Please describe your proposed solution.
Commonlands’ solution links a community’s social-fabric & collective land arrangements to simultaneously create foundational economic identities & immutable land records, giving communities & investors ways to create impact together.
Each user on Commonlands is given a unique Cardano wallet which will hold their digital land certificate and can be used to interact with any Cardano based project.
Claimchain is the name of our open land registry where individuals create land claims and verify them with their neighbors. Community members place pins on a map to draw their plots. As claims are added and neighbors confirm them, a web of interconnected claims is established, creating a Claimchain. This process strengthens trust by involving the entire community in the verification process fostering engagement and collaboration.
<https://youtu.be/eyu8h7jS5Ac>The strength of Commonlands’ Claimchain is that it encourages consensus and a willingness to participate because claims are protected and dependent on all the other claims in the community’s registry. The interconnectedness provides both security and credibility.
Our solution enables easy, accurate land mapping without costly surveyors or officials, utilizing community knowledge & social capital to form blockchain-based Claimchains whose plot certificates can serve as collateral, with an immutable ledger recording info about any transaction, repayments, & defaults.
Individuals build bankability via usage, but default rates also affect the quality of the Claimchain as a whole, incentivizing communities to promote repayment. The solution can be easily adopted for disbursement from MFIs & lenders adopting our solution as part of their credit scoring/portfolio management processes.
The pilot will be an end-to-end test in 5 Ugandan communities whose Claimchains will include a minimum of 750 plots & 2,500 new economic identities on the Cardano blockchain.
We plan to refine user experience, calibrate incentive levels, & collaborate with local partner CEFORD building on their local presence & mutual relationship with CARE, whose VSLA program is actively incorporating our solution.
Once the first Claimchain is complete, we will test it as a mechanism for credit delivery, working with mobile money partners & MFIs, leveraging our platform without the need for costly integrations.
The pilot evaluates solution inclusivity, cooperation, repayment rates & financial education needs, running multiple credit rounds to assess effectiveness. We will also evaluate women’s inclusivity, the ways in which communities work together to uphold the quality of the Claimchain & rate of repayment, the need for financial education & bookkeeping tools.
Commonlands will actively engage with MFIs to finetune interoperability, map out pains/gains & generate scalable insights web3-based ledger value in credit delivery for underserved populations.
Building Identity and Enabling Financial Inclusion
In parts of the Global South that lack strong private property rights and/or rule of law, bootstrapping individuals into a world of financial inclusion face special challenges caused by a dearth of information about users. The lack of any information about the user makes it nearly impossible for profit seeking organizations to offer them credit based financial services.
Commonland's solution is a protocol, the Commonlands Claim Credentials (CCCs), that creates a records in a DID trusted repository, owned and controlled by the landholder- with a sufficient amount of data to serve as a seed on which financial transactions can be undertaken that will extend communities, businesses, and lenders. The possibilities of using the Commonlands platform are only limited by the imagination of its users. Examples of how CCCs can be used to secure agreements include:
-
MFI loans - MFIs can use CCCs to check creditworthiness or potential borrowers and lock CCCs to secure their loans
-
Lending circles Organizations or communities using lending circle models to pool resources and mitigate risk may require participants to have free & clear CCCs to participate (individuals with locked CCCs will not be accepted). At the time of lending, the CCCs of borrowers will be locked, reducing the typical time and paperwork involved. This also provides a secure incentive for repayment. If a member defaults, they can be removed from the circle and their CCC will remain locked until the debt is repaid.
-
Property sales & transfer - CCCs can be used to verify if someone owns a property & determine exactly what they own and who has verified it. Once a sale is agreed upon the CCC can be transferred like a typical title. This simple transfer reduces the time and costs associated with typical real-estate transactions and provides increased security for the buyer because once transferred all the neighbor agreed boundary lines are included so there are no questions & no basis for boundary disputes.
Financial Inclusion and Property Rights
As Hernando de Soto points out in his book "Mystery of Capital," economic growth in the Global South is hindered by poorly functioning financial infrastructure and inadequate laws to protect private property rights. However, a new type of bank called Neobanks has prioritized financial inclusion and is working to address the lack of financial infrastructure. This new and innovative sector of the financial services industry is aiming to change the way people bank with a special focus on inclusion in the Global South.
Neobanks such as Chime (valued at $35 billion in the US), NuBank (valued at $41.5 billion at the time of their NYSE IPO in Brazil), Revolut (valued at $33 billion worldwide), and Tinkoff (valued at $22.5 billion in Russia) are gaining significant traction and are considered successful by the industry. Payment systems like M-Pesa in Kenya, AliPay, and WeChant Pay are also beginning to offer financial services.
