# Impact Markets

> Permissionlessly create and distribute impact with scarce ownership.

> An infinite game of creating and distributing impact.

> Restructure money with a plurality of social capital, and we can build a more resilient financial system.

> Autonomous markets for small scale economic activities

## Overview

Impact Markets are practical explorations of Curation Markets for stewarding social impact.

> Curation markets allows groups to coordinate around shared goals (and interests) and benefit from the value they collectively create. It does this by adding tokenized, skin-in-the-game signals to information curation.
>
> Rules for tokenized value creation & curation are built into a smart contract that acts as the schelling (focal) point for coordination. It is built on Ethereum, a decentralized world computer.
>
> [Curation Markets](https://docs.google.com/document/d/1VNkBjjGhcZUV9CyC0ccWYbqeOoVKT2maqX0rK3yXB20/edit)

### Impact Stewardship

Look at
- resource-to-impact ratio
- transaction costs involved in capital and ecosystem formation, proceeds distribution, products and services delivery, and maintaining sustainability

#### Top-down coordination

[Pay for Success](https://obamawhitehouse.archives.gov/administration/eop/sicp/initiatives/pay-for-success)

[Social Impact Bond](https://www.goldmansachs.com/our-firm/history/moments/2012-social-impact-bond.html#:~:text=In%202012%2C%20Goldman%20Sachs%2C%20along,Project%20for%20Incarcerated%20Youth%20delivering) by Goldman and co.

> [Source](https://www.thirdsectorcap.org/wp-content/uploads/2015/02/TSCP_MAJJ-PFS-Lessons-Learned.pdf)

Perhaps the social impact the program tried to create was too complex to begin with, but considering it being the first experiment on Social Impact Bonds, it opened up possibilities to investing in social impact instruments.

**Similar onchain initiatives:**

1. Paul Graham Saves Thousands of Lives

In 2021, Noora Health minted an NFT, [Save Thousands of Lives](https://opensea.io/assets/ethereum/0x495f947276749ce646f68ac8c248420045cb7b5e/96773753706640817147890456629920587151705670001482122310561805592519359070209) purchased by Paul Graham for [1337 ether](https://etherscan.io/tx/0xa0cfc7df12d8f3ab51da8ddfbb7fe6735c5f004dbbf1da9eda45faac5d55023a).

The NFT did not confer any benefits or rights but according to Paul Graham, it promised "public report tracking how this specific tranche of money is spent, and estimating the number of lives saved as a result." ([Source](http://paulgraham.com/nft.html))

However, Noora's [impact reports](https://noorahealth.org/impact-reports/) since 2021 have not yet mentioned the NFT proceed, other than in its financial report as "gain on sale of digital asset." ([2022 audited financial report](https://noorahealth.org/wp-content/uploads/2023/08/Noora-Health-Audited-Financial-Statements-2022.pdf))

**Transaction costs in this model**
- private funders with potentially misaligned interests
- large upfront sum to generate impact at scale
- impact generation and reports are often too complex or costly to capture and share for future replication (e.g., technology, capital formation, investor relations, etc.)

#### Bottoms-up coordination

Community Gardens

Beach Cleanings

**Similar onchain initiatives:**

1. Hepta Education

Radical transparency

[Crowdsale](https://etherscan.io/address/0x8a426b34c7a45c8361351f88730ac1d824ec8c58#code)

[Knowpro Foundation](https://www.knowprofoundation.org/)

https://app.kali.gg/daos/1/0x162b9d97d103aef5e4ffb660e7930b58f1b86689

2. Hypercerts

Big miss: Hypercerts focuses on the result and not the process, i.e., outsources impact evaluation

**Transaction costs in this model**
- resource quantity over technical expertise
- operational uncertainties
- requires degree of mental and situational flexibility
- little to no compensation
- regional influence

https://ssir.org/articles/entry/impact_markets_the_next_frontier

## Impact Generation Patterns

Patterns:
- Funding
- People to produce social impact by delivering service
- People to receive the service that produces social impact
- (bonus) Impact report to show social impact produced

