Celebrating Ethereum: The Technology Empowering the Next Generation of Social Impact
Cover art by @zoltantasi
Today, we celebrate a milestone that has transformed the world of finance, governance, digital assets, and of course, social impact: the 8-year anniversary of the launch of the Ethereum blockchain. From its inception, Ethereum has been a catalyst for change, fostering countless projects that leverage its technology for social impact.
In this post, we highlight five key areas where Ethereum has been instrumental in empowering individuals and communities to drive social impact: Smart contracts, Decentralized Autonomous Organizations (DAOs), Stablecoins, New funding models, and Non-Fungible Tokens (NFTs).
1. Smart Contracts – a powerful tool for social impact
One of Ethereum’s core features is its ability to create smart contracts – self-executing contracts with the terms of the agreement directly written into lines of code. They are one of the key innovations brought about by blockchain technology, particularly Ethereum. These contracts automatically execute transactions and store information when predetermined conditions are met, without the need for a central authority, legal system, or external enforcement mechanism. This digital automation reduces the need for intermediaries and provides a highly secure, immutable, and transparent method for executing and recording transactions. With their ability to eliminate unnecessary intermediaries, enhance efficiency, and establish trust and transparency, smart contracts have found widespread applications in various sectors, from finance and real estate to supply chain management and legal processes.
These contracts have become the backbone for numerous social impact projects, by enabling the transparent and automated delivery of important services. One example of a project making use of smart contracts is Etherisc, a decentralized insurance provider offering affordable crop insurance for smallholder farmers. Crop insurance is a vital tool for farmers by protecting their crop yield from extreme weather events such as drought or flooding. Despite the value of this tool, only 3% of smallholder farmers in Sub-Saharan Africa use it, putting them at a huge disadvantage, and putting their livelihoods at risk. Etherisc is hoping to address this by building an insurance framework that is compatible with all Ethereum Virtual Machine (EVM) compatible chains, and makes use of Chainlink’s oracle network which provides a reliable connection to external weather data sources. In the event of an extreme weather event, insurance policies are triggered automatically and payout the insurance to the policy holder. The end result is a fair, transparent, and tamper proof process, where payouts are made in a timely manner.
#CropProtection! 🌾
— Etherisc (@etherisc) July 31, 2023
We have protected 30k+ farmers, lowered 80% of insurance transaction costs for them, and brought down claim payout time to 24hrs - 5 days. #blockchain #defi #insurance
Find out more: https://t.co/ZKpFKTxlOl pic.twitter.com/HXEUWwDENJ
In addition to the obvious benefits that come with an objective, tamper-proof payout system, this project could save farmers a substantial amount of money in insurance premiums, opening up access to crop insurance for millions of smallholder farmers. To date, Etherisc is already reaching over 30,000 farmers with this revolutionary tool, while also reducing transaction costs for farmers by a whopping 80%!
Smart contracts are also the technical backbone of Decentralized Autonomous Organizations (DAO), which we will cover next.
2. Decentralized Autonomous Organizations (DAOs) – a gamechanger for community organizing
Decentralized Autonomous Organizations (DAOs) are blockchain-based entities that operate through pre-programmed rules, without the need for centralized control. DAOs are governed by smart contracts on the blockchain, which execute functions and enforce decisions based on consensus mechanisms or a set of programmatically enforced rules. Essentially, DAOs enable a group of people to collaborate and make decisions without traditional hierarchical structures, aiming to promote transparency and eliminate the need for intermediaries.
The concept of DAOs gained attention with "The DAO", which was launched in April 2016 on the Ethereum blockchain. "The DAO" was intended to operate as a venture capital fund for the crypto and decentralized space, allowing anyone to propose projects and vote on them. Despite its innovative approach, it is also known for the infamous hacking incident where approximately $50 million in Ether was stolen, leading to a hard fork of the Ethereum blockchain. This incident brought attention to the potential risks and the importance of security in DAOs, shaping subsequent developments in the space.
However, just like a phoenix rising from the ashes, several incredible social impact DAOs have been borne in recent years, including VitaDAO, a community-owned collective dedicated to funding and advancing longevity science research that can improve people's lives. VitaDAO is a decentralized community of researchers, technologists, and community members, who earn VITA governance tokens for their contributions which can then be used to vote on funding activities and DAO governance proposals. To date, VitaDAO has deployed over $4M in funding to 17 longevity projects, engaging over 9,000 community members along the way. VitaDAO serves as a great example of how DAOs can be a revolutionary tool to empower the community and drive social impact.
3. Stablecoins: beyond traditional currency
Stablecoins have become an integral part of the Ethereum and social impact ecosystems in recent years. Stablecoins are a type of cryptocurrency that are designed to minimize price volatility by being pegged to a stable asset or a group of assets, typically reserve currencies like the US dollar or assets like gold. This pegging mechanism allows them to offer the advantages of cryptocurrencies, such as speed, security, and privacy, while maintaining price stability, making them suitable for financial transactions. Although the first stablecoin, USDT was launched on the Bitcoin blockchain and pre-dates Ethereum, stablecoins have become a staple in the Ethereum Ecosystem with the adoption of several large-cap Ethereum-native stablecoins like USDC and DAI.
