Generating Income to Benefit Communities

With Blockchain at Berkeley, UNICEF is exploring the possibility of DeFi to open access to financial services for the unbanked

Mehran Hydary and Christina Lomazzo, UNICEF Innovation
Kikwit, province du Kwilu. Sœurs Annonciades Primary School.
12 August 2021

UNICEF has been exploring innovation in the blockchain and cryptocurrency space for the past few years. One of the emerging themes that has come up time and time again is decentralised finance.  

Decentralised finance (DeFi) is a set of financial services that are available on blockchain and cryptocurrency platforms. These financial services are available to anyone that has access to internet. An example of a service that is offered by DeFi is the ability for anyone to open a savings account.  

DeFi is important because it enables people around the world to access basic financial services. Globally, 31% of adults are unbanked, facing several challenges accessing these basic financial services because of various problems, including not having the exact documentation required by a bank for them to open a savings account. 

To further UNICEF’s exploration in DeFi services, UNICEF has worked closely with a university student group called Blockchain at Berkeley. The student group has developed a mobile application that makes a DeFi service easier to access. The mobile application can be used by communities around the world to participate in DeFi. The DeFi service that is provided through the mobile application is lending, which allows the user to deposit their money into the mobile application and generate interest. The interest can be paid back to the user or pay for other services. 

The project they worked on was to help UNICEF explore if lending as a DeFi service can be useful to communities and schools around the world. 

Why schools?

In 2019, UNICEF and ITU launched an initiative called Giga, which aims to connect every school in the world to the Internet. The core pillars of Giga include Map, Finance, Connect, and Empower.  

  • Map: get schools around the world mapped so that connectivity demand can be understood and identified. 

  • Finance: building affordable and sustainable country-specific models for finance and delivery of internet connectivity.  

  • Connect: Use technical solutions to provide schools with connectivity, and countries with safe, secure, reliable, fit-for-purpose infrastructure to support future digital development needs. 

  • Empower: partner with governments and digital learning and services initiatives to ensure every young person has access to information, opportunity, and choice. 

Once the schools are connected to the internet, Giga will explore different methods to potentially empower communities with open-source digital public goods. Some of these digital public goods can be DeFi services. UNICEF and Blockchain at Berkeley were interested in seeing how schools could be positioned to become economic hubs for their communities using DeFi. 

Blockchain at Berkeley created a mobile application called Satchel. Satchel is looking to use DeFi to enable communities around schools to pool money together and earn income for their community. 

Meet Satchel, a Blockchain at Berkeley Project

Satchel allows people in a community (around a school) to pool money together, which can be lent out to earn interest. The interest generated can then be used to improve the community (and school) while also providing income for the lender (e.g., parents, teachers, etc.). 

This project is open-source, and the code can be found here. Please note that it is still in beta and at this point is only for prototyping purposes. 

Blockchain at Berkeley

How it began

The team at Blockchain at Berkeley started off by looking at a set of problems that were common in emerging markets. In some of the countries that the team looked at, they noticed that salaries were losing value over time due to inflation. According to the World Economic Forum, the global inflation rate is around 3.6% with countries like Argentina and Zimbabwe having some of the highest rates. People in these countries were looking for a way to keep the value of the salaries that they were being paid over long periods of time. The student group did some additional investigating and learned that some people were starting to explore the transfer of their salaries into crypto to retain value.  

With this learning, the Blockchain at Berkeley team researched various DeFi services. They wanted to figure out which services could easily be used by the average consumer. They identified a reliable lending service. With this service, the team created a mobile application that enabled community members to crowdfund improvements in their own community. The initial implementation of Satchel would focus on communities built around schools. 

User journey for different users of the Satchel Web Application
The Satchel team
User journey for different users of the Satchel Web Application

An example of how someone may use Satchel is provided below: 

  1. Parent of student at a school provides $100 USD to Satchel 
  2. Satchel lends out the $100 USD using the DeFi Service to earn between 3% and 5% per year on the principal amount 
  3. At the end of the year, the parent receives the earned income (e.g., 4% of $100 USD to provide the parent $4 USD) 
  4. The earned amount, $4 USD, is split 50/50 between the parent and the school 

The team conducted design research to make the DeFi lending service and mobile application easy to use. The design of the application focused on the user experience. Through interviews with users from the regions in which the team hoped to deploy the application, along with academic professionals, the Blockchain at Berkeley team was able to create an intuitive application which enables users to invest as a community.  

Screenshots from the Satchel Web Application
The Satchel team
Screenshots from the Satchel Web Application

What's next?

The team is looking to continue work on the platform. The three features they will be looking to build out in the new year include enabling communities to organize events to raise more funds through the app, enabling people from around the world to donate funds to communities of their choice, and enabling other users to join the platform and leverage the borrowing and lending capabilities (e.g. onboard small business owners to co-invest with their communities).  

If you’re interested in getting involved in this project, please check out the repository for more information.