The Hunt for Impactful Use Cases from the Crypto For Good Fund: What 15 Blockchain P... | Devcon SEA

[Music] good morning everyone my name is Timothy and I'm from Uganda and I work with maso Ventures which is the impact investing arm of maso which is a global nonprofit um operating in more than 40 countries across the world um and today I'm here to share more about um what we've learned from running more than 15 Pilots across imagi markets um so I lead the crypto Venture Lab at maso ventures and I'll just give you a quick intro of maso Ventures um so we like I said we are the impact investing arm of maso and to date we've supported over 50 startups um that have gone on to raise over $500 million um and our thesis is centered around increasing the financial resilience and climate resilience of people in Emerging Markets um so in terms of what I hope to cover today one is about the crypto for good fund um which is an initiative by maso Ventures and two is an overview of what we've seen in the web 3 ecosystem in imaging markets and then three I hope to provide you um three deep Dives on a few Pilots that we've run um as part of the crypto for good fun fund so I guess quickly um about the crypto for good fund um I guess a good place to start is the context that led us to to to launch the crypto for good fund and there's two important things to note um you know web three hype hasn't muched reality um there's always been you know everyone is aware of the promise of blockchains but as we stand here today much of that hasn't been felt especially in the mai markets um we still have billions of people who are financially excluded um over 1.7 billion adults and nearly 60% of these happen to be women um and at the same time um you know climate vulnerability is a real thing and we have over 120 million people at risk of falling into poverty because of the effects of IM of climate change which are being felt the most in imagin markets um so it's sort of these these um realities are sort of what led us to launch the crypto for good fund and with the crypto for good fund our aim is to close the hype Gap in web 3 um and we basically do this in two ways um so one is we partner with different startups to launch Pilots that are testing out real world use cases of web 3 and two is we share all the findings that come out of these Pilots publicly um you can access all the reports on on our website which have all the key learnings and insights that come out of these Pilots um yeah and then a quick overview of where we are today um we've launched over 15 Pilots to date um and these Pilots are running across 10 countries in Africa Latin America um as well as South Asia and um cumulatively our Pilots have reached a total of more than 40,000 participants and we've deployed over2 million do across these Pilots um so just want to quickly share with you a few of the learnings that we've seen um coming from reviewing you know so many different applications and and also seeing the pilots that have been running um as part of a crypto for good fund um so we've we've we've had over three rounds of the crypto for good fund so far and we've received more than 500 applications and across this pool a a few patterns have emerged one is that the web 3 space is still nent in Emerging Markets about um only 30% of the startups applying for the crypto for good fund have actually completed a foral fundraising round so many of these companies are at the precede stage and then the second interesting um promising finding is that many of these startups are actually targeting Builders um actually targeting user groups which are unders solved and um from our from our statistics we see that the most popular segments are small holder Farmers lowincome people as well as MSM um so now I'd like to provide a quick overview of some of the high impact Pilots that we've seen out of the crypto for good fund and provide you a deep dive on three of these Pilots um so these are a few of the pilots that we've run and as you can see they span a variety of sectors and geographies um and they have a wide range of user groups all the way from low income users to small holder Farmers um for instance we run a pilot to provide um smart contract weather insurance for 12,000 farmers in Kenya and this was in partnership with EA Africa and E risk and we'll do a deep dive on this shortly we also run a pilot in Cameroon which tested the use of tokenization and fractionalization of government bonds to make savings more accessible to low income users um another example I'll highlight from this least is the pilot that we run to provide anticipatory cash transfers to pasture lists in Kenya and we'll dive into this shortly as well um and then we also run a pilot in that leveraged nft sales to Source liquidity to provide affordable climate housing to more than 30 families in Mambi um so these are some of the examples of you know web 3 in the real world um that we've seen as part of a crypto for good fund and you know if you're curious to learn more I'll invite you to visit our website where you can read more about the pilots about the hypothesis we're looking to test and the key learnings that came out of these um yeah but for now I'll provide a quick Deep dive on a few of these Pilots um the first one I'll start with is a pilot that we run in ceron um and we did this pilot in partnership with a startup called iara iara is a financial technology app which is designed for users in frankophone Africa offering a range of investment and saving services including the ability to purchase a variety of cryptocurrencies um so for many of the users that are using this app it's more like a crypto exchange um and this pilot um reached over 11,000 users um I would like to provide a quick overview of um the context in Cameroon just to give you an idea of the market need um so in many African countries um um government bonds are probably the best savings product with regards to high yield low risk um but the minimum amount to purchase a Government Bond is about $1,500 this is Out Of Reach for many lowincome people and so the idea of this pilot was to take um the idea of tokenization and fractionalization of government bonds you bring these Bonds on chain and you're able to fractionalize them and then people can access this product for as little as $1.5 us so aara was able to cut down the cost um to cut down the cost to the minimum amount to purchase a Government Bond by 1,000x and you know that was the key hypothesis of this pilot um I'll quickly share a bit um about the key findings that came out of this pilot um so one the pilot enabled access to a high yield lowrisk savings product for many who didn't have prior access so out of the users surveyed 46% um of the pilot participants say that they hadn't been able to access such a product before um so that sort of gives you a sense of you know the power of lowering costs and how that impacts Financial inclusion and then the second key finding from this pilot was that it actually helped