The Buy Side of the Swytch Network

One of the questions we get asked a lot is who will buy the Swytch tokens. Most people we talk to readily understand the generator/seller side of the equation. A person or entity puts up a solar or wind farm and earns Swytch tokens based on how much renewable energy is generated. The Swytch Open Oracle uses machine learning and a consensus protocol to determine how many Swytch tokens to award based on an estimate of carbon offset.

The buyer/holder view of Swytch tokens is where people want to drill down. So let’s begin!

What Is Swytch?

Swytch provides a smarter way to incent companies, municipalities, and investors to flow capital into the projects that will have the biggest impact on C02 emissions. Swytch runs on the blockchain in a secure fashion and incents the generation of renewable energy to the extent that energy has an impact on carbon emissions. Swytch provides an incentive for renewable energy generated by nodes on our network; we don’t generate the energy ourselves nor do we get directly involved in energy trading. The incentives provided by Swytch encourage energy generators to register their assets on the Swytch system as a node. As such nodes multiply, network effects take over, to make Swytch the leading provider of energy data to market participants. This data has extreme value for investors, who are struggling to understand exactly where and what kind of sustainability projects to fund to reduce C02 emissions.

In that context, here’s who we expect to be the early buyers/holders of Swytch tokens:

1// Investors with capital they want to invest in solar, wind, or another type of sustainability project, including private equity investors, developers of large renewable energy facilities, investment bankers involved with municipal bond initiatives et. al. These investors want to deploy their capital to the places in the world that will generate both a high return and the most good. Today, there is no central repository of information that brings together these two perspectives: ROI/IRR (“where will I get the highest return”) and impact (“where will my investment reduce C02 emissions the most”). Nor is there any single “marketplace” that enables investors to look at different investments (wind, solar, geothermal) in sustainability across the same footing.

To participate in the marketplace enabled by Swytch*, investors will need to purchase Swytch tokens to determine the expected impact on carbon emissions of projects. When their projects “go live”, the Swytch network will be used for attestation purposes, verifying the exact amount of energy generated, when and where it enters the electrical grid, and also an ongoing estimate of carbon offsets. This type of attestation builds trusts and eventually, we expect reputation scores to be made available on our network, to show that a typical developer has a track record in Africa, for example, a place where the perception is that it is difficult to verify and track that money invested in being spent appropriately.

2//EPCs (engineering, production, construction) work to design, build, and engineer new solar or wind projects. An EPC is typically hired very early on to do an initial site survey and estimate how much it will cost to build out a renewable energy power plant at a particular location. We expect these players to purchase Swytch tokens to do “what if” analysis, to determine the impact of their projects on carbon emissions. To do this, they’d lean on the Swytch network for forward predictions of carbon offsets, something our Open Oracle handles.

To understand why this kind of “what if” analysis is useful — consider the Hawaii example. In Hawaii, our partner Black & Veatch was hired to create a simulation of the impact of investment in solar and wind. The simulation showed that incenting solar and wind production would not reduce carbon emissions in Hawaii. Instead, what the region needed was an investment in electric vehicles, which in turn drives consumer adoption of battery technology. There are many such examples.

Additionally, EPCs are tasked with engineering the project so it can operate at maximum efficiency, something that is extremely difficult given the changing nature of the sun and wind. Part of efficiency is figuring out how to design a partiuclar renewable energy project so it delivers the maximum number of Swytch tokens.

In short, we expect EPCs to buy tokens repeatedly as they fine-tune their projects, tapping into the Open Oracle to model how various projects will perform under different scenarios.

3//Individual investors who invest for social good purposes more so than ROI/IRR.

Investors in the developing world are interesed in putting their money to work in the clean energy sector. The problem is how to do so, especially as where the money is needed the most is the developing world.

Bloomberg New Energy Finance estimates that over $7.4 Trillion will be spent on renewable energy projects over 2017–2040 [1]. China will account for 28% and India 11% of total regional investment from 2017–40.

An investor would subscribe to an application running on the Swytch network which would enable them to get the exact data they’d need to understand:

· The reputation of the project developer

· Where the project stands in financing

· The impact of the project on carbon emissions

· Swytch tokens earned (actual vs. projected)

All of this data is made possible due to sensors embedded in commercial-grade renewable energy equipment. Sustainability projects (e.g. a vertical garden, composting, or other initiative) can be instrumented with low-cost sensors/IoT devices, making more types of projects eligible for financing.

Note that Swytch itself is unlikely to build the application discussed above. As a platform, we want to enable these types of applications to be built by others. Swytch is a project of the Token Commons Foundation, a non-profit foundation based in Zug, Switzerland. Our role is to develop the fundamental technology that makes this type of application possible. This includes the open-source protocol that handles the attestation processes, the Open Oracle (discussed above), consensus protocol, and fundamental token economics that will make the entire system hum.

4//Model Builders

Critical to making the Open Oracle work is the notion of model builders. Model builders could come from academia or from the private sector. They will buy a modest number of Swytch tokens in order to access the network and its rich data sets. Model builders compete to build models that properly estimate the amount of carbon offset as renewable energy is generated and/or sustainability actions are taken. Models that “win” the competitions are awarded Swytch tokens. This type of decentralized prediction market was pioneered by Augur, among others.

Currently, Dr. John Clippinger, Co-Founder and Head of Token Innovation, is working with a consortium of data scientists from Yale, Harvard, and MIT to develop some of the initial models to run on the Swytch networks.

5// Cities/Municipal Entities. Cities have a vested interest in sustainability, to reduce air pollution and improve quality of life. This is particularly true for cities in the developing world that do not want to become the next Bejing or Mumbai, in terms of extreme air pollution and its impact on quality of life.

Cities will purchase Swytch tokens to stake a reserve currency, used to back sustainability projects undertaken by the community or other groups in their city. The way this works is that the city says it wants to put up $1M for wind farms and sets up smart contracts on the Swytch network that will payout under a particular set of circumstances e.g. attestation that the wind farm is up and operational as of a certain date. The Swytch network benefits because the use of Swytch as a staking token increases demand for Swytch tokens. The city/municipality benefits by reducing the administrative overhead that would otherwise be involved in these kinds of program. There is no requirement that someone from the city go out and verify that the funds were used properly. Instead, the Swytch network can attest to this fact. Any sustainability action that can be tracked and measured using a sensor or IoT device is eligible for this type of programmatic support. Vertical farms. Composting. Electric vehicles. This usage of Swytch is particularly appealing to cities that see themselves on the forefront of the fourth industrial revolution.

[1] Source: https://about.bnef.com/new-energy-outlook/#toc-download