ReClothes: A Decentralized Solution for Second-hand Clothes Recycles in the Fashion Industry
This is the first issue of Overtheblock’s PoC Series, which aims at showcasing how DLT-based solutions may be leveraged to undertake pressing business and societal problems. This issue focuses on an application promoting reuse and recycle in the fashion industry.
The Major Challenges for the Fashion Industry
Current world problems pose many ongoing strategic and operational challenges to the fashion industry. Blockchain technology can represent a one-of-a-kind opportunity for driving a fashion business towards renovation and eco-sustainability, as pointed out in a previous OverTheBlock article “Opportunities for Blockchain in the Fashion Industry”.
The global apparel and footwear industry produced 2.1 billion tonnes of CO2 emissions in 2018, resulting in a discharge of greenhouse gases more significant than the combination of France, Germany, and the UK, placing it as one of the most negatively impacting industries on the environmental sphere . The high speed and low-cost production combined with the textile and clothing industry’s high volume consumption causes significant environmental impacts due to the short product life span. This increases the need for products to be replaced faster, impacting the production, transportation, and disposal phases . Tones of non-renewable resources, including petroleum, are extracted to produce clothes. Moreover, less than 1% of the material used to produce clothing is recycled. Simultaneously, the residual portion is primarily lost to landfill or incineration, meaning loss of more than 100 billion dollars worth of materials each year . Recent studies have pointed out we will discard 134 million tonnes of textiles a year by 2030 .
A typical fashion industry supply chain suffers from the centralization of information inside non-communicating silos. The resulting information asymmetry may lead to information dispersion, omission, and falsification, opening uncertainty scenarios when reconstructing the various steps across the supply chain. The growing necessity of direct communication to the customer and product ownership tracking has opened scenarios for the fashion business renovation via solutions focused on transparency and affordability . Blockchain technology can be a game-changer for reducing information asymmetry and incentivizing eco-friendly behaviors in people, pushing for the extension of clothes life span and minimizing waste. Transparency, accessibility, and the presence of a shared consensus mechanism have placed blockchain technology as an ideal medium for recording digital fingerprints and automatize supply chain processes using smart contracts.
The investigation conducted has revealed several opportunities to leverage blockchain technology to promote higher fashion industry sustainability levels. Therefore, we have designed and developed ReClothes: a blockchain-based solution to favor the second-hand clothes recycles in the fashion industry to help mitigate the obstacles mentioned above. The solution is designed as an enterprise blockchain-based network built on top of Hyperledger Besu. Reclothes allows a company operating in the fashion sector to implement a decentralized, transparent and secure mechanism to record information relating to business relationships among partners and people interested in selling their second-hand clothes and/or buying second-hand upcycled clothes. To promote cooperation in the circular economy process, the solution implements a “double incentive” mechanism by adopting two different fungible token implementations to meet consortium participants and people’s needs. Leveraging private transaction processing tools, the consortium partners can define their commercial agreements and carry out transactions in confidence, without releasing any information openly to competitors.
Figure 1 shows the high-level overview of the Reclothes workflow, emphasizing the actors, actions, and information visibility. The three possible figures involved are:
- ReClothes Dealer: represents a company operating in the fashion industry,
- Recycler: commercial partners involved in a partnership for clothes recycles operations with the ReClothes Dealer,
- Customers: somebody who has an interest in buying and selling second-hand clothes.
The information regarding the interaction between Customers and ReClothes Dealer is publicly available and verifiable. In contrast, the information between ReClothes Dealer and Recyclers is confidential, visible only by the participants who agreed.
The environmental impact in the fashion industry is hard to determine. The carbon footprint is not calculated in products’ price, causing an insufficient incentive for customers and companies, respectively, to buy and sell low-carbon products . Taking advantage of the proposed solution, when customers decide to send boxes of second-hand clothes that they no longer use, they give the clothes a new opportunity to be reused by others or to be recycled. Buying a cloth using ReClothes prevents a similar cloth's production, avoiding the production costs and the corresponding CO2 emissions. The customers receive many tokens corresponding to the average price of the production cost for a similar cloth. Thus, the number of tokens received as a reward by the customer is the same paid by those who will buy is old cloth. The ReClothes Dealer behaves as an evaluator and reseller for customers’ clothes and as a raw materials supplier for the Recyclers, which evaluate and remunerate these assets with specific amounts of tokes based on the stipulated commercial agreement.