Incumbent challenges:
- People with time and labor to create impact don't have capital, people with capital that wish to create impact don't have time or labor, and thus coordination by project intermediaries becomes crucially important
- Prohibitive transaction cost to coordinate at scale
- Lack of resources and funding
- Parties with different goals
- Prohibitive transaction cost to share learnings
- Lack of standards and precedents
- Prohibitive cost to cpature and evaluate impact

## Impact Markets

### REA Ontology

Resource, event, agent

REA Ontology https://vimeo.com/517621752


[ValueFlows on Making Pies](https://www.valueflo.ws/assets/ValueFlows-Story.pdf)

Reorganize the flow a little bit into something of a web2 operations stack. This kind of operations is typically run by a single organization, where it chooses the type of ingredients to make dough with, the type of ovens to use for baking, the types of transport, and so on. Of course, it'd also chooses how it charges its customers, depending its capability and any output surplus from any of the pie-making processes.

This stack may be run for-profit and non-profit.


Some routine processes have technology to complement workflow and bring data to light, but are often not owned by those that generate them. Most organizations have some sort of clock-in or billing system, though this layer is generally developed by third parties or the organizations themselves, rarely are they developed by the people doing the jobs.

What is the digitization layer? Digitizing physical operations create access for open sourcer and executors to then wrap their own data to start their choice of impact markets.


Impact Markets help with the most expensive transaction cost: price discovery. The idea is that we defer price discovery to mathematically predictable markets with infinite potential, open source patrons' market influence, without sacrificing delivery of impact, or the purpose of the todo lists.


### How these markets fit in a community setting

> Social capital is present in the networks, norms, and social trust inherent in associations whose members work together in concerted collaborative action.
>
> [Source](https://resources.depaul.edu/abcd-institute/resources/Documents/WhatisAssetBasedCommunityDevelopment.pdf)

Turn what we do into data that we own, and transform them into assets that we can leverage. Then weave communities with a asset-based community development mindset.

Smallest unit of coordination = lists

> "The agencies and institutions that are trying to help our community are inadvertently contributing greatly to the breakdown of our communities. We have more and more professionals doing for communities what communities used to be doing for themselves"

Jim Diers, a long time community builder in Seatle who authored [Neighbor Power](http://www.neighborpower.org/book.html), speaks about the two paths to building a healthy community / neighborhood: service delivery and community building, and the importance to having both.

In his [talk on rebuilding communities](https://www.youtube.com/watch?v=NAjJF0TN-Xc), he breaks down these two paths like below to emphasize the need to work on community building in modern societies.

|Service Delivery| Community Building|
|-|-|
|agencies|associations|
|class of people| Citizens|
|Top down | democartic|
|one way| reciprocity|
|siloed|hoslitic|
|focus on needs|focus on gifts|
|money|trust & relationships|

By looking at service delivery and community building through the lens of ValueFlows, we can map out the postions of the markets as follows.


Each impact market begins, and continues in perpetuity, when one open sources knowledge in the form of an actionable plan, and invites another to perform the actionable plan in observable manner. Here observable means observation by measurement or interaction.

### What does it do?

Impact Markets sell impact of collective action.

Impact Markets celebrate individual action collectively.

Impact Markets improve coordination between participants.

Impact Markets reduce transaction costs to steward and replicate impact.

Impact Markets separate market forces from impact stewardship.


Impact Markets has 3 major components:
- Physical touchpoints to capture “intent to create impact” (QR code / NFC / RFID + EIP712)
- SVG NFTs to display the intents captured at physical touchpoints
- Autonomous markets to purchase SVG NFTs

#### Parallel Ownership - Bonding Curve
Rather than tying bonding curves to something that remains relatively unchanged in time (reputation, access, art, etc.), experimenting curves on activities or happenings over a period of time could also be intersting. Both are finite in time but one lives for the duration of the finite time, giving life to bonding curve dynamics. Curves for static items too become static after alpha becomes general knowledge. Price itself becomes the center of gravity and slows down everything around it.