to improve the financial discipline planning and overall savings experience for users who saved more than once on the app um so more than 2/3 about 66% um of the surveyed users reported that um you know they saw improvements in their financial discipline and planning and um on this slide you can see a quote from one of the pilot participants um you know mentioning how this is giving them access to a service that previously they couldn't access and this is helping them build Financial Independence um another pilot that I would like to highlight um from the crypto for good fund is one that we run in Kenya um and I guess um um a little context about the the cont um the market need here um so we have over 50 million pasture lists in subsaharan Africa and they basically rely on you know pastoralism um for their livelihoods um but you know the effects of climate change are threatening their way of life um we've seen more prolonged droughts more recently in the Eastern Horn of Africa and at the same time um today 9% of humanitarian Aid is delivered reactively that means it's delivered after the disaster happens after the worst effects have been felt um however research shows that um many many of the humanitarian crisises in the world more than 50% are actually somewhat predictable and so um bringing these two ideas together the hypothesis of this pilot was um you know can we use onchain remote sensing together with smart contracts to increase the speed of delivery and reduce the costs of humanitarian Aid um and so yeah we run this pilot in Kenya and and um these are these were the results that we found we found that using smart contracts resulted in a 75% reduction in the transaction costs compared to traditional cash transfers um so the endtoend cost including gas fees was about 2.5% and this comparing this with traditional methods which typically take between 10 to 35% depending on which country the funds are moving across um and this includes also the operational costs involved in moving the funds from the donor to the final recipient um and then the second key Insight from this pilot was that um it resulted in a 90% reduction in the time for the delivery of funds from release to the beneficiary um so typically typical cash transfer methods take between 7 to 10 days with this pilot we were able to cut down that time to just just a few hours and as you can see here you know one of the pilot participants says you know before the participating in the program we had previously slept for two days without food on receipt of funds I went and bought food for my family that sort of gives you a sense of um you know the impact of drought on on these pasture lists um yeah the final Deep dive um that I would like to cover is is a pilot that we also run in Kenya um which was um focused on providing a smart contract bestas weather Insurance product for small holder Farmers um I guess quickly providing some context around this um today in tsaran Africa only about 3% of small holder Farmers have access to corop Insurance globally this number is around 20% um and this leaves Farmers vulnerable to the impacts of climate shocks um so we partnered with a startup called echa Africa which is an index Insurance service provider best in Kenya and they cover about 1.7 million small holders across East Africa and through this pilot um for the first time we integrated blockchain smart contracts into an existing weather index product at scale um and so in the the event of an extreme weather event um the policies are automatically triggered facilitating Fair transparent And Timely payouts to small holder Farmers um and some of the barriers to adoption um for such Insurance products in imaging markets include um the high premium costs and the complex um claim settlement processes and so the key hypothesis for this pilot was um ACA Africa the startup providing this product can they use Smart contracts to automate their already existing Insurance payouts and minimize the operational overhead um providing greater savings to their clients um and looking at the results that came out of this pilot um yeah so the two key findings um were that smart contract integration into the West index product drastically reduced the payout times so by automating um the product using smart contracts the pilot reduced the payout Times by 97% um for an industry average of about 45 days to just 24 hours um and then the second key finding we saw was that um smart contract automation enabled an increase in the coverage amount so EA Africa actually reassigned three actor staff to other roles within the company which helped them save costs and this and they basically passed this on to their customers by increasing the coverage amount of of the policies um and you can see one of the quotes from a pilot participant um you know highlighting the impact of this pilot he says I now have less stress about how the weather will affect my produce each season because I know the company has me covered um so this sort of gives you a sense of um these were just a few examples of some of the pilots that we've run um in imaging markets and you know the idea was to sort of highlight some of the real world web through use cases that we've seen in imaging markets um yeah and so with that you know happy to open it up for questions um I'll just just mentioned that the crypto for good fund the fourth iteration of the fund is now live and you know we're receiving applications up until December 20th and we provide grants to startups that are building um that are building web three solutions in imagin markets um we provide up to 100,000 to each startup and so if you're interested you know i' would encourage you to to scan this QR code um to apply yeah we that happy to take any questions thank you so much Timothy uh two QR codes on screen great awesome uh thank you so much for that amazing talk uh the QR code is on screen here please uh take a photo of it so that you can ask some questions basically once you get to the screen you just need to scroll all the way to the bottom right and there's a live Q&A button for you and you can submit some questions so let's go ahead and get started here the first question Timothy says you mentioned web3 hype has not matched reality uh making money as I think all of us know is a big incentive in the space do you have any ideas on what can incentivize better participation um yeah so that's that's definitely right um yeah you know a lot of a lot of uh crypto Space is really about you know graph go up and so um I think one of the things we've seen that actually incentivizes um people to come into the space is some of the success stories that we see right um so for instance when you prove that crypto actually is able to lower the costs is able to lower the barriers to access um and you know even someone who wants to make profit understands that by being able to broaden the user base then you know you're able to build a much bigger business so I think from our perspective you know the way