18th Jun 2024 Gemini 1.5 Pro
Holke Brammer, a research scientist at Protocol Labs and a founding member of the Hypercerts Foundation, describes Hypercerts as a generalized form of carbon credits applicable to any impact vector imaginable. Whether it's biodiversity, open-source software development, or AI safety, Hypercerts aim to incentivize and reward contributions that generate positive social or environmental impact.
Hypercerts function as verifiable digital records of impactful work, fostering transparency and accountability within the impact space. They are designed to be interoperable across platforms, promoting a coherent and consistent approach to impact tracking and valuation.
So it is this similar concept applied to those things, and why we think that is important is that with that idea, you really can have a record of like what is work that is like impactful or like supposed to be impactful. And we want to have a record of that in order to reward these like the contributors to this work either like prospectively or retrospectively so that whoever actually produces impact like public goods or like impact on like positive value for the environment that they actually also get rewarded for that according to the impact that they create.
One key distinction between Hypercerts and other impact certificate models is the separation of contributions (inputs) from evaluations (outcomes). A Hypercert itself primarily records the work done, such as planting 200 trees, without assigning a specific impact value.
Evaluations, potentially from multiple sources and employing diverse methodologies, then assess the impact of the work represented by the Hypercert. This separation allows for a more nuanced and dynamic understanding of impact, accounting for multiple variables and evolving evaluation techniques.
So the basic Hypercert just says, "Okay, this was the work that has been done." It doesn't actually say something like five tons of carbon has been removed from the atmosphere, but maybe just like, "Oh, 200 trees have been planted." And then, in the second step, we actually can have evaluations that point basically at the same space and the same thing that was captured in the Hypercert, then attributing really evaluation and impact towards this work.
Hypercerts facilitate a three-sided marketplace for impact, connecting contributors, funders, and evaluators:
Contributors: Individuals or organizations undertaking projects with potential for positive impact.
Funders: Entities providing financial resources to support impact-driven projects. This can include prospective funders who provide upfront capital and retrospective funders who reward impact after it has been realized and validated.
Evaluators: Experts who assess and quantify the impact generated by projects, providing valuable signals to retrospective funders and the broader impact ecosystem.
This model aims to create a more efficient and transparent system for funding and rewarding impact, addressing many challenges inherent in traditional philanthropy and impact investing models.
A central aim of the Hypercerts Foundation is to establish retrospective funding as a standard practice in the impact space. This approach offers several advantages over traditional prospective funding models:
Focus on Impact: By rewarding impact after it has been achieved, contributors are incentivized to prioritize generating meaningful outcomes rather than solely focusing on securing upfront funding.
Increased Risk Tolerance: Retrospective funding can encourage greater risk-taking in the public goods space. Funders can confidently support riskier projects with potentially high impact knowing that they will only be rewarded if the project delivers on its promises.
Data-Driven Decision-Making: The transparency of the Hypercerts system, with its public record of contributions and evaluations, facilitates data-driven decision-making for funders and enables continuous improvement in impact measurement methodologies.
The vision is that retrospective funding becomes a norm. With carbon credits right now, it's kind of regulated so that we actually know that there will be funding for carbon credits in the future.
While the Hypercerts model offers potential solutions to various challenges within the impact space, Brammer acknowledges potential downsides and risks, including:
Over-Financialization: Focusing solely on quantifiable metrics could lead to the over-financialization of activities traditionally driven by intrinsic motivation or community values.
Reductionism: An overemphasis on quantifiable outputs could neglect the contributions of individuals or communities not directly captured in the metrics.
To mitigate these risks, Brammer emphasizes the importance of open dialogue and ongoing refinement of evaluation methodologies. He envisions a future where these systems incorporate more nuanced, multi-dimensional assessments of impact, moving beyond purely quantitative metrics. He also advocates for incorporating democratic principles into the decision-making processes surrounding funding allocation, ensuring a more equitable and representative system.
And making this much more transparent and public, what we evaluate and how we distribute the funding enables us to actually prevent exactly the risk that you just pointed out. But if you have like just like narrow mindset to this approach, then all of the risks that you say can happen also in the system. So having an open transparent dialogue around the evaluations, what we care about, and the dynamic improvements of those, that is necessary to really push all of this in the right direction.
Overall, the Hypercerts model presents a compelling vision for the future of impact funding, leveraging blockchain technology to promote transparency, accountability, and data-driven decision-making. As the model continues to evolve and mature, it has the potential to reshape how we incentivize and reward positive social and environmental impact on a global scale.
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