An innovative financing solution to transform a crisis into an opportunity
When you consider that we have lost over 97% of our African elephant in the last century, 97.6% of our black rhino in the last 60 years, over 50% of our lion in the last 20 years — the list goes on — and that the population of Africa is set to double between now and 2050, one starts to get an idea of what can only be called a crisis.
Yet on the other hand we have technology, such as blockchain, driving an explosion of wealth that is creating the single greatest wealth transfer in the history of humankind. It would appear that tech billionaires are being minted on a daily basis. Many of these young entrepreneurs often choose to value environment over money, which is very encouraging. This trend is fuelling an exponential growth in ‘impact investing’, which is a form of investing which seeks to generate a measurable positive social and/or environmental impact alongside a financial return.
Given the wildlife and ecological crisis we are facing in Africa and the world at large, can we in some way harness this explosion of wealth and good intent in such way that it can be used to address the many ecological crises we are facing? Unfortunately, as things stand now the answer to that is only a partial yes. This new money is not philanthropic money but rather investment capital and investment capital requires a return on its investment. For an investor to derive a return there needs to be some form of business that generates a profit and this business needs to operate within some form of functioning economy. A real problem is that these ecological disasters are happening ‘outside’ the bounds of our economic structures. In other words, they are ‘external’ to our economies and as such the great losses mentioned above don’t appear on anyone’s balance sheet or income statement, hence they are not accounted for. The term used to categorise these unaccounted-for costs is ‘externalities’.
Typically, the problems caused by these ‘externalities’, or put differently, remedying the catastrophic consequences of our economic activity is usually left to donor and/or philanthropic agencies to try and solve. While the efforts of these entities must be lauded, I’m sure you will agree that the extent and complexity of the ecological problems that we MUST solve, is such that we need to do something progressive. We need to innovate in order to harness this new positive momentum and combine different types of capital in such a way that will enable us to radically upscale existing efforts. That is the purpose of the Wadappt platform. It enables one to take impact investment capital and utilise it to address the ecological crisis we are facing AND provides the investor with a return on their capital.
Thus, the Wadappt platform enables investors to take investment capital beyond the confines of normal economic activity and invest it directly into these high impact areas, while at the same time providing them with a return on their investment.
The Wadappt platform does this by using smart contracts on the blockchain to combine impact investment capital with donor/aid capital in such a way that is mutually beneficial for both parties.
The aid/donor economy is valued at $3T annually and is growing. Sadly, much of this precious capital does not reach its target or achieve its intended outcome. There are many reasons for this which will not be covered here. Much of this precious capital is ‘stuck’ or at best there is an immense amount of friction in this space which is not allowing sufficient capital to get to the crises it is intended for. The Wadappt platform assures donors that they will achieve their impact, thus reducing this friction and hopefully unlocking vast amounts of capital that is ‘stuck’ or battling to achieve its impact.
It achieves this by combining both impact investment capital with donor capital in such a way that impact investors derive a return on their investment and donors are assured of their outcome. The following steps will illustrate how this happens:
Step 1: A high impact project is identified e.g. saving some rhino by translocating them from one region to another.
Step 2: The capital required for the project is received from both impact investors and donors and placed into a smart contract on the blockchain. Hence there are now 2 lots of capital being held in the smart contract for the project — one lot of capital requires a return and the other is donor capital.
Step 3: The investment capital is deployed into and used in the high impact project. During this time there is a risk that the project does not fully achieve its outcome. Hence the investment capital is bearing this risk. The donor capital is still safely being held by the smart contract.
Step 4: The project is concluded, and the impact is achieved. At this point a crypto economic ‘proof of impact’ protocol registers that the intended impact has been achieved and this triggers the smart contract to release the donor capital which is now used to pay out or repay the investor. Because the donor capital is assured of its outcome it pays slightly more than what the project costs, in other words it pays a slight premium for the assurance of achieving its outcome and this is then paid to the investor.
This is how investors, by utilising the Wadappt platform, can derive a return on their investment while investing into high social or environmental impact projects that they ordinarily would not have been able to.
This is also how we can unlock vast amounts of capital that can be intelligently / efficiently applied into these critical areas and the Wadappt platform, through its design, will continuously direct capital into those areas where there is the greatest impact. There is much more to be said about the innovation happening within the Wadappt platform but the above will hopefully give you a taste of what is possible.
In this way we can reverse the trajectory of the catastrophic ecological statistics stated above and create incredibly positive changes for the lives of the animals that are being decimated and as a result this will also positively impact the lives of the millions of people who depend on and benefit from their existence.