As of the end of this week, the prep work for Capstone is almost complete, and I have been given the project topic for Capstone and contacted the other group members. The topic of our group project is “Blockchain-based smart contract for infrastructure token”. Our product has two main goals, the first is to raise funds for capital infrastructure projects using cryptocurrencies, and the second is to automate dividends by writing smart contracts. Based on the requirements of the project, I have done some exploration of blockchain this week.
What is blockchain?
Literally, a blockchain is a chain of blocks, where each block contains a certain amount of data, and the blocks are linked by hash. Blockchain is often interpreted as a “distributed ledger”, which means that the transaction information on the blockchain is not stored in any centralized space, but in multiple nodes in different places. Whenever a new block is created, the blockchain will add the block to each node through a consensus mechanism. These features of the blockchain mean that the data that exists on the blockchain is not susceptible to corruption and modification, thus eliminating the possibility of counterfeiting.
What is DeFi?
In fact, I think Defi is not very different from traditional finance, but the blockchain is used as a platform, which has changed from a centralized model to a P2P model, making traditional financial services, such as lending, borrowing, trading, and fundraising, simple, convenient and transparent. At present, many DeFi applications are running on Ethereum, they use smart contracts to ensure the transaction is carried out properly. I found this video very helpful in my process of understanding smart contracts.
Our project
Our project uses cryptocurrency to finance transportation infrastructure projects instead of traditional public-private partnerships. In my current understanding, this takes advantage of the ease, flexibility, transparency, and decentralization of DeFi. For the traditional PPP model, a consortium of private contractors and the relevant republican agencies need to work together to form a company, which is a long, tedious process with a lot of risks associated with uncertainty. If we can use blockchain, we can simply enable these stakeholders to purchase tokens as proof of investment in the highway project and write smart contracts to ensure that the stakeholders receive a share of the agreed-upon dividend after the highway receives tolls.
We will be using the Solidity language to write this DeFi application and I am very much looking forward to learning more about blockchain development.