and have high penetration of smart phones.
Impressed and intrigued by the speed and scale, I interviewed the founder of Impact Market, Marco Barbosa.
Deepa: How did you come up with the idea of Impact Market?
Marco: I’m passionate about blockchain and social impact. I have a background in computer science and blockchain technology. I realized there are many tech platforms for fundraising but none focused on fund distribution. One of the biggest problem in philanthropy is that once you donate money there is no way to know where the money is going and how the money is being distributed. There is lack of transparency. That’s why I started looking into blockchain technology. I started Impact Market with the focus on transparency and fund distribution.
Deepa: Can you explain how Impact Market works?
Marco: Impact Market distributes unconditional basic income (UBI) to people living in places that have no access to finance. In places where people have no bank accounts and there is no way for people with means to send them money. The way Impact Market works is that everything is decentralized, money never goes through any intermediaries. The only intermediary between the donor and the receiver is a smart contract which is just a bunch of code. We work with Ambassadors in countries we are trying to reach. Ambassadors are people who like our mission and they know local charities supporting communities living in extreme poverty. The charity appointed manager sets up the UBI program for the community in our app (fills out a short form), the UBI proposal goes to our community (DAO) of token holders who reviews and votes to make that community live. What happens next is that it deploys a specific smart contract for that community with rules specific to the community’s requirements for eg $1 every 24hrs that each beneficiary can claim for a total of up to $400.
To claim funds the beneficiary has to download the wallet and the Impact Market app. Once they create a wallet they give their blockchain address to the manager who serves as the admin to the smart contract. The manager can add or remove the beneficiaries from the smart contract. The beneficiary have an opportunity to claim UBI on their app, that sends out request to the smart contract which verifies the wallet address and as per the smart contract rule dispenses funds directly into their wallet.
Deepa: So a crypto wallet is a must in order to receive funds. What if they don’t have smartphones?
Marco: Most communities have smartphones, the crypto wallet works even with older smartphones. In certain places where they don’t have smartphones we have to go through a partner who claims for them and then hands out the cash. For instance in Kenya we work with a partner that allows them to claim and then money goes through this partner. The use of intermediary is only in certain cases where people don’t yet have smart phones but it’s just a matter of time.
Deepa: Can you tell us about the cryptocurrency you are using for the UBI program?
Marco: We use a stablecoin cUSD that’s associated with the dollar. cUSD is the stablecoin of the celo blockchain on top of which we’ve built our protocol. Most of the countries we are in there is a lot of demand for dollar as its a much stronger currency compared to their local currency. Sometimes people cash out our cryptocurrency to make sure its actually money but in most cases there is no cash out.
Deepa: So you are saying in communities where you are giving cUSD people don’t convert to their local currency to buy food and other necessities?
Marco: People don’t need to and they don’t want to. In communities where we are the local merchants have started to accept our stablecoin. What we are seeing is that when people go with celo dollars to the merchant and if they don’t accept it they lose the client. Because of our UBI program people now have the buying power in celo dollars. So it’s in the interest of the merchant to accept or else they lose customers. The money is circulating in the community. Sometimes the merchants offer them the option to cash out. They charge a small fee for that. When we go to a new country people cash out to see what they are getting is real money. But in some places cashing out is difficult for instance in Afghanistan and Venezuela. Also we’ve seen there are other people who are trying to buy celo dollars from the beneficiary which is also kinda like a cash out.
Deepa: What were your early days like? How did you make contact with your first community?
Marco: Before COVID I went few times to Brazil and met lots of local organization there. I told them about my idea of UBI and if they would be interested in testing it out. Then COVID came and the need kind of exploded. in September 2020, we started with a small charity in Brazil serving a vulnerable community. Initially recipients asked how can they cash out to see if it converts to real money. The younger generation started teaching the older generation how to use the wallet. Slowly the word spread, one told the other about the UBI program. And then others started applying for the program. We have an Ambassador in Brazil who knows these communities really well and goes to visit them regularly. We also have Ambassadors in Togo, Mali, India, Nigeria and other places. Ambassadors are the people who work with us part time and they do the due-diligence on the community.
Deepa: How do Ambassadors get introduced to the community?
Marco: Ambassadors work for us (Impact Market). They are the people who know the nonprofit sector in the country. They know where the most vulnerable communities are. They are the ones who visit the community before onboarding them. But they are not the one onboarding the community to our smart contract, it’s the managers.
Deepa: Are the managers who are adding and removing the beneficiaries on the smart contract your employees?
Marco: No. They are employees of the local charity. The manager decides who should be part of the program and the minimum amount to be given is determined by the manager. Managers are the admins to the smart contract. They are the ones who submit the grant.
Deepa: How much of your process is automated?
