Impact Staking: STaaS for Good

[GENERAL] Summarize your solution to the problem.

Create an impact-focused, STaaS for Good consultancy and Stake Pool Operator (SPO) network to help businesses attain and maintain corporate social responsibility, regulatory and investor compliance.

[GENERAL] Summarize your relevant experience.

Project Director - Managing Director of B2B web development company serving SMEs; SPO, Prism pioneer, Dandelion IA Network.

Business Development Lead - Attorney; marketing and business strategies consultant; experienced community impact producer.

[IMPACT] Please describe your proposed solution.

Problem: Growing Compliance Requirements for Environmental and Social Impact

Environmental and social impact considerations (also known as ESG) have become a key factor in corporate governance and the flow of investment global capital. 

In January 2020, the CEO of BlackRock, the world’s largest asset manager, said he believed considerations about climate change had put the world on the “edge of a fundamental reshaping of finance.” By July of last year, the CEO of Singapore’s largest bank said a “tsunami of money” was flowing into sustainable investments.

At the same time, regulators are moving to impose increasingly strict impact requirements on businesses: In 2018, the EU began requiring large companies to report on how they manage social and environmental challenges. In March 2021, the U.S. Securities and Exchange Commission (SEC) created a task force within its Division of Enforcement to focus exclusively on climate and ESG issues. (4)

Solution: Impact Staking – STaaS for Good

By staking with mission-driven Cardano stakepool operators (SPOs), enterprises can make large, positive impacts to earn goodwill with the public and offset any negative impacts necessitated by their business models. 

Cardano’s protocol and staking ecosystem already possess the building-blocks for Cardano to become the clear, industry leader in impact-driven investment because of:

• Cardano’s energy-efficient consensus mechanism makes it a comparatively green option for blockchain-based businesses;
• Cardano’s lite-weight proof-of-stake (dPoS) requirements allow for a more globally distributed, socially inclusive network of validators than any other major blockchain.

The advantages of Cardano’s dPoS consensus model have spurred the growth of a staking ecosystem that’s more dynamic, diverse and mission-driven than that of any other blockchain. Cardano’s staking ecosystem already displays demand from delegators for impact-compliant stakepools. Yet few SPOs’ business models are adequate to partner with enterprises and institutional investors because they fail to offer: 

• robust systems of accountability to ensure ESG-driven, charitable contributions are actually being made by SPOs,
• a wide range of giving options to vetted charities, through which enterprises can fulfill their unique impact goals, and
• transparent and granular impact metrics to quantify the giving impacts of their giving for compliance purposes.

Our Staking as a Service (STaaS) Provides Accountability 

We’re able to do this by partnering with B1G1 - Business for Good.

The B1G1 Integration

B1G1 (https://b1g1.com/), a Singaporean social enterprise and U.S. 501(c)(3) non-profit organization. B1G1 operates a subscription based giving model designed for small and medium-sized enterprises (SMEs) around the world.

100% of funds contributed by a member business (except a reasonable, monthly subscription fee) pass through to the B1G1 vetted charities chosen by that business. B1G1 member businesses receive detailed metrics on the positive impacts of their giving. The over 500 projects/charities in the B1G1 network are vetted to ensure they cost-effectively further at least one of the United Nations’ 17 sustainable development goals (SGEs) - goals focused on "ending poverty, fighting inequality and injustice, and tackling climate change." And B1G1 even offers members gift options including an "Employee Carbon Offset Bundle" and "Office Energy Usage Carbon Offset Bundle" to directly address companies’ most pressing ESG goals and mandates.

Total Impact

Total environmental impact = Cardano’s energy efficient PoS consensus + B1G1’s carbon offset initiatives

Total social impact = Cardano’s inclusive approach to commerce and governance + B1G1’s education and social justice initiatives

The Framework

FLUID stakepool became a B1G1 member in July 2021. Currently, each time FLUID pool receives a new delegator, through B1G1 we donate 5 days of ITT and internet access to a student in Ethiopia. And continuous reporting we receive from B1G1 documents our giving and giving impacts with respect to the UN's SDGs - an extremely useful framework for enterprises attempting to optimize their ESG impacts in an accountable way. 

