The United Nations International Children’s Emergency Fund, commonly known as UNICEF, a global humanitarian aid organization, is testing the efficacy of a decentralized autonomous organization (DAO) in conducting crypto-funding activities.
In an interview with crypto news outlet The Block during the Paris Blockchain Week, Arun Maharajan, blockchain lead at UNICEF, said the agency is prototyping a DAO to “fairly distribute power and communication” for a globally distributed digital public good (DPG).
Digital Public Goods are referred to as open-source goods such as software, data sets, AI models, standards, or content that are available for free to the public. DPGs provide marginalized communities in low-income countries with resources to build digital infrastructure and promote social and economic development.
UNICEF Set to Launch DAO on Polygon Network
According to UNICEF’s blockchain lead, the DAO will be closed for each DPG to get its stakeholders on board. The agency is currently looking for team members to further develop the initiative. Maharajan expects the pilot program to include end users and other stakeholders so that it encourages the larger community around DPGs to team up and decide on what direction to take.
The UNICEF DAO, built on Ethereum-based Layer 2 scaling blockchain Polygon (MATIC), will in its early testing phase enable easier communication between DPG stakeholders when discussing the prospect of new projects. Polygon was selected to be DAOs the blockchain infrastructure provider due to its high network throughput and low-cost capabilities.
The humanitarian aid organization is also integrating Snapshot – an off-chain voting tool for DAOs, decentralized finance (DeFi) platforms, and NFT communities – into the program and testing the open-source tool for voting on DPG governance proposals. Ultimately, the DAO would allow UNICEF to fund any new features voted on by the community for DPG projects initiated around the world.
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The project is part of UNICEF’s crypto venture capital program called the UNICEF CryptoFund. The program, launched in 2019, allows for donations to be made in cryptocurrencies like Bitcoin (BTC) and Ether (ETH). The fund also provides monetary aid in digital currencies to tech startups that UNICEF believes develop innovative solutions to assist children and marginalized communities in need.
Approved startups will be supported by UNICEF to become certified DPG via the Digital Public Goods Alliance. Current board members of the Alliance are the German Federal Ministry for Economic Cooperation and Development (DMZ), the Norwegian Agency for Development Cooperation (NORAD), United Nations Development Program (UNDP), and UNICEF.
The UNICEF CryptoFund also allows crypto companies to provide funding for innovative blockchain projects in UNICEF member nations. Currently, four crypto donors fund the program, including ETC Labs, Animoca Brands, and Huobi Charity – the philanthropic arm of Huobi crypto exchange which donated $1 million to UNICEF in April 2021.
Sana Bedi, who manages the UNICEF CryptoFund, said the agency has a rigid due diligence process when it comes to accepting crypto donations. She added that there cannot be any anonymous transactions in crypto, and to avoid controversy, the CryptoFund burns any unsolicited funds that it may receive.
41 portfolio companies part of the initiative have raised about $17 million in follow-on funding. UNICEF had earlier confirmed that it does not take equity in any of the firms it backs. At the Paris Blockchain Week, Maharajan gave the example of a Nepali Blockchain startup called Rumsan which was backed by the UNICEF CryptoFund. Rumsan is a cash and voucher assistance platform that connects aid agencies with distribution networks to provide monetary assistance and vouchers for beneficiaries. Maharajan mentioned that any aid given to the company can be easily traced using blockchain technology.
The blockchain lead also announced the completion of a pilot project that UNICEF conducted with Rumsan in Nepal, where the company used its services to provide cash assistance to people in the flood-prone rural districts of the country.
At the event, Bedi noted that UNICEF’s blockchain initiatives weren’t without challenges. The fund manager said that despite internal doubts about the effectiveness of the project, the aid organization is flexible and willing to learn more about blockchain-related technologies as it develops.
She was also asked whether UNICEF will accept donations in USDC stablecoin, which has been faced with a host of problems related to its exposure to collapsed U.S. banks, Silicon Valley Bank and Silvergate Bank. Bedi said the agency would be interested in the prospect but such a measure would have to “make sense from a market point of view.”
When questioned on how UNICEF custody its crypto donations, she said she couldn’t share many details about the arrangement but assured that the humanitarian aid organization was not impacted by the recent banking turmoil in the United States and Europe.
Increased adoption of cryptocurrencies has led to a significant rise in the number of donations made in digital currencies. After the catastrophic earthquakes that devastated parts of Turkey and Syria earlier this year, many major companies made crypto donations to aid agencies in the region. As per reports, Ukraine has collected over $100 million in crypto donations since the country began its conflict with Russia last year.
Similarly, the United Nations High Commissioner for Refugees (UNHCR) and the International Rescue Committee (IRC) partnered with Stellar Development Foundation (SDF), developers of the Stellar blockchain and XLM token, to distribute relief payments in USDC to war refugees in Ukraine on their Stellar wallets.