Vision

Our vision is to make Web3 genuinely inclusive by bringing the long tail of users into the ecosystem, particularly in the global south. Through the faucet and the community reserve, we have established a cash-transfer rail that integrates seamlessly with local community currencies. Building on this foundation, we aim to operate fractional-reserve community currencies, allowing each transfer to seed a larger, eventually self-sustaining pool of local liquidity. Our core hypothesis is that transferred cash, when combined with community currencies and fractional reserves, can multiply the impact of the transferred cash alone.

This approach leverages each cash transfer beyond its nominal value and strengthens the development cooperation sector. Read more about it here: https://encointer.org/fractional-reserve-community-currencies/

Strategic Objectives

We have demonstrated that the Encointer system works in practice: people are actively using it, companies participate in the local economy, and mechanisms such as buy-backs are effective in the early stages before sufficient transaction volume is reached. In a later stage, the buy-backs can turn into a distribution system, where holders of community currency can sell it and local actors can buy it.

We have also shown that the faucet is a powerful tool to grow communities, and have collected the first qualitative evidence in one pilot community that highlights its positive impact:

https://encointer.org/a-glimpse-into-the-nyota-community/

The next step is to deepen our understanding through quantitative data. We will pursue this in two complementary ways:

Surveys to capture community perspectives and social impact.
Transaction analysis to measure economic flows, adoption patterns, and system dynamics.

Missing Pieces

To reach the next level of maturity, several building blocks are still needed:

A survey instrument that can be regularly deployed across communities.
Comprehensive business listings, ensuring visibility of participating merchants, facilitating local trade, and enabling issuance of the swap option
Stablecoin treasuries and swap options with discounts for businesses, to mitigate volatility and increase adoption.

To Explore Further

The Nyota community in Tanzania has pioneered its own approaches to strengthen the local economy:

Rotating savings groups (Mchezo): By pooling faucet rewards, community members multiply their impact and finance small business initiatives. https://encointer.org/kusama-mchezo-in-tanzania/
Small business loan system: Building on Mchezo, members now access community-backed microloans to fund entrepreneurial projects and expand local trade.

Our next step is to integrate these mechanisms directly into the Encointer Wallet. This will make Mchezo and community-backed loans accessible to all future communities and reduce reliance on informal coordination. To achieve this, we will:

Gather requirements from community leaders to ensure the tools meet real needs.
Develop mockups for embedding Mchezo and microloan features in the wallet.
Design a scalable framework for new communities to adopt these systems seamlessly.

PoP-Enhancements

Alongside local economic experiments, we are also exploring how proof-of-personhood itself can evolve to become more scalable and inclusive, while retaining the strong Sybil-resistance of our current in-person model. A key research question is whether the combination of different proof-of-personhood mechanisms can increase scalability, broaden inclusivity, and still maintain strong Sybil-resistance. Our ongoing innovation project is making progress in this area, building on the findings of a recent thesis at the DISCO Group (Prof. Roger Wattenhofer, ETH Zurich). These insights are informing the development of a scalable Personhood-as-a-Service platform, which could expand Encointer’s reach while reinforcing its security model.

Deliverables