Please describe your proposed solution.

Context & Problem Statement

• Although Small and Medium Sized Enterprises (SMEs), defined as businesses with less than 250 employees, constitute upwards of 90% of businesses globally, sustainability initiatives, such as those by the UN, focus largely on big transnational corporations.

• Moreover, SMEs have low capital reserves, often minimal technological capacities, and varied knowledge of social and ecologically sustainable business practices

• Lastly, in many parts of the world, especially throughout Africa and Southeast Asia, where these barriers are even more pressing, they are combined with inadequate access to basic services, sound institutions, and extreme interest rates on loans from 15%-80%, which often result in businesses going deep into debt and having to take out more loans to try and recover from the initial loans. These issues make it very difficult for businesses to prioritize sustainability, which is vital considering the rapid urbanization rates.

• In turn, these issues illustrate the broad range of barriers SMEs face in their attempts to support the success of the Sustainable Development Goals.

• However, there is power in numbers, and this project aims to leverage that concept by allowing a broad range of participants to both provide and receive no-interest micro loans that support the launch of sustainable SMEs, or the implementation of sustainability initiatives by established SMEs.

Objectives

The following will describe the proposed objectives and solutions, however, it is important to note, that this proposal is to help fund the research and development phase of this initiative, including a workshop with SMEs, and a Hackathon, where the DAO infrastructure, Tokenomics model, auditing processes and more, will be thoroughly refined with the help of experts, academic research, and input from SMEs around the world. At the moment, it is called 'ScaleDAO', but this is subject to change in time.

Main Objective:

• The creation of a DAO which allows people, and businesses, to invest in SMEs who need funding to implement sustainability initiatives or sustainability-oriented SMEs in need of startup funding.

Sustainability Objectives:

• Allow SMEs to invest in sustainability initiatives, share insights, and gain exposure to ESG investing with minimal entry barriers
• Enable civil society members to invest in sustainability projects they feel are important
• Formulate a sustainability network which supports loan recipients with knowledge and expertise
• Bolster the success of the Sustainable Development Goals (SDGs)
• Allow SMEs, especially those in the Global South, to build on-chain credit

Blockchain Objectives

• Tokenization of sustainability-based investments that can be utilized in the DeFi space such as for yield farming or general swaps
• Tokenization of sustainability impacts that supports the measurement and evaluation of positive changes to social, ecological, and economic conditions
• Expansion of Cardano through education and the formation of context specific, and impact driven DApps that arise from Scale's investments

Micro Loan Process Description:

• SMEs will submit proposals that outline their initiative or business plan, to the DAO, where members will vote on whether to provide support, or reject and provide feedback.

• Such proposals will have to provide a range of details regarding the SMEs business history, objectives, and most importantly, how these funds will help them contribute to the SDGs

• Proposals will have a budget limit of 30000

• SMEs will have the ability to craft collaborative proposals to create system specific initiatives, such as supply chain sustainability improvements

• Before the vote takes place, an auditing process will occur:

• Option 1 is for this to be done by an organization or team member in the geographical area where the proposal originates, similar to Kiva (www.kiva.org). However, this is labor intensive and will require a vast network.

• Option 2 is to create a digital (semi) automated auditing process, which will be one objective of this fund, and the hackathon.

• Option 3 is to embrace interoperability and incorporate a technology like FlexID (<https://flexfintx.com/>).

• If the proposal is accepted for funding, the applicant will have 20 days to gather a small percentage of the investment from their personal network which will illustrate a ‘social creditworthiness’, common with microloans. The amount of such will be dictated by the size of the SME, their financial standing, location, and the amount they request.

After all steps are finished and the loan has been distributed:

• An appropriate payback schedule will be formulated, which unlike many microloans, gives the recipient time to implement the initiative and begin seeing returns, helping to prevent them from defaulting on the loan
• A fractional NFT will be created, with loan tokens distributed proportionally to the respective parties who have voted to provide funds to the project
• The applicant will be assigned one or more mentors from our pool of SMEs which have a shared background, to help guide them and support their success.
• Progress reports will be required to be submitted at various intervals throughout implementation to update investors on the progress, challenges, and provide documentation of main expenditures when possible.
• This record will also be saved into a ‘initiative library’, that will help guide other SMEs.
• Impact tokens will be created that act as a sustainability certificate, and which represent a type of quantification of their sustainability success, as related to a particular SDG, for instance, the amount of renewable energy generated in joules, supporting SDG 7, 11, and 13.
• These tokens will be divided between the SME implementing the project, and those who helped to fund the project.
• As noted by IXO, ‘Impact Tokens are units of value created to represent a real-world outcome state that people care about and are willing to invest in. Impact tokens will become a new standard for measuring, verifying, reporting, and valuing impacts’ <https://www.ixo.world/white-paper>