In the words of Nigel Verdon, CEO of Railsbank “These more agile financial services companies are democratizing financial services by breaking down financial products into core components that can be distributed at micro levels. Financial services can be adapted to a size that is suitable for inclusion.”
More than 400 NeoBanks have been created in the last year alone with several proposals in Cardano working on loan systems.
The Cold Start Problem - No Credit Profiles, No Financial Services
The primary challenge for growth in Africa is the lack of even basic profiles. Embedded finance has the potential to offer credit based financial services, but only they have the basic information needed to bootstrap individuals into the credit system. Commonlands is currently working with large populations of unbanked individuals to help them acquire certificates of ownership for the land they live and work on. These certificates of ownership can provide the initial starting-point to serve as seed data that will provide them access to financial services provided by companies that prioritize inclusion and are seeking to expand into African markets.
Making Credit Information Self Sovereign using DID
Users must be given the knowledge they need to make smart financial decisions and complete control over their data. Using AtalaPRISM and DID based technology certificates of land ownership can be issued and controlled by the land owner in a trusted repository. These certificates become the seed of a virtuous cycle where the certificate holder’s credit history is continuously enriched as she completes transactions with the plethora of credit organizations seeking inclusion.
Governance Framework Working Group at ToIP or Other Organization
Commonlands will create a working group at ToIP or W3.org of stakeholders who can help neobank financial innovators fulfill their goals of inclusion. The group will define a standard on how credit data from CCC is managed and accessed and updated using DID to protect the rights of the data holders. We will also define a data dictionary and standard for the data, cryptography etc.
Once this standard has been defined and approved it will remove a large barrier for organization that prioritize financial inclusion to be able to onboard and provide services to a large unserved demographic.
Use Cases
Commonlands Claim Credentials (CCCs) will serve as a secure tool for agreements, loans, escrow, and financing, creating new, secure contracting opportunities for communities, businesses, and lenders. The possibilities of using the Commonlands platform are only limited by the imagination of its users.
Examples of how CCCs can be used to secure agreements include:
MFI loans
MFIs can use CCCs to check creditworthiness or potential borrowers and lock CCCs to secure their loans
Lending circles
Organizations or communities using lending circle models to pool resources and mitigate risk may require participants to have free & clear CCCs to participate (individuals with locked CCCs will not be accepted). At the time of lending, the CCCs of borrowers will be locked, reducing the typical time and paperwork involved. This also provides a secure incentive for repayment. If a member defaults, they can be removed from the circle and their CCC will remain locked until the debt is repaid.
Property sales & transfer
CCCs can be used to verify if someone owns a property & determine exactly what they own and who has verified it.
Once a sale is agreed upon the CCC can be transferred like a typical title. This simple transfer reduces the time and costs associated with typical real-estate transactions and provides increased security for the buyer because once transferred all the neighbor agreed boundary lines are included so there are no questions & no basis for boundary disputes.
Escrow
Any two way transaction that may require time to settle can be secured by both parties locking their CCCs. Once both parties meet their transaction obligations the CCCs can be unlocked.
Group financing of a solar powered crop refrigeration system
A business that sells solar powered refrigeration systems can offer an innovative financing model to increase sales by allowing farmers to pool their CCCs to lock as security to finance the hardware.
Before deciding who they let participate, the business can require a minimum Claimrank score or require a percentage of participants to be women or from a specific region.
They can choose to unlock individual CCCs at time of payment or keep them all locked until the full payment is made.
Supporting equal rights for women
Organizations, banks, lenders or institutions can incentivize or require communities to include women on ownership credentials in order for them to be used to access their services or to obtain a reward.
Carbon credit advances
Organizations looking to promote sustainability can advance money to farmers and businesses that meet carbon credit payment specifications but don’t have the financial runway to participate.
They can check Claimrank scores to determine who to let into the program and lock CCCs when they issue the cash advances.
Promoting sustainable agriculture practices
Organizations looking to promote certain agricultural practices such as non-GMO, drought tolerant seed varieties, organic farming, etc. can pre-pay farmers and get farmer commitment by locking their CCCs.
Borrow motorcycle between neighbors
Commonlands is not limited to businesses, once Claimchains are complete and CCCs are issued, community members can use the system to secure agreements amongst themselves.
