HealthCredit

Like a carbon credit but for health.

DevWebsite. Website2 if DevWebsite is down.

Healthcare funders like corporations, governments and foundations want to improve health in developing countries but funders are unsure of the impact they are getting. Health interventions that could save lives go underfunded due to lack of awareness, accessibility and traceable impact.

We’re all familiar with this: when we see a company’s annual report say “We are helping maternal health in Africa” we wonder “Are they? How much? And how sure are they?”

In the era of blockchains we need not be in doubt anymore.

Solution

Just as carbon credits represent a ton of carbon or equivalent removed from the atmosphere, we can tokenize health using DALYs (disability adjusted life years) as a unit of account.

Each HealthCredit represents a DALY averted. Each verified health care Project Developer gets a unique token of impact with their photo.[1] Each accredited health organization can sell their tokens on a marketplace at the market price. The token uses the ticker symbol $LYS for “life year saved.”

Here are example organizations with example stats:

Price of $LYS (the life-years saved token) depends on the subjective view of the buyer. For example, an $LYS from a health center in rural Kenya might be worth more[a][b] to buyers than an $LYS from a hospital in New York. This is similar to how carbon credits work, though the carbon credit solution is less elegant. Carbon credits were intended to be fungible[2], but in practice buyers are willing to pay a higher price[c][d][e][f] for [g][h]a ton of carbon from saving the amazon rainforest than a ton of carbon from a cement plant that reduces emissions by 5%.

NFTs and crypto currency is a good way to solve the challenge of subjective value of a DALY while simultaneously referencing a concrete impact. The picture on the token also maintains the emotional relationship to the project the DALY came from. Each health organization’s token will come with an image of the project so that people can keep it in their digital wallet, on their digital trophy wall or annual report.[i][j] It will also link to a video of the work and may come with perks like visiting the project (for major patrons).

The number of $LYS for sale depends on how many DALYs an organization saves[k][l], which are subsequently verified.

Business model

A portion of sales go to the protocol for management, R&D, demand generation, verification and a yield to the staker.

$LYS sales might be distributed as follows:

  • 50-80% Health Organization[m][n]
  • 45-10% Verifier
  • 10% Demand Generation/sales
  • 1-3% ImpactCredit R&D
  • 1-3% ImpactCredit Management
  • 1% transaction fees

This is comparable to carbon credits where 15-50% of the value of the credits sold goes to the carbon aggregator/broker.The proportions can vary depending on supply and demand. This dynamic model is only possible because of blockchain and will make the system more efficient.

Token Value Accrual

The $IMT governance token accrues value to those who stake their tokens. Each $LYS sold pays a commission to the HealthCredit protocol. The protocol distributes some of that commission to stakers of $IMT. $IMT stakers receive the distribution regardless of whether they are chosen as jurors. This is so that jurors are not incentivized to approve projects for their own benefit.

Startup Financing

There are two options:

  1. An ICO crowd sale of $IMT to fund the initial product development.
  2. Raise VC capital.

Cash flow for healthcare organizations

Health Organizations can sell $LYS futures at a discounted price. Speculators can buy the futures based on the expectation that the $LYS will increase in value once verified.[o][p]

DALYs futures can be verified and turned into Verified DALYs ($LYS). This is analogous to carbon credits where carbon aggregators[3] pay for all of the upfront verification and might even advance a conservation company funding so that they can begin their work. But this becomes more elegant with cryptocurrency.

Once $LYS is sold it is not resellable. This is analogous to how carbon credits are retired after purchase. However, a commemorative token will be shared with the funders of the project.

$LYSs don’t prevent an organization from winning grants from other activities or prevent them from charging patients for their services. Selling $LYS may prevent them from raising Results Based Financing (RBF) for the same DALYs averted.

Verification

Carbon credits rely on 3 levels of verification:

  • Methodology development (a mangrove methodology is different from a permaculture pasture one, for example)
  • Specific Project design and
  • Monitoring of Results

HealthCredits will have several levels of verification:

Methodology Development

Each type of health intervention needs its own methodology. Thus, a method of tracking maternal health outcomes is different from cataract surgery. This study could be an RCT or equivalent. Methodology development is a cost prohibitive step in the carbon credit ecosystem. But the R&D budget from ImpactCredits can fund new methodology development.[q][r][s][t][u][v]

Specific Project design[w][x]

Each company needs to pass KYC checks and choose a methodology. They need a way to record the number of patients treated for each condition.