One example of a social impact project making use of stablecoins is Glo. Glo is the provider of USDGLO, a stablecoin launched on the Ethereum blockchain that is pegged to the US dollar and backed by a combination of cash and Treasury Bills. What makes Glo unique, is that all yields earned through the Treasury Bills are donated to GiveDirectly, supporting their efforts in the fight to end extreme poverty.
Interested in learning more? Check out our interview with their Co-Founders Garm Lucassen and Jasper Driessens where we discuss how stablecoins can be an important tool to fight extreme poverty!
An overview of Glo Dollar’s process
4. New funding models and crypto philanthropy
In the realm of fundraising and philanthropy, Ethereum has also revolutionized how charitable organizations and social impact movements secure funding. Crypto Philanthropy, for example, is one of the most exciting developments to emerge in the “tech-for-good” world in recent years, with thousands of nonprofits signing up to receive crypto donations including big names like UNICEF, the American Cancer Society, and Save the Children. While the first philanthropic fund, Pineapple Fund, was actually launched on Bitcoin back in 2017, Ethereum has become a key driver of the crypto philanthropy movement since then.
Endaoment, for example, is a crypto philanthropy platform built on the Ethereum blockchain and is the worlds’ first on-chain 501(c)(3) nonprofit. Endaoment has served as the bridge connecting crypto donors with the nonprofit organizations they seek to support for more than two years. Endaoment is currently the only platform to offer smart contracts with fully composable addresses to any 501(c)(3) nonprofit that is in good standing with the IRS—a feature that is completely free for nonprofits. To date, Endaoment has facilitated over $50M USD in donations and onboarded nearly 8,000 nonprofits to the platform.
Beyond crypto philanthropy, builders in the Ethereum ecosystem have also pioneered innovative new models for funding public goods. This includes Quadratic Funding, a crowdfunding mechanism that elevates the crowd’s favorite projects by contributing more matching funds to the grants that receive the highest number of contributions, not the highest value of contributions. This amplifies the impact of smaller donors and ensures funding decisions are truly representative of the communities wishes. Gitcoin has pioneered Quadratic Funding through their Grants Program, a quarterly initiative that provides grant funding to Web3 public goods projects. Through this program, community members can donate to the projects of their choice, with Quadratic Funding being used to allocate matching funds to the projects with the most widespread support. To date, Gitcoin has facilitated over $50M USD in contributions to nearly 4,000 projects.
5. NFTs: more than just JPEGs
Non-Fungible Tokens (NFTs) are unique digital assets stored on a blockchain that certify a digital asset to be unique and therefore not interchangeable. They can represent a wide range of tangible and intangible items, from digital art and music to virtual real estate and digital goods, providing proof of ownership and authenticity in the digital realm. Although the first NFT actually pre-dates Ethereum, the growth of the NFT movement over the past five years can largely be attributed to Ethereum, which has dominated the NFT market in terms of transaction volume.
NFTs have been a huge catalyst for positive change in the Web3 community, with many NFT social impact projects emerging in recent years. This includes philanthropic projects, like Untamed Elephants, a mission driven NFT project dedicated to saving African and Asian elephants. Half of the royalties from NFT sales are donated monthly to three non-profit partners supporting elephant conservation efforts, with over $75,000 having been donated to date. We had the pleasure of interviewing Untamed Elephants’ Founder Adam Ghahramani on the Crypto Altruism podcast.
NFTs can also be used to incentivize positive actions, such as sustainable behaviors. Ecosapiens, for example, is “the world’s first carbon-backed collectible”, with each NFT represented by unique humanoid artwork and is backed by 16 metric tonnes of CO2 (the average person’s annual CO2 emissions). Holders have the opportunity to “level up” their Ecosapien by infusing it with additional Carbon. As it levels up, the dynamic NFT transforms with additional traits and artwork, including “various flora, fauna, mineral, and technological elements, hybridizing the entire spectrum of Earth's biological kingdoms with human technology.”
Check out our interview with Ecosapiens’ Founder Nihar Neelakanti where we discuss how Web3 is the perfect tool to incentivize climate action.
Looking Ahead: Ethereum and its Transformative Impact
As we celebrate eight years of Ethereum, it's clear that this technology isn't just about finance or technology. It's about building a better world. Ethereum has shown us the power of blockchain to tackle some of our most pressing societal challenges, and we're excited to see where the next eight years will take us.
From smart contracts that ensure transparency and accountability, to DAOs that reimagine governance, stablecoins that foster financial inclusion, to NFTs that contribute to social causes, builders in the Ethereum ecosystem are continually proving that blockchain is a powerful tool for social change. Here's to many more years of innovation and impact!
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