Tokenomics:

While this, along with all other elements will be further developed with the help of experts, this is to give a general idea of the starting point and foundation

• X number of utility tokens are minted with the Scale DAO creation
• Participants who provide liquidity receive utility tokens which allow them to vote on proposals
• When projects complete their sustainability initiative, 2 types of tokens will be created.
• A fractionalized NFT token that represents the funders portion of investment, and which can be traded, and utilized in the DeFi space
• Impact tokens will be created which correspond to the SDG based impact created by the applicant/SME, which is derived from evaluation and measurement procedure
• Impact tokens will be distributed amongst the applicant, and funders
• The SME which creates the impact may be given the power to issue impact tokens, if auditable proof can be provided of the impact, and such measured in a coherent manner
• One challenge will be to figure out how to deal with impacts over time and that are generated on an ongoing basis
• Perhaps, for the example regarding renewable energy generated. The SME generating the energy could be granted the right to mint their own impact tokens. For example, X tokens per month representing Y joules of solar energy.
• In time, a governance token will be created which allows DAO members who have helped fund multiple projects to vote on DAO changes and updates

Target Audience

• While anyone will be permitted to fund proposals and contribute liquidity to the Scale DAO, and therefore, be enabled to vote on proposals, SMEs will be one of the main target groups, to enable a type of SMEs helping SMEs type of culture. The reason for this is to help bridge knowledge gaps and allow SMEs to overcome similar challenges together and pool their resources.
• Additionally, extra attention will be paid to onboarding SMEs in countries throughout Africa and Southeast Asia, where support and funding is more intensely needed

Inspiration:

• The impact token concept has been adopted from IXO- ‘The internet of impact’ <https://www.ixo.world/>
• This project has adopted various DAO structural elements from CitaDao, which has made strides in tokenizing real estate: <https://citadao.io/>
• Additionally, this project builds on Kiva, a non-blockchain platform, which allows people around the world to provide micro fiat loans to those in need: <https://www.kiva.org/>
• Moreover, this initiative shares the values represented by Cardashift that are oriented towards using blockchain to build a more ecologically and socially sustainable world: <https://cardashift.com/>
• Lastly, this project has been inspired by my 8+ years of academic research into sustainability, equality, and justice

Please describe how your proposed solution will address the Challenge that you have submitted it in.

This project addresses this challenge in various ways:

1. Measuring and evaluating sustainability impacts as related to the SDGs is a top priority
2. Providing a market mechanism in which impacts can be tokenized, traded, and integrated into the DeFi space will be a main feature of the platform
3. Improving the recordability, transparency and accountability of sustainability initiatives is a pillar of this project’s foundation
4. Creating an inclusive market mechanism which supports holistic and inclusive support of the SDGs is an overarching objective of this initiative

What are the main risks that could prevent you from delivering the project successfully and please explain how you will mitigate each risk?

One main risk, is developing a DAO and proposal platform that is difficult to use, and does not include the aspects which SMEs would find most useful, or are required to implement sustainability oriented projects.

To mitigate this risk, a workshop with a broad range of SMEs has been integrated into the R&D phase in order to connect with them, gain feedback, and understand what they from such a platform to accelerate their sustainability efforts. Additionally, SMEs more globally will be contacted in order to gain a broader perspective that takes into account different contextual details, with emphasis on Africa and Southeast Asia.

This information will be passed along to hackathon participants, to be ensured it is understood, and utilized in their projects.

Please provide a detailed plan, including timeline and key milestones for delivering your proposal.

As I am currently a PhD Candidate and Lecturer at the University Vienna, the initial project launch, workshop for SMEs, and hackathon, will take place in Vienna, Austria.

