If Nick Szabo already imagined the contours of a smart contract in 1996, we had to wait for Ethereum, Vitalik Buterin’s protocol, to see these new forms of smart contracts develop. Since then, many other protocols (EOS, Tezos, Dune, FANTOM, Neo, etc.) have developed the intelligence part integrated into the blockchain and other technological underlyings (DAGchain, Holochain, etc.).
Smart Contract: Brainpower of the Blockchain
This is a computer protocol intended to automate the performance of a contract. Once coded and deployed on the blockchain, the Smart Contract is inviolable, autonomous in its execution and verifiable by all the section of the network because it is distributed.
There is an infinite number of potential applications for a smart contract (multi signature, escrow accounts, inter-chain, payment flows, data collection from oracles, etc.) and it is easy to see the advantages offered (automation, precision, reliability, speed, economy, transparency, security, storage, etc.) by these different protocols for legal and even financial professions.
If the blockchain is the forgery-proof memory of the accounting register, the Smart Contract is the intelligent overlay that determines the transaction executions of a programmable currency. The time has come to provide this intelligence with a certain form of societal awareness and make the digital asset industry the figurehead of a more responsible economy. One of the most important tools for developing and programming the social responsibility of companies is the Social Smart Contract.
Social Smart Contract (SSC): What is it?
The Social Smart Contract is a programmable protocol serving companies’ societal ambitions. Considering that all companies must now design a business plan that integrates a significant response to the societal challenges of our time and that this assumption of responsibility must bear a significant proportion of the real economic performance of the company, the SSC must make it possible to facilitate its implementation.
Concretely, the SSC is a set of IT rules between three (or more) parties directly concerned by the execution of the contract. Two of the parties (or more) program the terms and rules of execution of the contract. The third party (or more) will not be involved in this configuration step but will be defined as the “Social Beneficiary” of the contract.
The Social Beneficiary is the third party representing a cause, an association, an NGO, or a project designated as beneficiary of the societal commitments of the party(ies) concerned.
Fictitious illustration through example: Renault and Société Générale
Let’s say Renault wants to sell a fleet of cars to Société Générale and assures the bank’s teams (sensitive to the Malaysian orangutan’s cause) the company finances a vast program to remove palm oil from biofuels via the NGO BioGaz Palm Free (BGPF ONG) and this, up to 0.5% of its annual turnover. This is confirmed by Renault’s corporate site in the CSR section.
Both the manufacturer and the bank then define the sales conditions of the car fleet (stock of vehicles, models, delivery date, degressive rate, payment schedule, etc.) and determine what the Social Beneficiary will be. The “Social” section of the Smart Contract determines Renault’s financing properties to the NGO up to 0.5% of the financial flow (CA) realized over the period of the contract. Throughout the execution of the contract, Renault’s financial contribution to the NGO will be paid automatically upon each payment due from the bank. Société Générale will be able to follow up on the proper implementation of this corporate responsibility policy, which is indexed to Renault’s sales. For its part, the NGO may not even be aware that a Social Smart Contract is being implemented for its benefit.
SSC: Origin of a Developing Concept
The Social Smart Contract is a concept born at the end of 2018 during during the development of the economic model (Business Design) of the fintech retreeb. In the case of retreeb (a new payment network), the model is based on the transaction’s tokenization by relying on a stablecoin network collateralized with the user’s currencies. As payment is made with the token, there is no need for interchange fees applied by banks and networks (Visa, Mastercard, etc.) to merchants. By reducing bank intermediation, retreeb applies its own commissions to each transaction (1.5% without fixed). Then, retreeb commits to donate one third of the generated revenues to the social or environmental project chosen by the user from a selection of projects available on its wallet.
Retreeb’s business model
Retreeb’s first Social Smart Contract was designed for the sake of automation, transparency and reliability. A 2-level and 4-party process that runs for each transaction made on the network.
A first level between the 3 signatory parties to the contract:
- The user having funds (stablecoin) on his wallet and choosing a project
- The merchant collecting the transaction funds on his business wallet
- Retreeb capturing a commission (1.5% of the transaction amount)
A second level integrating the Social Beneficiary (project) selected by the user on his wallet with the payment of ⅓ of the retreeb commissions to the Social Beneficiary’s wallet.
With such properties this SSC ensures full automation of the process and full transparency for all parties. Thus, retreeb adds a new dimension to payment by making a daily act at the heart of economic exchanges, a responsible act. It is a new way of looking at finance. It’s a new way of looking at finance. An approach that correlates at the root of the economic pattern, growth and social responsibility.
SSC: Technological Brick for a Responsible Economy
The SSC is the ideal tool for companies taking the turn towards Social Responsibility (CSR) and a forefront marketing argument for consumers/customers who are increasingly sensitive and demanding about companies’ commitment, transparency and probity of governance.
Although technically accessible, the overall level of acculturation of companies on the subject is still very low and even more so when it comes to programmable CSR. It is also simpler to design a Social Smart Contract at the beginning of a new business because it is easier to implement. Consequently, the digital asset industry and all startups composing it, are on the first line to develop and deploy them.
This is also the idea defended by one of the figures in the industry, Owen Simonin alias Hasheur and founder of Just Mining : “Blockchain is just a technology whose properties of each protocol depend on their designers. However, with extreme traceability, transparency and governance programming, this technology offers the world unique features to move towards more corporate social responsibility.”
Blockchain and the digital asset industry are still indissociable. But it won’t always be. Gradually the blockchain will be assimilated and will become a major underlying of all industries and all types of service. This is a rare opportunity for startups in the sector to actively contribute to the advent of a responsible economy.
By Lepetit Jeremi -Retreeb’s Co-Founder
Translated from French into English by Julie Lenfant