Impact Market

The core mechanism where Impact Market Communities distribute a daily, unconditional cryptocurrency stipend to verified members. This is the primary tool for direct poverty alleviation.

• Automated Distribution: Funds are streamed daily from a community's smart contract.
• Self-Sovereign Identity: Recipients use a cryptographic proof-of-humanity to claim funds, preserving privacy.
• Example: A community in Venezuela might distribute $0.50 in cUSD daily to each member for basic needs.

Each Impact Market Community is autonomously managed by its members through a multi-signature wallet. This ensures local control over funds and membership.

• Managers: Designated community members approve new beneficiaries and manage the treasury.
• Transparency: All transactions and beneficiary lists are on-chain and publicly verifiable.
• Decentralization: Prevents single points of failure or centralized control of aid distribution.

The PACT governance token funds the protocol's treasury and aligns incentives for sustainable impact.

• Treasury Funding: A portion of PACT inflation directly funds the Impact Market DAO Treasury.
• Governance: PACT holders vote on treasury allocations, protocol upgrades, and new community approvals.
• Sustainability: Creates a decentralized, perpetual funding mechanism for UBI and microcredit programs.

An extension of UBI, allowing community members to access small, collateral-free loans to start or grow businesses.

• Trust-Based: Loans are issued based on social reputation within the community, not traditional credit scores.
• Empowerment: Designed to foster economic activity and self-sufficiency beyond basic consumption.
• Repayment: Funds are recycled back into the community's treasury, creating a sustainable cycle of capital.

Impact Market is natively built on the Celo blockchain, leveraging its mobile-first, fee-less, and stablecoin-focused design.

• Stablecoin Payments: UBI is primarily distributed in cUSD or cEUR, protecting recipients from volatility.
• Gasless Transactions: Beneficiaries can claim UBI without holding CELO for gas fees, a critical UX feature.
• Mobile Accessibility: Aligns with Celo's mission to reach users in developing regions primarily via smartphones.

The protocol is sustained by a global network of donors, grant providers, and decentralized autonomous organizations (DAOs).

• Direct Donations: Anyone can donate stablecoins directly to a community's smart contract.
• Grant Funding: Major grants from entities like the Celo Foundation and Climate Collective bootstrap new communities.
• DAO Partnerships: Other DAOs can allocate treasury funds to Impact Market as part of their social impact mandates.

To prevent fraud and ensure fair distribution, Impact Market relies on Sybil-resistant identity verification. While not exclusively using the Proof-of-Humanity protocol, it employs similar principles to verify that each recipient is a unique human. Methods can include:

• Community-based verification by trusted local leaders.
• Integration with decentralized identity solutions.
• Biometric or video attestation in some implementations. This is critical for maintaining the integrity of UBI and CIC programs.

Impact Market is built on the Celo blockchain, chosen for its mobile-first design and native stablecoin ecosystem. Key integrations include:

• cUSD (Celo Dollar): A stablecoin pegged to the US Dollar, used as a primary reserve asset and for UBI distributions.
• Low-Cost Transactions: Celo's proof-of-stake mechanism enables fast, affordable transactions crucial for micro-payments.
• Mobile Accessibility: The Celo protocol allows users to interact with the blockchain using phone numbers, lowering the barrier to entry.

Impact Market introduces novel mechanisms for allocating humanitarian capital. A core innovation is the use of Quadratic Funding models for its donation pools. This mechanism:

• Amplifies community support: The amount of matching funds a project receives is based on the number of unique donors, not just the total sum.
• Promotes democratic funding: Prioritizes projects with broad-based community backing.
• Optimizes impact: Directs capital to initiatives with proven local demand and legitimacy.

Impact Markets rely on capital providers who stake assets into risk pools to back insurance coverage. The design must balance liquidity with solvency, ensuring sufficient funds exist to pay claims without locking excessive capital. Key mechanisms include:

• Dynamic pricing models that adjust premiums based on pool utilization.
• Reinsurance layers or excess-of-loss structures to protect against catastrophic events.
• Staking slashing for providers who act maliciously during claim assessments.

A core security challenge is objectively validating claims without a central authority. Most protocols use a decentralized dispute resolution system, often involving:

• Jury pools of token-holders who vote on claim validity.
• Bonded challenges where disputers stake funds, penalizing frivolous claims or denials.
• Time-locked resolutions and multi-signature approvals for large claims. This process must be Sybil-resistant and designed to prevent collusion between policyholders and assessors.

Payouts are typically triggered by verifiable, real-world events (e.g., flight delays, smart contract hacks). This creates a critical dependency on oracles. Design considerations include:

• Using decentralized oracle networks (like Chainlink) to reduce single points of failure.
• Implementing multi-source attestation and data aggregation.
• Defining clear, objective trigger conditions in the policy smart contract to minimize oracle manipulation risk.

Smart contracts encode the policy terms, making their parameters a primary attack surface. Key risks involve:

• Parameter manipulation: Exploiting ambiguities in coverage definitions, expiration, or payout calculations.
• Adverse selection: Where high-risk users disproportionately purchase coverage, destabilizing the pool.
• Moral hazard: Policyholders becoming less cautious because they are insured. Mitigations include rigorous policy wording, actuarial modeling, and cooling periods before coverage activates.

As with any DeFi protocol, Impact Markets inherit standard blockchain security risks:

• Smart contract vulnerabilities in the core coverage, staking, or governance contracts.
• Economic attacks like flash loan manipulations to drain liquidity pools during claim periods.
• Governance attacks where a malicious actor gains control to change critical parameters. Thorough audits, bug bounties, and time-locked, multi-sig upgrades are essential countermeasures.

Offering insurance-like products attracts regulatory scrutiny. Design must consider:

• Jurisdictional compliance: Regulations (like Solvency II or state insurance laws) may apply depending on the policyholder's location.
• KYC/AML requirements for fiat on/off-ramps connected to the protocol.
• Security token classification: Pool tokens representing a share of liability might be deemed securities. Many protocols operate in a legal gray area, relying on decentralization to argue they are not traditional insurers.