There are several ways we plan to make this framework more accessible and valuable for SPOs and their enterprise delegators:

• Providing a robust data analytics tool. Metrics include new delegations, delegation sizes, delegators new to a stakepool, number of new delegators, total funds delegated to a stakepool exceeding a threshold, delegations or delegated funds in a given timeframe, or other metrics SPOs and their delegators want to capture.
• Integrating participating SPOs with Zapier's automation solution. Zapier's automation solution is very flexible, allowing SPOs to automate any number of kinds of giving events, triggered by any number of kinds of delegation events. And SPOs will be able to configure the solution specifically to suit the impact needs of investors and enterprises.
• Giving impacts captured on social media. Automated social media notifications draw attention to impacts generated out of Cardano's consensus through charitable giving, and highlight benchmarks of the stakepools' giving impacts being reached.
• Integrating B1G1 widgets and giving badges onto SPOs’ websites. B1G1 widgets feed the current count of SDG impacts an SPO has contributed to the B1G1 network.

The Consultancy 

If our STaaS for Good framework is favored by Cardano delegators (as we believe it will be) it will incentivize mission-driven SPOs to move towards a culture of accountability, and give them tools to take this step. But if this framework - in both its initial and future iterations - is going to maximally benefit businesses, we'll also need to work in collaboration with these businesses to ensure we're designing a system to fit their ESG compliance needs. For this reason, we'll be implementing a three-legged approach to getting our impact-focused STaaS consultancy and Stakepool network off the ground:

• Led by our Project Director and the Fluid7 team, we'll develop the above innovations and create systems to support multiple SPOs in the above integrations.
• Our Business Development Lead, will create business development materials and attempt to connect with a large number of the largest projects and companies on Cardano. To satisfy this proposal, we commit to trying to connect with 50 of the largest companies and projects on Cardano. Wherever possible, we'll present them with our value proposition with respect to ESG issues. We'll welcome their feedback on how best to address their current and future needs, and do our best to incorporate the sum of our findings into a viable plan to build upon.
• We'll work with a small number of mission driven SPOs (probably 2 or 3 to fulfill the goals of this proposal, but possibly more) in a closed trial - integrating our solutions into their Stakepools. The primary reason for this closed trial will be to work out any kinks in our integration plans, and receive feedback from SPOs on the process, the benefits, and any unforeseen drawbacks of the integration. We have not yet selected SPOs to participate in this trial, but can promise they'll be mission-driven SPOs who are well respected in the Cardano community.

Citations:

1. https://www.huntonnickelreportblog.com/2020/01/blackrock-supports-esg-as-a-new-standard-for-investing-in-its-annual-ceo-letters/
2. https://www.cnbc.com/2021/06/17/dbs-piyush-gupta-a-tsunami-of-money-is-going-to-sustainable-assets.html?&qsearchterm=esg
3. https://ec.europa.eu/info/business-economy-euro/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en
4. https://www.jdsupra.com/legalnews/proactive-and-realistic-anticipating-9862024/

Other related articles:

• https://www.blackrock.com/corporate/literature/publication/blk-esg-investment-statement-web.pdf
• https://www.wilmerhale.com/en/insights/client-alerts/02102022-esg-the-eu-agenda-for-2022-what-you-need-to-know

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

The vast majority of dApps and businesses operating on Cardano will delegate at least some of their ADA to stakepools that help them attain and maintain corporate social responsibility, regulatory and investor compliance. Especially as "cryptocurrency companies," these businesses and dApps will be compelled by prevailing financial and regulatory regimes to reduce their carbon footprint wherever possible.