"Each original NFT has a limited set of prints priced on a bonding curve." [EulerBeats](https://eulerbeats.gitbook.io/eulerbeats-docs/)

[Playground's SupportCurve Mechanics](https://docs.google.com/spreadsheets/d/1f35xAUGnxU0cVVcsVxPXyVKxGHxCwfAKbsQ9oNMOtXI/edit#gid=1824654143)

#### Sequential Ownership - Harberger's Tax

> Harberger Tax is an economic policy that aims to strike a balance between pure private ownership & total commons ownership in order to increase general welfare of society. It helps ensure that property is more productively utilised by the society, resulting in an increase of overall economic productivity and general welfare of society.
> [Source](https://medium.com/@simondlr/what-is-harberger-tax-where-does-the-blockchain-fit-in-1329046922c6)

Harberger's Tax works as follows:

- Owners periodically evaluate their property and pay taxes based on its value.
- Potential buyers can force a sale by purchasing the property from the owner at any time.

Similarly, we want to test the "over a period of time" permise with Harberger Tax.

Harberger is a balance between allocative efficiency and investment efficiency.

License to a committee overseeing the common pool, generated by licensing fee

Partial common ownership

we can establish basic conditions to better help us assess how we value social impact, i.e., mission metrics, number of starts/completions, . one thing is for sure, is that we should incorporate non-utilitarian or non-monetary categories, such as calories burned, miles hiked, when making valuations of individual and collective social data.

## Curating Impact Markets

### Curation Process

- Impact setter set conditions for measurable impactful activities
- Impact creators curate impact by completing activities
- Progressively decentralize to curate Impact as DAOs

### Support the Setters and Creators

Purchase from Creators' SupportCurve
Purchase ImpactNFT

## Market Participants

### Impact Setters

**Objective**
1. To open source **knowledge** and **plan** to achieve desired impact
2. To collectively own reputational and social success with a global community
- Need to build something equivalent to an oracle for offline social information.
- We the people can easily generate useful and helpful data for the benefit for our local communities.

"The core, incentivized game being played through the token-curated registry system is to include reputable actors and exclude non-reputable actors." [Link](https://medium.com/@simondlr/city-walls-bo-taoshi-exploring-the-power-of-token-curated-registries-588f208c17d5)
- It may be difficult to establish the type of objectivity required by TCR. One possibly is that actor, whether humans or legal persons, are too complex a being to be fairly voted on by one voting token and as a consequence, results in decisions that often only speaks to one side of that actor.
- "Continuous vetting game of Curation Market vs binary voting of TCR" love this

"TCRs take their roots from thinking on oracles, mechanisms that record publicly observable data onto the blockchain ... The most important aspect of this is that, according to Schelling, what coordinates people around an answer is not truth per se, but the answer’s salience, which permits coordination without communication. The reason this works for oracles is because in oracles coordinating around the objectively truthful answer doesn’t require communication, but coordinating around the false answer does, and so becomes overwhelmingly hard in a large random crowd of participants."

"Let us now notice some assumptions we have made above. The most important assumptions are that: (1) the objective answer exists, (2) it is publicly observable, and (3) it is very cheap to observe it. ... The problem with non-public information is similar to the problem with expensive information. "

[Link](https://blog.coinfund.io/curate-this-token-curated-registries-that-dont-work-d76370b77150)

#### Example Dynamic NFT

### Impact Creators / Stewards / Agent

**Objective**
1. To provide **observable** responses while achieving desired impact, as conditioned by Impact Setters
2. To own personal social graph while achieving desired impact
3. The [eustress](https://en.wikipedia.org/wiki/Eustress) in each market

#### Example Dynamic NFT

#### Description

Creators stress test Playground activities by taking them on IRL and curating activities that produce impactful and measurable results. While staking token is a way to generate such curated signals and commitments, coupling the sale of NFT with a bonding curve might serve a better vehicle for pooling funds to support Impact Creators.

Creators are curators in Token Curated Registries, and stakers in Curation Markets.

Curves to rally around the execution of a todo list.

### Token Holders

> does the value of my token equate the expected average value that the community will be able to derive in the future from coordinating around the curation of information?

1. To send positive impactful signals with tokens

> What we’re missing is the infrastructure that could interpret such signals, construct interaction graphs and apply algorithms on top of them to build discovery rankings.
>
> [Source](https://medium.com/userfeeds/userfeeds-got-funded-heres-how-we-plan-to-bring-skin-in-the-game-back-to-discovery-algorithms-71f7afcb886d)

Money can still go up, but it is not the primary reason!

