GiveCrypto Monthly Update — September 2019: Phase 3 Update, Helping the Bahamas & a Stablecoin Savings Experiment
September has been a busy month for GiveCrypto.
- We kicked off phase three of our Venezuelan Ambassador Program
- We launched an extension of the ambassador model in the Bahamas helping people affected by Hurricane Dorian
- We began a stablecoin savings experiment
We’re excited to update you on how the Ambassador Program is growing and maturing as we set our sights on phase four. It’s also exciting to think of applications for our program outside of Venezuela and look critically at our ability to quickly implement and scale in areas affected by natural disasters. And, as always, we’re constantly looking for ways to have more sustainable impact. This has led us to experiment with a stablecoin savings trial in Venezuela.
How We Plan to Distribute $120k of Crypto in Phase Three
Building on the success and lessons of phases one and two of our Venezuelan Ambassador Program, we launched phase three on Sept. 1.
Like previous phases, we’re empowering our on-the-ground ambassadors living in the community to help us identify recipients who are most in need. We’ll then give both recipients and ambassadors $10 per week for six weeks.
Phase three focuses on 2,000 people in two locations. We’ve made the following improvements to the platform since phase two:
- Multiple stores will accept crypto
- Each location will have at least one cash-out option
- All payments to participants will be automated
- Improved on-boarding flow and impact questions
Here is a summary of the numbers to date:
As mentioned in last month’s report, we have recently implemented a number of fraud detection mechanisms that are focused on identifying fraudulent ambassadors.
So far, we have identified five ambassadors acting in bad faith, which translates to an 8.2% fraud rate across both locations. Three of the ambassadors asked for payments from recipients, one ambassador set up a network of fake recipients, and one ambassador was in a location that we previously deactivated. We realize that we likely aren’t detecting all fraud and wouldn’t be surprised if the actual fraud rate was closer to 10–15%. Fraud prevention/detection will be a cat-and-mouse game, and our goal will be to keep it down to an acceptable number.
Finding a Way to Help the Victims of Hurricane Dorian
Like many, we were shocked and saddened by the devastation caused by Hurricane Dorian.
Thanks to local charity partner Lend a Hand, and some hustle by our developers, we quickly launched an ambassador program in the Bahamas. We are currently helping 48 families in Nassau, giving them $250 per week for four weeks. Our local partner provides cash-out services so that the recipients can purchase food and supplies.
Most of the recipients are from Abaco, the island that was most affected by the hurricane. They were forced to flee to Nassau in the aftermath of the storm. They are using our funds to purchase food/supplies and, hopefully, regain some semblance of normalcy.
This project offers a good test of the geographic extensibility of the ambassador program and the applicability of crypto to a disaster relief situation. We will share impact information once the program is complete.
Experimenting with Stablecoins to Help Venezuelans Reduce Financial Risk
There isn’t a playbook on how to use cryptocurrency to help people in need. We started our work experimenting with crypto transfers, eventually performing 18 projects in 12 countries. This taught us a number of lessons that we have applied to our Venezuelan Ambassador Program.
We believe that crypto transfers are only one way to potentially help, and that other approaches are hiding in plain sight. In an effort to discover new ways to help, we have started conducting experiments using crypto as a savings tool. Due to hyperinflation and limited access to financial services, Venezuela is an especially fertile testing ground for this kind of work.
Venezuelans are already doing unique things to protect their assets and minimize exposure to the bolivar. For example, we’ve heard reports of people buying commodities, like diapers and canned food, when they receive a relatively large amount of cash, as these items hold value better than the native currency.
This type of behavior is unnecessary if someone has a smartphone and a crypto wallet. They could instead convert their bolivars to a stablecoin (e.g. USDC) and would basically have a virtual U.S. dollar bank account.
We have started reaching out to a number of people in Venezuela, offering to help them convert their bolivars into USDC and providing a small incentive to do so. We have found the most interest from companies that pay their employees in bolivars but set the value of those payments in USD.
These employees generally earn more than the average wage, so they have a higher likelihood of having something to save at the end of the month. Plus, they usually don’t have access to a U.S. bank account.
People not familiar with cryptocurrency feel understandably skeptical of the technology, so we need to provide some incentive for them to convert their hard-earned bolivars into USDC. The current model involves the employer (with the employee’s consent) paying 50% of the salary in USDC (sent to the employee’s crypto wallet). We then add another 5% of USDC as incentive for the employee to take payment in crypto. So far we have convinced two companies to pay their employees this way, and have a number of interested prospects in the pipeline.
It would be irresponsible to give people cryptocurrency without a way to convert it back to the bolivar (so they can make purchases). We facilitate these conversions for the participants (as well as the deposits for the employers); a non-trivial task in a place like Venezuela. Here are flowcharts describing our process for deposits and withdrawals.
Staying Connected
As always, we love to hear from our supporters and those curious about the role of crypto in charity. Please follow along on Twitter and our blog for updates on the Venezuelan Ambassador Program.