In this case a neighbor wants to borrow a motorcycle. The parties lock the borrower's CCC until the motorcycle is returned.
Fund community well or other large community development projects
A community would like to dig a well but they don’t have the money to pay the price a local contractor bid for the job. An organization or lender wants to fund the project under the condition that the community pays a token amount and promises to use it as intended.
The funder can require 60% of the community to lock their CCCs to demonstrate interest in the project. Once the threshold is reached, the funds are issued and the project begins. Once the terms are met, the community’s CCCs are unlocked and they have successfully used their cooperation creating a Claimchain to fund a community development project.
Targeted micro-business formation grants for slum dwelling populations
An organization is providing business start-up grants to micro-entrepreneurs from a specific slum. They require a CCC with a Claimrank of 85% or higher from the target slum to apply. The deal is the entrepreneur must prove they formed the business as agreed & operated for at least 3mos and employed at least one other person from the slum. Once approved they lock the CCC and unlock it when the terms have been met.
How does your proposed solution address the challenge and what benefits will this bring to the Cardano ecosystem?
Commonlands is built to scale. Our goal is to issue 1 billion certificates by 2030.
Every journey on Commonlands starts with creating a Decentralized Identity (DID). This DID binds a user's phone number, face, name, gender, government-issued IDs (if available), and address into a secure and foundational identity.
Every individual in Commonlands will create a unique Cardano wallet, enabling them to interact with any Cardano-based project, smart contract, decentralized exchange, or service. This not only expands the user base of Cardano but also opens up new possibilities for these individuals.
Moreover, all certificates generated within Commonlands—be it for land, contracts, loans, or identity—will contribute fees to the Cardano ecosystem, fueling growth. As our project scales, it promises to provide substantial returns to both the Cardano ecosystem and Project Catalyst, conservatively estimated at a 100x value increase.
Furthermore, our project aligns with the emerging focus on financial inclusion in the financial services sector. By enabling ownership registration and submission of loan application data through our app, we facilitate access to financial services for individuals, particularly in developing regions.
To ensure seamless integration, we're designing an interoperability standard for technical systems involved in our project. This encompasses various data types, including land plots, soil assays, and government pesticide testing.
In effect, we're defining a new format for land ownership registries. This registry will be stored in a decentralized ID framework, allowing users to maintain control over their DID.
In conclusion, Commonlands presents a unique opportunity for the Cardano ecosystem. Not only does it address a critical global issue, but it also promises immense benefits in terms of user expansion, fee generation, and increased network activity.
How do you intend to measure the success of your project?
Onboarding and claimchain completion:
Creation of 5 community Claimchains, with a minimum 750 individual community-verified plots.
2,500 people provided community-verified economic identities and credit ratings tied to their land claims.
Credit delivery and repayment:
Support 100 Commonlands certificate holders to access credit lines through Mobile Money & Micro-Finance partners with the goal of a subset going through 3 loan and repayment cycles successfully with default rate <3% (above industry average)
Help 1 Micro-Finance Institution quantifiably increase service area at or below typical service costs with profit margins at or above regional averages.
Please describe your plans to share the outputs and results of your project?
We are enthusiastic about sharing the progress and results of our project with the wider community. We understand that the intersection of blockchain technology, land ownership, and economic development offers a multitude of learnings, not only for our team but for others interested in these areas. It's our commitment to transparency that fuels this intention.
To share the learnings from our project, we have identified three key questions that we aim to answer during our pilot. Each question is designed to unravel the potential of blockchain in reshaping traditional systems, especially in areas lacking robust infrastructures. The insights gleaned from these questions will be documented and shared with the public in the form of a comprehensive report to stimulate growth and understanding in our shared ecosystem.
-
How can decentralized community-verified credit scores on the blockchain tied to land inform lending models to reduce cost and improve accessibility and productive capital use? This question also explores the willingness of traditional and less tech-savvy banking institutions like MFIs to adopt these blockchain solutions, and identifies the precise value proposition that will encourage adoption and drive innovation and scalability through Web3.0 solutions.
-
How can blockchain solutions bring security and transparency to community-based governance systems, compensating for the lack of legal security that often hampers investment in developing countries?
-
What are the hurdles for adopting Web 3.0 solutions at the community level, and what kind of delivery methods, onboarding and training support is required for an effective and inclusive roll-out?
These questions will guide our project as we navigate the complexities of integrating blockchain technology into traditional systems. We look forward to sharing our journey, learnings, and results with the broader community, contributing to the collective understanding and application of blockchain technology in diverse contexts.