Call to charitable action for the crypto industry
28 Sep 2021
When you are in the position to pursue the creation of a useful crypto currency (or token), it just appears profoundly relevant to consider tying into it a verifiable commitment to giving back. On a global scale we are dealing with growing ecological challenges (water pollution, deforestation, etc) and we live in an increasingly divided world (access to the monetary system, education, health care, etc). Social media provides us with more insights into disparities and increased awareness provides an opportunity for crypto projects to align their purpose and emotional connection with the generation that cares. Imagine the combined impact the industry could have if every crypto project was to adopt a similar pledge. In hindsight, at the current combined market cap of around $2 trillion that would translate to $40 billion the crypto industry could have allocated for good! Going forward it is an important “why” that any project can add to the list of reasons for pursuing success.
Nimiq wants to set an example and encourage other crypto projects to join in their commitment.
The best way to implement and communicate such a commitment—and the way Nimiq did it—is by including it from the very beginning of the project. That allows transparently informing all contributors and stakeholders of such coin or token “allocation by design”. Of course it is also possible for established crypto projects to retrofit for such a commitment, but it requires approaching their respective governing community or entity for majority consent.
Verifiably designating the 2% of coin supply—”Crypto for good”
Nimiq at creation of its Genesis Block in April 2018 allocated 2% (420 million) of its total maximum coin supply (21 billion) to a special Nimiq wallet address. This wallet address is owned by the ImpactX Foundation, a registered 501c3 that was set up specifically for the purpose of “supporting projects of high social and ecological impact” (nimiq.com/about/#charity). If NIM were to reach 1/100th of the market cap of Bitcoin for example, the USD equivalent of these funds to use for good would almost reach half a billion USD! It is important to choose a setup that protects the intended charitable purpose and use of funds through the entity's statutes and its jurisdiction.
While control of funds should at the very least be decentralized via multi-signature cold storage wallets and other security enhancing means, an additional factor to consider is to enforce a “gradual release” approach for the designated 2% of coin supply. This encourages taking a longer term view for the use of these funds in line with growth and reach of the project in time. In the case of Nimiq’s ImpactX Foundation, the 420 million NIM are bound in a vesting type smart contract which programmatically releases portions periodically over the course of 10 years. To be precise, 1/20th of the 420 million NIM vests every 6 months which is publicly verifiable in any Nimiq block explorer.
Governing the allocation to positive impact
In its early stage, the founding visionary board decides on which social or ecological impact efforts portions of funds may be allocated to, if any. With maturing of the efforts and value to give away or “impact invest”, the idea is to switch to a governance model that will allow voting by the coin holding (or mining or staking) community. In the case of ImpactX, the idea is that voting happens with proof of NIM holdings, which will determine the allocation projects and amounts as they present themselves. The foundation board, which itself is elected on a periodic basis, is the one tasked with executing the decisions that follow from the community vote.
As a final step and to close the loop of setting up such a “Pledge 2%” model, Nimiq expects to release an annual transparency report that details the use of funds of the ImpactX Foundation, with links to the projects and blockchain transactions that identify the donations made. This establishes trust and traceability in the process.
None of the statements must be viewed as an endorsement or recommendation for Nimiq, any cryptocurrency, or investment product. Neither the information, nor any opinion contained herein constitutes a solicitation or offer by the creators or participants to buy or sell any securities or other financial instruments or provide any investment advice or service. All statements contained in statements made in Nimiq’s web pages, blogs, social media, press releases, or in any place accessible by the public, and oral statements that may be made by Nimiq or project associates that are not statements of historical fact, constitute “forward-looking statements”. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual future results, performance, or achievements to be materially different from any future results, performance, or achievements expected, expressed, or implied by such forward-looking statements.