Step 1: (2 months)

• Formulate initial core project team (to be expanded upon at a later date) composed of:
• Myself – Sustainability and Ecological Economics Expert & Blockchain PhD Researcher
• Business Manager
• Blockchain Developer
• Biodiversity Ecological Expert
• Economist
• Research & Development:
• Further develop the initiative and outline specific details of development and implementation, challenges, costs, benefits, tokenomics, DAO structure etc
• To be continuously developed through the following workshops and hackathon

Step 2: (3 months)

• Develop a workshop for SMEs which:
• Explains the organizations objectives regarding sustainability support
• Elaborates on the ways in which SMEs can become more sustainable
• Educates SMEs on blockchain fundamentals and illustrates the potential of blockchain technologies to support their ambitious to be more sustainable
• Outlines the formation of a DAO which allows them to pool resources and work together in achieving their sustainability goals
• Supports co-design processes that allow SMEs to voice their wants and needs regarding sustainability micro loans

Step 3: (1-2 months)

• Marketing
• Develop and implement a marketing strategy to attract SMEs the workshop outlined above

Step 4: (1 week)

• Conduct workshop according to plan outlined above

Step 5: (2-3 weeks)

• Collect feedback from SMEs, synthesize, and integrate into Scales development plan

Step 6: (1 month)

• Develop a weekend long in-person hackathon with the goal of improving the:
• Tokenomics Model
• Impact tokenization process
• DAO structure
• SME auditing process

Step 7:(1-2months)

• Hackathon Marketing

Step 8: (2.5 days)

• Host Hackathon

Step 9:

• Reformulate DAO design and prepare for next steps which include:
• Applying for additional funding
• Designing and Developing Website
• DAO development
• Discord Server Launch

Please provide a detailed budget breakdown.

• Initial Research & Development with Core Team: 1250
• Workshop for SMEs - 2200
• Design & Development: 700
• Marketing: 700
• Posters & Stickers - 150
• Newspaper Ads - 300
• Facebook Ads - 250
• Implementation - 750
• Room Rental - 500
• Catering - 250
• Hackathon - 8950
• Design & Planning - 1000
• Marketing & Promotion - 2000
• Event Website - 1000
• Prizes – 2750
• 1st – 1500
• 2nd – 750
• 3rd – 500
• Giveaway Swag – 500
• Event Venue and required materials – 1750
• Catering - 1600

Total: 14250

Please provide details of the people who will work on the project.

James Vandenberg, Msc

• BA in International Development at the University of British Columbia and the University of Amsterdam
• MSc in Urban Studies with semesters in Brussels, Vienna, Copenhagen & Madrid
• Current PhD Candidate at the University of Vienna investigating Blockchain’s potential to improve the sustainability and circularity of urban metabolic flows
• Urban Sustainability Lecturer at the University of Vienna for Master level classes
• 3+ years researching blockchain and its sustainability implications
• <https://www.linkedin.com/in/jamesavandenberg/>
• <https://geographie.univie.ac.at/en/working-groups/urban-studies/team/vandenberg-james/>

If you are funded, will you return to Catalyst in a later round for further funding? Please explain why / why not.

Yes. This project is intended to fund the initial research and development phase of the project, including workshops, a hackathon, and more.

This will help solidify the details of the DAO, tokenomics model, project auditing process, and the like, as outlined above.

After this, the project will return for a second round of funding to build the build, test, and launch the project.

Please describe what you will measure to track your project's progress, and how will you measure these?

Measuring Progress

• Disciplinary, Gender, & Ethnic Diversity of the Core Team
• Quality and thoroughness of first research and design phase
• Number of SME participants at the Workshop
• Number of SMEs who provide feedback
• Number of SMEs who highlight their willingness to participate in the future DAO
• Number of SMEs who illustrate their need of sustainability support
• Number of teams who participate in the Hackathon
• Quality of submitted projects at the Hackathon
• Number of useable concepts generated at the Hackathon

What does success for this project look like?

Project Success

• The success of this project includes achieving various goals:
• Recruiting and forming a sound and interdisciplinary team that is dedicated and motivated to improving sustainability worldwide
• Designing and implementing an educational, interactive, and collaborative workshop, with a range of SMEs who want to become more sustainable, and receiving positive feedback and input that is directed towards the development of the DAO and platform
• Developing and Implementing an inspirational hackathon, that brings together at least 10 ambitious and creative teams to help improve the design of the DAO structure, tokenomics model, auditing process, and impact token integration
• Concrete formulation of a solid DAO structure, tokenomics model, auditing process and impact token integration plan that can be communicated to developers in the next stage of the project where the DAO is operationalized, built, tested, and launched.

Please provide information on whether this proposal is a continuation of a previously funded project in Catalyst or an entirely new one.

No, this is an entirely new project.