## Real World Applications

#### Impact Market #1: [RecipeRevive](https://hackmd.io/@audsssy/HyFwJMzxp)

#### Impact Market #2: [BeachCleanX](https://hackmd.io/@audsssy/Sy8pJGGeT)

#### Impact Market #3: [TrailTransformers](https://hackmd.io/@audsssy/H1eRxGGl6)

## Conclusion

As [Christopher Alexander](https://en.wikipedia.org/wiki/Christopher_Alexander) shared in [A Pattern Language](https://www.patternlanguage.com/), properly functioning big patterns (i.e., buildings, cities, institutions) must be built from smaller patterns (i.e., building foundation, city roads, products and services) but the big patterns do not only consist of smaller patterns. Indeed, a portion of a big pattern relies on emergent properties (i.e., "quality without a name") from combining smaller patterns meaningfully and organically.

In Web3, we have working Defi primitives (e.g., x * y = k) that are creating their own pattern language, but not so much for the wider Web3 space. A big part is certainly the lack of non-investment related tools and applications for individuals or collectives to do "Web3 things" and thus establish fun Web3 patterns.

We hope that by introducing this model, communities will have the tools to rally and coordinate around something that matter to them. We believe even just starting with smaller patterns around our daily lives like attending to community gardens or recording hiking data, we can reveal new social foundation that support communities and beyond.

## Resources

This piece is deeply inspired by [Token Curated Registries](https://docs.google.com/document/d/1BWWC__-Kmso9b7yCI_R7ysoGFIT9D_sfjH3axQsmB6E/edit), [Curation Market](https://medium.com/@simondlr/introducing-curation-markets-trade-popularity-of-memes-information-with-code-70bf6fed9881), and [KaliDAO.sol](https://github.com/kalidao/kali-contracts/blob/main/contracts/KaliDAO.sol).

https://medium.com/@simondlr/solving-price-discovery-of-non-rivalrous-goods-with-curved-bonding-27b2186d55d5

https://medium.com/@abbey_titcomb/crowdfunding-the-commons-d590238d8c3c

https://blog.coinfund.io/curate-this-token-curated-registries-that-dont-work-d76370b77150

More on Goldman Sach's Social Impact Bond
- https://www.nytimes.com/2015/07/29/business/economy/wall-st-money-meets-social-policy-at-rikers-island.html
- https://www.frbsf.org/community-development/wp-content/uploads/sites/3/rikers-island-first-social-impact-bond-united-states.pdf
- https://nonprofitquarterly.org/what-we-learned-from-the-failure-of-the-rikers-island-social-impact-bond/

> Vera determined that the program did not lead to reductions in recidivism for participants. When external factors were taken into account, the rate of recidivism for eligible 16- to 18-year-olds was statistically equivalent to the matched historical comparison cohort. The 19-year-olds and the study cohort (16- to 18-year-olds) displayed similar trends in rates of recidivism over time, indicating that any shifts were the result of factors other than the ABLE program. The program did not reduce recidivism and, therefore, did not meet the pre-defined threshold of success, a 10 percent reduction in RBDs for the study cohort.
>
> [Source](https://oldwebsite.vera.org/downloads/publications/rikers-adolescent-behavioral-learning-experience-evaluation.pdf)

Pay-for-success
- https://www.thirdsectorcap.org/wp-content/uploads/2015/02/120815_Third-Sector-Capital-Partners-2-Pager.pdf
- https://www.thirdsectorcap.org/wp-content/uploads/2015/02/TSCP_MAJJ-PFS-Lessons-Learned.pdf

Impact Certificates
- https://forum.effectivealtruism.org/posts/eb28pDHzZz2RWh9Fh/will-impact-certificates-value-only-impact
- https://forum.effectivealtruism.org/posts/yNn2o3kEhixZHkRga/certificates-of-impact#1__Some_existing_challenges

Harberger Tax
- https://medium.com/blockchannel/reimagining-property-fbce9d3832a4

Demand for better impact solution
- "In each country, between 40% and 60% of retail investors want to have impact" [Source](https://2degrees-investing.org/resource/the-6-national-country-report/)
- "high risk of impact-washing" [Source](https://2degrees-investing.org/resource/market-review-of-environmental-impact-claims-of-retail-investment-funds-in-europe/#_ftn3)