Marco: Everything. Once the manager submits the grant, the DAO is automatically notified, they can read the proposal online. The process of approval takes about two days. It’s to give the DAO members time to review and vote. Once approved through majority or via the minimum voting threshold the contract becomes live. The smart contract does not dispense money automatically. The beneficiaries have to claim. The claiming process is important it helps us measure a lot of things and also it ensures contract does not spend money if not needed.
Deepa: Can you explain the UBI claiming process?
Marco: Members have to claim money and there is a time increment between each claim. The claim rules are defined in the smart contract. So the way it works is say you claim $1 in 24hrs then wait for 24hrs, 5mins for the next claim then 24hrs, 10mins for next $1claim. So the time between each claim expands a bit. One of the things we measure is how long it passes on average between the time they can claim and the time they actually claim. The difference in time on this is if it increases means urgency for UBI decreases because people are taking more time to claim and then UBI can last much longer. Beneficiaries are allocated a maximum amount they can claim so for instance $400 in total however daily claim amount could be set to$1 and so if they don’t claim for couple days they can have $400 last longer. They can continue to claim the set fixed amount per day till they exhaust the total funds allocated to them. These parameters are different for different communities and are set as rules in the smart contract
Deepa: The work you are doing is just WOW. What else are you planning?
Marco: UBI is just the beginning. We are also now working to provide access to microcredit, savings, learn and earn. We’ve launched a very light weigh wallet. Our current Valora wallet sometimes slows down the phone. We are working on identity and trust mechanisms, KYC (know your customers) without the traditional way which requires centralized systems. We are looking at social consensus where beneficiaries can vouch for each other and create reputation for themselves. Our goal is to decentralize more, we want to remove the managers from the equation and have people directly apply and a collective community vote for who should be in the priority to receive UBI.
Our goal is to reach 1 billion by 2030 and become one of the main contributors in eradicating extreme poverty and also in the process become one of the biggest decentralized banking system.
We are learning and improving constantly. Our aim is to have the protocol be completely decentralized and not be dependent on any company or individual. Even if we disappear as a company the protocol will still work and will be free and open for anyone in the world to use.
Deepa: How do you sustain your operation. Has decentralized tech had any impact in lowering overheard costs as compared to traditional nonprofits?
Marco: Our transaction cost is negligible. The only cost we have is our team and technology development. We are backed by couple investors. We don’t have any revenue streams at this point. The company has 30% $PACT token allocation. Higher the token appreciates the more money flows into the company.
We don’t touch any of the donations and 100% is distributed to the beneficiaries. For now part of the revenue streams we are considering is licensing our technology to World Food Program, GiveDirectly, Refugees Commission. With our technology these organizations can be cost effective, efficient and can achieve scale faster. We license our technology to them but they use their funds for their beneficiaries.
Deepa: How can potential donors participate. In what currency do you accept donations?
Marco: For now we accept donations only in celo dollars (cUSD). You can buy cUSD directly with a credit card from a crypto exchange then send it to your wallet and go to our website to donate. By donating you earn free $PACT governance tokens. Next month we’ll be opening up to accept donations in several crypto assets on the celo network. We use the celo blockchain as its proof of stake and mobile friendly. We also have plans to accept donations via credit card on our website which we then convert to celo dollars.
You can also just buy $PACT tokens and become an investor in the organization and have a say on the protocol. Or you can donate cUSD for the UBI program and earn free $PACT tokens.
I’m definitely blown away with the kind of scale Impact Market has achieved in just over a year - 40,000 beneficiaries, over 200 communities in 30+ developing countries with over 2 million dollars distributed. Also since every transaction is recorded on the blockchain and their claim system provides rich analytics to measure efficiency. I’m impressed how they are able to reach communities in the most challenging parts on the world without having their own presence.
If we had to go the nonprofit way, then we would have to setup subsidiary in each of the countries. The money has to flow from us to the subsidiaries. With our decentralized technology the scale is so fast and direct with no intermediaries. Doesn’t matter if the bank or govt allows we don’t care. People have access to internet they are ready to go - Marco Barbosa, Founder Impact Market
I’m also excited about the potential of other nonprofits using their technology to accelerate their efforts. It would definitely bring the power of blockchain to others. For instance World Food Programme in Afghanistan intends to use Impact Market protocol and Humanity Forward in America.
I’m also amazed to see how Impact Market is keeping donors in the loop. By earning $PACT governance tokens for their donation, donors become part of the protocol and can influence the UBI program. Impact Market’s documentation is thorough on every aspect which is needed for an open decentralized org that’s reliant on people learning and joining without the need of intermediaries.
I wish though the donation process was a bit easier as in its current form the donors need to go through lot of hoops to donate if they do not hold celo assets. With the kind of impact they are making and their ethos of decentralization and transparency I’m certain many more people would love to participate.
If you have any questions or ideas reach out to me on Twitter or leave a comment on my Substack.
Disclaimer: This article should not be taken as, and is not intended to provide, investment advice.
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