Why Solar DAO Uses Blockchain?
Because it’s totally awesome. Here’s why…
Solar DAO is based on Ethereum blockchain and utilizes cutting edge smart contract technology to provide its users maximum security.
As we have already observed, most energy tech projects use blockchain to manage the demand side. They try to create new cryptocurrencies that will allow users to trade solar energy on specialized decentralized platforms, and to flexibly balance energy supply and demand. They also aim to incentivize customers financially, allowing them to store and exchange energy units, and receive rewards for renewable energy generation.
Blockchain gives such projects many advantages and sharpens their focus on the demand side. In short, their ultimate goal is to effect the transition to a “greener” energy by changing the way people produce and consume it, and simultaneously to mitigate the most important risks involved in such a transition.
On the contrary, Solar DAO uses blockchain as a means for crowdfunding. It is oriented at the supply-side of the energy financing equation. The use of Ethereum blockchain, and the issuance of ERC20 compatible SDAO tokens makes Solar DAO different from both other energy tech projects that utilize blockchain, as well as from non-blockchain based investment partnerships in the field of solar energy.
Negatively speaking, the use of blockchain destroys the triple hierarchy that prevents most people from investing into the booming field of solar energy. By undermining the financial hierarchy, the hierarchy of expertise that assumes most of the transaction costs, and the hierarchy of attention from the policy makers, blockchain makes the investment projects in the field of solar energy at the same time financially viable, technically feasible, and trustworthy from the point of view of the public. It also radically diminishes transaction costs by eliminating agency issues and the costs of due diligence and contract enforcement.
First, blockchain allows for the use of smart contracts that are (partly) self-executing and self-enforcing. This creates enhanced security for the members of the Solar DAO, and enables trust within the membership.
Second, Ethereum blockchain allows to democratize access to solar energy investments. The investors of Solar DAO can contribute sums as modest as $1, and still acquire a membership in the investment fund, and the status of an investor into the construction of PV solar plants. Moreover, even with one token in your hand, you can still receive a portion of the dividends. There are no more financial thresholds that could prevent you from participating.
Third, tokenization of investing into solar energy creates a unique opportunity for the investors to anonymously and securely own and trade tokens that are tied to the real assets in the real economy. That means that SDAO combines the flexibility and tradability of a cryptocurrency with stability and value increases of a real asset. And not just any real asset, but one with a bright and promising future — PV solar plants.
Fourth, the decentralized structure of the investment fund enabled by blockchain in itself also solves many issues of corporate governance. By purchasing SDAO tokens, the investors acquire membership and voting rights within the decentralized autonomous organization. That means that the investors have direct control over the key decisions of the fund’s future. On the other hand, the benefits of specialized expertise are not compromised, since the project’s team is in charge of the technical due diligence, while remaining completely accountable to the investors.
In other words,
blockchain in Solar DAO means = Trust, Security, Transparency, and Increasing (Real) Value.
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