envCoin: A Step Towards a Cleaner Future
Environmental degradation seems to be a fact of life in the twenty-first century. Despite humanity’s incredible innovations we are only beginning to face the immense negative repercussions of climate change and habitat destruction around the globe. Political agendas seem to turn a blind eye to these pressing matters, while poor accountability for corporate environmental objectives continue to make matters worse. Government efforts such as carbon taxation schemes penalize companies for their environmental destruction and remain ineffective due to bureaucratic shortcomings such as corruption and logistical issues with auditors.
The Solution: envCoin
Blockchain technology, which underlies Bitcoin and Ethereum may be uniquely suited to solve this urgent problem due to its trustless and decentralized nature. The solution comes in the form of a decentralized application (DApp) hosted on the Ethereum network that allows anyone to bet on the outcomes of environmental objectives corporations set for themselves.
In the diagram above, Company A sets a quantifiable environmentally oriented objective for itself and stakes cryptocurrency as a guarantee that it will meet its goal. Its goals and stake are written to a smart contract (1) on the Ethereum blockchain. Once recorded, auditors are hired by masternodes to record the initial status of the company. Individuals who verify their identity are given the opportunity to bet for or against the completion of the goal outlined by Company A (2&3). Individuals who place wagers on the company’s completion of their objective are placed in an Decentralized Autonomous Organisation (DAO) (4) and part of their wagers are placed in a pool (5). While working on projects to improve their company’s environmental footprint, Company A may place requests for additional capital from the pool. The DAO conducts votes on whether or not to grant the additional capital. Since the participants are invested in the company’s success, their votes will reflect the best interests of the company’s objective.
If Company A achieves its objective in the given time period, those who bet in favour of the company’s objective are rewarded the bet that was placed against it. However, if Company A fails to achieve their objective in their time period, those who placed wagers against it are rewarded the company’s stake as well as bets in favour of the company’s objectives. The rewards for each side scale with the growth of the opposition (i.e. higher wager for the completion of the objective will yield a higher reward for those who bet against it if the company fails).
In such a system, Company A is incentivized to set difficult goals to incentivize wagers against them, which are awarded to it if it meets its goal. This would raise the reward for wagers favouring the completion of the objective and thus make more capital available in the pool from which Company A can request funds. Furthermore, if Company A places a higher stake, a proportionally larger part of wagers placed in their favour will join the pool as capital available for their project. The smart contract will also provide a Quantitative Environmental Accountability Index which can be used to compare companies and allow high scoring, reliable and environmentally diligent companies to improve their public image.
Masternodes are stakeholders who are significantly invested in this DApp who are paid in tokens by the smart contract to allocate newly generated funds to the improvement of the DApp. Since, Masternodes are heavily invested, they stand to benefit from its growth. This DApp follows a similar DAO structure to Dash.
Implementation of of this DApp requires smart contracts which serve as the mediators between all parties in the process. The Smart Contract serves as a pool within which trustless parties can store wealth and know with certainty that it will later be redistributed appropriately. Both the DAO for the entirety of the DApp and DAO for the capital available for the project (5) can be implemented as Smart Contracts on the Ethereum network. Wallets for each type of stakeholder would be necessary to create a usable application.
Blockchain technologies are still in their infancy and still pose significant limitations in regards to the implementation of this application. The latencies of completing transactions on-chain is a significant issue that temporary off-chain storage can help mitigate. Within the context of this DApp, user actions will be stored temporarily, committed to the respective Smart Contracts and will assume completion to ensure a responsive user experience that is not affected by ethereum network clogs. Although this solution is not ideal, an unresponsive site could greatly inhibit general adoption. Additionally, the cost of on-chain operations may also be a significant issue due to the many layers of Smart Contracts that need to be executed. Solutions such as the Casper protocol, sharding and multisig. which are currently under development, may aid significantly in reducing latencies and costs.
We carry the responsibility of amending the problems we create.Regardless of the current technical limitations, this ethereum token concept has the potential to drastically change the way environmental issues are tackled. In the twenty-first century, we face many global environmental challenges and envCoin may bring us one step closer to a cleaner future for generations to come.