And even if this move towards impact staking doesn't turn out to be mandatory, it's hard to see why many enterprises would avoid it entirely: Many mission-driven pools offer returns to delegators that are on par with pools without a mission-driven component, so the downside to impact-focused delegation doesn't have to be burdensome. And impact staking builds good will with the customers of Cardano enterprises.

Our team sees the move towards mission-driven, accountable staking for businesses as analogous to the corporate giving sector: It may not come to dominate the enterprise delegation space (which is driven primarily by ROI) but a significant percentage of enterprise delegations will be allocated to it.

Even more importantly, we've outlined clear advantages that the Cardano staking ecosystem has over other blockchains when it comes to impact-compliant staking. And if ESG is becoming as big of an issue as it appears to be, these advantages and the work of our project and others like it will drive more projects to Cardano, and more growth in activity on Cardano's mainnet and testnet.

Last, because pioneers in this STaaS niche will likely secure significant delegations for their stakepools within the next 6 - 18 months, stakepools in the network we're proposing should eventually have healthy revenues and be able to self-fund the bulk of this project's future development.

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

Challenge #1

Risk: Lack of corporate "agility" in re-delegation:

While our team is very confident a sizable number of Cardano-based enterprises will find our impact-driven STaaS attractive, it's possible that many corporations also face significant obstacles to redelegating some or all of their ADA holdings. These obstacles could involve such factors as utilizing a 3rd party custodial service for their ADA, multi-sig wallets requiring acts of corporate governance to redelegate ADA holdings, obstacles arising from DAO governance, or other unforeseen obstacles.

Mitigation: Lack of corporate "agility" in re-delegation:

As we've outlined above, we believe many enterprises, especially larger enterprises, will feel increasing pressure to avail themselves of any positive ESG impacts that don't cut deeply into their bottom line. And at some point, some enterprises will likely be compelled to aggressively pursue compliance related to their cryptocurrency holdings, so we feel these obstacles will prove temporary, even if they're initially significant.

Challenge #2

Risk: Our ESG approach isn't aggressive enough for some companies:

It's possible our "offset" model isn't aggressive enough for some Cardano enterprises - that they'll in fact prefer more radical approaches to countering any negative environmental or social impacts resulting from their businesses.

Mitigation: Our ESG approach isn't aggressive enough for some companies:

While we believe our initial "offset" solutions will be attractive to many businesses at this point in time, we have in mind STaaS consultancy options that could yield more dramatic, positive impacts for the environment and/or social justice. These more radical solutions will require more time and funds to design, coordinate and implement, but they are doable, and we'd actually like to move in the direction of more dramatic solutions in the mid to long term.

Challenge #3

Risk: Our solution is too early to achieve good product/market fit: It's possible that the vast majority of Cardano-based enterprises don't yet have a strong need or desire to opt for ESG impact solutions like the ones we're offering.

Mitigation: Our solution is too early to achieve good product/market fit: While this fact (assuming it proves to be true) could delay the widespread adoption of our services by Cardano-based businesses, we believe it is a matter of time before the need for impact, B2B STaaS becomes common for cryptocurrency based businesses. So if we're somewhat early on this issue, we consider that an advantage, not a liability. When (probably not if) ESG concerns become prominent in our industry, we want Cardano to be the blockchain with the best solutions, attracting projects in part because we were early on this issue.

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

Roadmap & Deliverables 

Month 1-2

• Creation of business development materials
• Cardano-based business outreach
• Proof of concept
• Create sample B1G1 Giving stories
• Capture Pool on-chain updates
• Trigger Zapier calls to B1G1

Month 3-4

• Continued Cardano-based business outreach
• Social notifications of giving
• Verified off chain impact widgets
• Verified off chain giving badges
• Closed trial with select mission-driven SPOs

Month 5-6

• Continued Closed trial with select mission-driven SPOs
• Continued Cardano-based business outreach
• Creation of project plan detailing impact B2B Consultancy, SPO network & future iterations of ESG and SPO accountability solutions

[FEASIBILITY] Please provide a detailed budget breakdown.

