This week, our group had a meeting with our sponsor. Through this meeting, the sponsor helped us clarify that our goal at this stage is to explore more deeply the application of blockchain in the field of capital infrastructure projects. I’ve combined what I’ve learned about blockchain with our project this week and have summarized three areas to help me think more about it.
My first idea is to finance infrastructure projects through cryptocurrency. Based on my study and research, I can now think of two ways to finance the project. The first way is for users to invest in the project by purchasing tokens and then receive a dividend based on the performance of the project. We can issue an exclusive security token for each infrastructure project, and users can buy the token as a proof of their investment in the project. When the project starts to earn revenue, investors can receive dividends based on the number of tokens they have. This is equivalent to putting the current financing model on the blockchain so that projects can get a more flexible form of financing, and possibly accelerate the speed of financing. In addition to this, I also learned that an interesting financing method is that users can purchase tokens as future access to the services offered by the project.[1] For example, users could purchase a free road pass to help get the project off the ground while saving themselves money for the future. Both of these ideas are explorations of how decentralized finance can be applied to infrastructure projects.
In addition to decentralized finance, blockchain also has some other qualities that I should explore. For example, decentralization of information. According to my understanding, due to some problems of PPP, it may lead to opaque information between public and private cooperation, resulting in a lot of time cost and even money cost, so if we put the information of all parties on the blockchain, we can ensure the transparency of information as a way to improve the efficiency of cooperation between all parties.[2] This is the characteristic of using blockchain as a distributed ledger technology. A distributed ledger means that each stakeholder involved in the process has a copy of the same information recorded, and there is a consensus on every piece of information in the ledger. For example, we can allow each stakeholder to update the progress related to the project on the blockchain in a timely manner, and this progress will be seen and monitored by all other stakeholders, ensuring the transparency and reliability of the information.
Based on the first two ideas, we can also build a DAO to improve the decision-making process. DAO act as a decentralized autonomous organization where every investor, or token holder, can participate in the decision-making. This is different from the way companies make decisions today, where the decision making power is almost in the hands of a small group of people, but a DAO allows everyone involved in the investment to be a part of the decision-making process and ensures that decisions that get consensus are automatically executed through smart contracts. This expands the scope of decision making and reduces disputes between stakeholders. Overall, the existence of DAO allows for more open and transparent decision-making.
Next, I will continue to research about smart contracts in blockchain and explore the project’s way forward more deeply!
References
[1] OECD Case Study. Blockchain Technologies as a Digital Enabler for Sustainable Infrastructure.
[2] https://www.linkedin.com/pulse/blockchains-mechanism-improving-data-information-trust-david-baxter/