We used two fungible ERC20 token implementations for the token design remuneration mechanisms between Customer / Dealer and Recycler / Dealer. The ResellingCredit (RSC) tokens incentivize the Customers to foster the circular economy model by extending clothes’ life cycle and reducing waste during production processes. The RegenerationCredit (RGC) tokens incentivize the ReClothes Dealer to dispatch the unsaleable and non-wearable clothes to the Recyclers for extracting raw materials to create upcycled clothes. These tokens serve as a yardstick for the fashion company’s environmental impact since a considerable number of tokens corresponds to a more significant demonstration of eco-sustainable behavior.
ReClothes Decentralized Application (dApp)
The following steps summarize the regeneration process for a second-hand cloth, as represented in Figure 1.
- A Customer can send a box of second-hand clothes to the ReClothes Dealer.
- The ReClothes Dealer can evaluate the box. The evaluation triggers an automatic remuneration in RSC tokens for the customer.
- The ReClothes Dealer can sell second-hand clothes in the shop, but the worn clothes can be confidentially sent to Recyclers to extract and reuse raw materials.
- The Recycler can confidentially evaluate the box. The evaluation triggers an automatic remuneration in RGC tokens for the ReClothes Dealer.
- The ReClothes Dealer can confidently buy upcycled clothes from Recyclers and sell them in the public shop.
- Customers can purchase clothes from the shop using the RSC tokens.
The customers’ steps are shown in the following video, which presents a proof-of-concept of a decentralized application (dApp) implementing ReClothes. The dApp is composed of two modules: a backend containing the scripts for deploying a local network of Besu nodes and the full implementation of the on-chain business logic in Solidity smart contracts, with relative utilities for data population and testing and, a frontend that guides the user to the connection with the blockchain, through a safe and easy onboarding with MetaMask, allowing customer registration for sending boxes of second-hand clothes and buying clothes from the shop with the RSC tokens.
The fashion sector requires a healthy revision in light of the ever more pressing consequences stemming from the climate crisis. ReClothes proposes an innovative and compelling solution based on blockchain technology, which exploits various mechanisms to encourage the reuse and recycling of clothes without requiring complex changes in the production processes.
The intent behind the development of the Reclothes proof-of-concept was to showcase how blockchain technology may be leveraged to ignite a long-overdue change process to secure the future of the upcoming generations and the planet. More in general, blockchain may be conceived as a foundational enabling infrastructure that may exert a significant impact on environmentally related challenges thanks to its ability to influence consumer choices through innovative incentive systems based on tokenomics as well as to promote collaborative behaviors made possible by the trust generated by radical transparency and immutability.
We are just scratching the surface of a new paradigm of doing business that will require time to be understood and become mainstream. Our mission is to explore the new frontiers of what is possible to support and inspire current and future generations of business leaders to stir society’s evolution towards a more sustainable and inclusive direction.
 Vogue Business, 2020, “Fashion and carbon emissions: Crunch time”, Retrievable at link.
 K. Laitala and I.G. Klepp, “Age and Active Life of Clothing”, 2015, PLATE Conference, Retrievable at link.
 Ellen MacArthur Foundation, 2017, “A New Textiles Economy: Redesigning fashion’s future”, Retrievable at link.
 BBC, 2020, “Why clothes are so hard to recycle”, Retrievable at link.
 Appinventiv, “Blockchain: The Technology Making Fashion Industry Transparent”, Retrievable at link.
Please cite as:
Corrias G., Favenza A., Ferro E. and Franzoni. S. (2020), “ReClothes: A Decentralized Solution for Second-hand Clothes Recycles in the Fashion Industry”, OverTheBlock Innovation Observatory, retrievable at link
OverTheBlock is a LINKS Foundation’s initiative carried out by a team of innovation researchers under the directorship of Enrico Ferro. The aim is to promote a wider awareness of the opportunities offered by the advent of exponential technologies in reshaping the way business is conducted, and society is governed.