Budget

6 months cloud hosting - $2,050

5x6 months B1G1 memberships - $1,150

UI/UX design - $4,550

Software Development - $11,400

Project Management - $4,550

Systems Admin/Dev Ops - $4,550

Business Development - $11,000

Total - $39,250

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

FLUID7 Team

For 11 years FLUID7 has built bespoke applications for small enterprises and NGOs specialising in system integrations and commerce applications. For examples of our work and wide experience, please see our website ... https://fluid7.co.uk/case-studies

Jonathan - Director

Software architect, SPO, Prism pioneer, Dandelion IA Network

Jane - Administration Manager

Accounts, HR

Aman - Systems Administrator

Linux Admin, Devops, Network engineer

Maksim - Lead Developer

Full stack developer

Sommerville - Project Manager

Investor Liaison

Additional Project Contributor

Shirah - Business Development Lead

Attorney; marketing and business strategies consultant; experienced community impact producer; over 7-yrs. experience in corporate account management and negotiations.

http://www.cowryandclay.com/

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

Future Funds

• On chain giving badges (NFTs)
• Delegator NFT rewards
• Stake Pool Directory integrations
• Explorer integrations
• B1G1 Crypto accounts
• Impact B2B consultancy beyond the charitable offset model

[FEASIBILITY] Are you or any member of your team working on any other proposals in this Fund9?

[FEASIBILITY] Are you or your team working on any other proposals from previous Funds?

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

Tracking Progress

Month 1-2

• Attempt to contact at least 20 Cardano businesses and/or projects
• Make contact with right point of contact at least 5 Cardano businesses and/or projects
• Present value propositions, receive feedback, and brainstorm on service options with at least 3 Cardano businesses and/or projects.

Month 3-4

• Attempt to contact at least 40 Cardano businesses and/or projects
• Make contact with right point of contact at least 13 Cardano businesses and/or projects
• Present value propositions, receive feedback, and brainstorm on service options with at least 7 Cardano businesses and/or projects.
• Assist at least 5 mission-driven SPOs in the integration of on-chain Pool data capture and Zapier calls.

Month 5-6

• Attempt to contact at least 50 Cardano businesses and/or projects
• Make contact with right point of contact at least 20 Cardano businesses and/or projects
• Present value propositions, receive feedback, and brainstorm on service options with at least 10 Cardano businesses and/or projects.
• Assist at least 5 mission-driven SPOs with integration of off-chain widgets and giving badges
• Create project plan for ESG STaaS Consultancy & ESG-focused SPO network
• Complete closed trial with at least 5 mission-driven SPOs
• Create step-by-step guide for mission driven SPOs to integrate B1G1 solution

[AUDITABILITY] What does success for this project look like?

Tracking Success

• A majority of Cardano-based companies attain and maintain ESG compliance in part through the delegation of a significant percentage of their ADA holdings to professionally managed, accountable, mission-driven stakepools.
• Projects and companies choose to launch on Cardano in part because of the superiority of Cardano's staking ecosystem - the stress Cardano delegators place on diversity, inclusion, and a number of options to attain ESG-compliant staking.
• The SPOs in our network of ESG-focused stakepools are diverse, globally distributed, but predominantly based in the developing world which has been historically excluded from controlling the infrastructure of financial systems.

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

This is a new proposal.

Sustainable Development Goals (SDG) Rating

Because B1G1 literally uses the United Nations' SDGs as the criteria by which it admits charities into its network, we are basically furthering all the SGDs by giving SPOs tools to utilize B1G1's framework on Cardano.

That said, our FLUID pool's giving is focused on a couple specific SDGs:

SDG #4 - Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all.

SDG #10 - Reduce inequality within and among countries.

Additionally, we anticipate Cardano enterprises concerned about their ESG impacts may place special focus on the following SGDs:

SDG #13 - Take urgent action to combat climate change and its impacts.

SDG #7 - Ensure access to affordable, reliable, sustainable and modern energy for all