Digicus: blending the old with the new
Using blockchain to improve transparency and efficiency in the work we do
Innovation is vital to improving the state of the world's children. The speed at which global problems - from disease outbreaks, to the global refugee crisis - disrupt the lives of children around the world is only getting faster. UNICEF innovates in order to stay agile and find solutions to the evolving challenges affecting all children. Most recently, UNICEF Kazakhstan created a platform that digitised financial processes, leveraging blockchain technology, to simulate business rules and the release of funds in a streamlined and transparent way to partner organisations.
UNICEF Kazakhstan was looking to leverage a public blockchain network to test whether it could provide a transparent way for the public and donors to see how their funds are spent, while increasing internal efficiencies in the process. The prototype was meant to test smart contracts (i.e. digitised rules) and explore whether this could potentially decrease banking fees for transactions, shorten time spend for spot-checks, and improve efficiency in dealing with partners.
The Initial Prototype
The initial prototype consisted of digitising a currently manual process between UNICEF Kazakhstan and its partners. The platform, which leveraged blockchain, consolidated UNICEF’s agreements with its implementing partners as smart contracts on the blockchain. When the appropriate approvals were received for a milestone, the corresponding funding amount would be released to the partner.
Ultimately, the prototype which was supported by UNICEF’s Office of Innovation, proved to increase the transparency of transferring value between parties, improved the operational efficiency in dealing with implementing partners, shortened the time for spot checks, and created a possible channel to release payments quickly.
The Technical Details
The blockchain element of the prototype was built using the Ethereum Ropsten test network, and an ERC-20 token was created for the purposes of mimicking payment. The token was named Digicus, a nod to the fact this project was combining old and new methods, the same way that a Digicus is the blend of a digital calculator and abacus. In the initial prototype, the token had no monetary value, however, it corresponded to how much the vendor was to be paid for a particular tranche (i.e. similar to a stablecoin).
For each partner agreement that UNICEF Kazakhstan entered into with an implementing partner, a smart contract was deployed which listed the key milestones of the agreement that needed to be reached for a tranche of funding to be released. For each tranche of funding, there was a requirement for the implementing partner to provide documentation. When the documentation was provided, several signoffs were required from the UNICEF Kazakhstan team. With the appropriate approvals, the funding was released; leveraging a multi-sig wallet.
One of the challenges we encountered while working on this project was how to integrate blockchain wallets to an enterprise solution in a seamless way (a challenge we know is faced by many in the industry). We also faced an issue with the size of the smart contract. At one point, due to the size of it, the process was taking hours to deploy even with high gas fees. Other non-blockchain elements we needed to address were the localisation of the platform both in terms of language and also local currency. Russian is one of the official languages in Kazakhstan, and English is used within the UN, therefore, the platform was built to be bilingual. We also needed to take into account how transfers from headquarters which are made in USD would be converted into the Kazakhstani Tenge, since UNICEF Kazakhstan makes payments to partners in local currencies and the exchange rate changes on a monthly basis.
As the build of the first iteration of this prototype wraps up, the initial findings show that there is value in leveraging blockchain for this process, in terms of both increasing transparency and accountability in the transfer of resources. The team is now considering further features that need to be added or adapted to conduct a mainnet transaction between UNICEF and an implementing partner.
This project is an example of UNICEF looking to transform, adapt and benefit from emerging technologies like blockchain.
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