TLDR

• Change Code believes that to achieve the world's sustainability and other impact goals, we must find a way to make purpose profitable. We are pioneering new financial primitives and tokenomics that will see impact emerge as the next asset class to be powered by web3.
• Our goal for this round is to extend our Change Credit framework to pilot a web3-native Social Impact Bond as a novel means to sustainably fund locally-based development.
• Building on a newly completed solar microgrid installation in Moshi, Kilimanjaro, Tanzania, we are partnering with The Solar Foundation to coordinate the parties required to capitalize several ancillary climate-friendly businesses and community solutions.
• The project will feature two parts: 1) Needs Assessment Tool, 2) Social Impact Bond design and issuance. Change Code’s impact tokenization model is the means for the SIB issuance, ensuring documentation best practices for optimal replicability in other Solar Foundation communities.

Change Code

Change Code has developed a protocol for impact tokenization and monetization called Change Credits. Change Credits are a new ReFi/DeFi primitive (already in production as web3 native carbon credits) that utilize hypercerts and the Ethereum Attestation Service (EAS) to maximize interoperability with the broader ecosystem.

As a primitive, Change Credits are highly adaptable to many funding and impact verification flows, ranging from retroactive funding and community donations to impact bonds and structured financing for social enterprises.

Pilot Background

Extraordinary outcomes are possible when communities are empowered with the right resources—and have ownership. In early 2024, the Solar Foundation partnered with OMAWA, an education and economic development NGO in Moshi town, Kilimanjaro, Tanzania. Installing a solar microgrid for the OMAWA school resulted in 24 x 7 access to clean power for the classrooms, staff houses and offices as well as the ability for the community to charge their phones with renewable energy. The project also resulted in exciting ‘knock-on effects’: two local businesses are providing OMAWA with ancillary revenue through their utilization of excess power, and the community even improved the road that serves the local school!

Now that OMAWA and their community has experienced the utility and benefits of solar power , they have several new ideas for utilizing solar for small businesses that can further address some of the community’s most pressing challenges, such as unemployment, food insecurity, and a lack of dependable water sources for drinking and irrigation:

• A local barbershop to provide skills training and employment opportunities;
• Phone charging infrastructure;
• Solar-powered refrigerator(s) for selling cold drinks, ice, and food preservation;
• Solar-powered irrigation for smallholder farmers.

The Solar Foundation is a small organization that seeks to find an innovative, sustainable model to fund these community led, solar-powered businesses, recoup the funds allocated and utilize the model to empower more communities throughout Sub-Saharan Africa.

Development of OMAWA Pilot

To determine the viability, assemble and deploy the funding, and track the results, Change Code will work with the Solar Foundation to carry out the OMAWA Pilot.

Part 1: Needs Assessment The ‘social’ in social business doesn’t mean we skip determining if the business is viable and effective in stimulating economic growth. Let’s take the example of the barbershop. How many young people express interest in this type of vocational training? Once completing the skills training, what does their road to full-time employment look like? Are there enough people in the community who express interest in this type of service so that the barbershop is economically viable?

Leveraging our background in economic development, we’re excited to help the Solar Foundation design a simple, standardized Needs Assessment that can be used both in this pilot and to improve the effectiveness of their other projects. To inform strategic planning and guide targeted initiatives, we will assist in the development of a streamlined, simple Needs Assessment mechanism that helps guide the development of solar-powered solutions that effectively meet the needs of the community while also assisting The Solar Foundation in attracting more funding for their impactful work.

Part 2: Social Impact Bond Social and development impact bonds (S/DIBs) are a tool in impact investing designed to transfer risk from the public sector to the private sector and have been used around the world to fund public health, infrastructure, climate, and myriad other innovations. Put simply, social impact bonds allow those altruistically funding a public good to be free from entrepreneurial risk.

To visualize this process, below is how our impact primitive, Change Credits, can be used in a social impact bond setup.

Our Impact Bond design process will include the following key steps:

• Define measurable outcomes and metrics: work with the community to establish clear, quantifiable goals and how they will be measured;
• Determine the cost structure and potential savings: calculate program costs and the project’s calculated public sector savings;
• Secure donor commitment and investors: obtain agreement from a local government or other donor group to repay the investor once outcomes are met; for the pilot, the Solar Foundation will be the investor, so one financing party has already been secured.
• Establish a verification framework: design a system to assess and report whether the program achieves its targeted outcomes.

Beyond creating a repeatable process for OMAWA and the Solar Foundation to fund projects in the future, Part 2 will also see necessary enhancements made to Change Code’s web3 infrastructure:

• Donor lock-box: implement holding accounts to store guaranteed funds that will be released upon project deliverables;
• Implement tokenization: tokenize project metrics and deliverables using both hypercert and Change Credit standards;
• On/off ramps: integrate with local on/off-ramps to support a potential preference to receive funds in fiat instead of crypto;
• Reporting infrastructure:** determine and implement the most user-friendly wrapper (likely Deresy.xyz) for claim verification via the Ethereum Attestation Service.

Project Goals

1. Demonstrate the viability of a sustainable funding model that aligns purpose with profit by generating the impact return (determined after Needs Assessment) and a financial return (goal of 5%).
2. Build a framework for tokenized impact investment that emphasizes user-friendly verification that can be used in further Solar Foundation initiatives and for other Climate Solutions Projects and beyond.
3. Validate the adaptability of the Change Credit design and infrastructure through a successful real-world Impact Bond implementation.
4. Catalyze the growth of at least one solar-powered social business in OMAWA’s local community in the next 12 months.