um the way that we sort of encourage more profit-seeking people to take an interest in this space is just showing them you know the scale that's available to tap in there's so many people who don't have access to servings products you know there's so much the billions of dollars of funds in humanitarian Aid that are moving across the world and so if you're able to make that process more efficient you know it from 20% to 5% you can make a mark up of 2% which is a decent amount of money so that's you know that would be my perspective on on that question thank you so much so we'll move on to the next question do you have insights on what it takes for a promising pilot to make systemic change right um yeah so you know obviously um creating systemic changes is a multi-year process um but I think you know what we've seen is it's sort of baby little steps that sort of um in the grand scheme of things tend to make a a sizable impact so for instance um the pilot that we run with iara in C in Cameron was tokenizing government bonds and you know like you might have heard in many African markets um The Regulators either don't really get crypto or in some markets they're actually hosting style to crypto but what we saw happening in in Cameroon was that um aara was getting government bonds and putting them on chain and then the government realized that you know wait a minute this this could actually help us sell more bonds and so the central bank is actually Keen to sort of work with aara to um you know find ways to help them sell more government bonds um what's interesting though is that it's not the central bank is not the one that regulates um you know the crypto space but I guess it's sort of like it it gives them a way into you know to influence government officials if you have a few people who actually see the benefits um that this solution can provide then that sort of gives you a bit of buying when you're going to talk to um to other regulators and so you know from my perspective I think that's sort of one of the ways um that that you can see systemic change I think um another way is is just to around um lowering costs so for instance we've you know one of the use cases that has been proven at this point is the use of stoc coins to lower um transaction fees across borders um and you know systemically what what what this enables is all of a sudden you know an African Merchant can purchase products you know from A supplier abroad and you know because of the lower fees then um they have more they have more working capital so if if it's going to if you're going to reduce the delivery time by just a few days all of a sudden you know those few days um those few days actually translate into a significant increase in their working capital which allows them to scale their business even more um yeah that would be my perspective on on that question great thank you the next one up is what have been some of the challenges you've had to overcome come to operationalize these Pilots yeah so I think you know one of the obvious challenges given the demographic um for many of these Pilots we're working with more holder Farmers lowi income populations and so um naturally you know when it comes to things like smartphone adoption they're probably going to have a low smartphone adoption rate than people in urban areas and so for many of these Pilots you know we had to um either you know work around that um have you know in some instances you could have someone in a community that has a wallet that is sort of receiving funds on behalf of users in some instances in some markets you know um some startups have come up with ussd based wallets um so these are able to work on feature phones um yeah but by and large you know there's also a huge component of user education um you know many people have no idea about how web through Works um and so you know one key component across any pilot is you have to spend a couple of days just um you know training people about the benefits um in some instances you know the the crypto is running in the background and you know you don't have to talk much about the technical stuff and you just have to to tell them about the actual benefits to their lives um yeah but I would say you know by and large the the the key challenge is always around um what devices do the pilot participants have and how are you going to walk around that and make the pilot successful great we're moving on to our next question we've got a couple minutes left you mentioned many Finance focused use cases what are your thoughts on deepin use cases such as cellular networks right um yeah so that's right um I think we've seen a few d new cases um as as part of our applications I think you know the challenge with dpin is always you know how do you Kickstart the network um and how do you get you know a few people to buy in and and sort of be like the um the Pioneers um to to stand up DP Network um but I guess one one example I'll highlight which is a pilot that we actually have launching soon is with a startup called Liquid Star um and they've sort of figured out a way to um to design um mic Micro Data Centers operating within a ship the size of a shipping container and these are powered by solar and you know they also using stying for internet um the price point is still still a bit high but I think it's one promising use case that we've seen um and yeah you know I think the key challenge with dpin is how do you bring down the you know the entry the entry cost down um to to a point where it's easily accessible by a wide range of people people and at the same time it makes um it makes business sense for someone to be part of the network we've got just over a minute left what def savings products have you seen being used if any what defi savings products have have you seen yeah um not sure if I fully understand that but you know um the what we saw with a ja pilot was um you know by tokenizing the government bonds then um they were able to offer this as a savings product um to their users enabling them access to a high yield lowrisk product that they previously didn't have access to so that's one example of a def savings product great and one last question um Are there specific challenges that Builders are facing Builders have come to you to talk about these challenges maybe when they're creating solutions for some of these use cases um yeah you know what like I mentioned you know one one challenge is around devices and wallets um I think you know obviously I can't fail to mention the regulatory challenges in many African markets you have um startups are operating in a legal gray area so many of them find that they have to incorporate their startup you know in some other country um but then they're operating locally um and also you know some times it's also hard just to Peach to investors and sort of convince them um to overcome that regulatory risk when it comes to fundraising great so that was the last question thank you so much can we give Tim withy a round of applause