A health economist, commissioned by the $IMT protocol, creates a report on whether they recommend the Project Developer be approved/rejected. Does the project make sense and will their methodology be sufficient to judge whether the project had an impact?

The health economist compiles a report with a recommendation to approve/reject the project. A random jury of $IMT holders are selected to approve/reject the project.

Monitoring of Results

Once a project is complete, the Project Developer will compile a list of patients treated. They will send this list to a survey organization, such as 60_db, that will randomly call the patients on the list to verify.

The survey organization sends the report to the HealthCredit protocol where a random selection of $IMT holders are chosen to approve/reject the project. Because the $IMT holders chosen are random, collusion is impossible.

Jury Selection

$IMT token holders who have their tokens staked (indicating that they have long term interest in the protocol) will be randomly selected to be in a jury.

Stakers who are chosen to be on a jury but don’t vote are penalized and thus are incentivized to vote. Further, they are incentivized to vote correctly due to the Consensus voting mechanism of the HealthCredit protocol. Jurors who do not vote with the majority are penalized.

Marketing

People want to show the world what they think is important. To show the world their values. That they walk the talk. Great networking like joining a biking club. Do something hard and you'll meet other people who like doing hard things.

Events to meet like-minded people in the space. Speed dating event before the auction opens.

Make it easy to show the world.  Use as social media profile pictures.

Leaderboard for referrals.

Buyers

Initially, buyers will be individuals, possibly Effective Altruists[y][z][aa][ab][ac][ad][ae].

Later, forward thinking and quantitative grantors in the healthcare space like Gates Foundation and USAID DIV.

Around the same time, corporations wanting to contribute to CSR projects (and for ESG) will see the value of buying certified health credits.

Eventually, companies with bad health outcomes like soda companies may feel compelled to buy HealthCredits to offset their negative impacts.

Giving away money to qualified organizations is hard

In 2009, Bill and Melinda Gates at the time worth 46.4 billion, committed to donating half their money before they died.

They gave away 45.5 billion dollars!

But by 2020, they were worth $114.7 billion.

Giving away money is hard. Each of us has our own challenge.

Meanwhile, entrepreneurs struggle to find the capital to get their ideas off the ground.

Let's connect the ideas and capital and make the world a little happier, a little healthier and a little greener.

Roadmap

  • Stage 0:
  • Write whitepaper
  • Launch token
  • Build software
  • Stage 1:
  • Launch in private beta to test the system with a few organizations
  • Raise awareness
  • Stage 2:
  • Marketing to potential funders of health credits
  • Full launch
  • Future:
  • This model can be extended to other kinds of impact like education, solar, ecological preservation (that is not already covered by carbon credits), refugees, etc.

Risks

Fraud: to avoid fraud from health care organizations an independent organization needs to verify the impact.

Health care organizations can’t deliver on the futures contracts they create.

Appendix

Prior Art

MVP for Hackathon

Roles:

  • Investor: someone who buys $IMT ERC20 governance token such as a high net worth individual or institutional investor
  • Project Developer: a HealthCare Organization that generates the impact such as a chain of maternal health facilities in rural Uganda. They sell this impact by selling the ERC1155 token, $LYS
  • Credit Buyer: someone who buys the $LYS token
  • Beneficiary: the patients receiving the health treatment

Interaction

Investor buys $IMT token with Ethereum or DAI. They can hold it in their wallet, sell it on UNISWAP or stake it in the protocol.

Project Developer applies to be verified by submitting documentation (certificate of registration, a business plan, a methodology they propose using and a CSV of Beneficiaries). 3 random Investors are chosen to vote on the submitted documentation

Project Developer sets the price of the $LYS credits they want to sell and list them on the marketplace.

A Credit Buyer signs in with their wallet to the marketplace and purchases credits with DAI. The NFT $LYS are transferred to their wallet where they are non-transferable. The NFTs are displayed on the Credit Buyer’s profile. The purchase price is divided amongst:

  • Project Developer
  • Investors
  • Treasury for R&D and management

Investors vote on the amount that each role receives once a year, as well as the budget approved for management and R&D.

Full Design (for later)

Roles:

  • Investor: An investor in the protocol; someone who buys $IMT ERC20 governance token
  • Staker: an investor who has staked their $IMT token in exchange for interest and has the right to vote on protocol proposals
  • Project Developer: a HealthCare Organization, such as a chain of maternal health facilities in rural Uganda, that generates $LYS impact. They sell this impact by selling the ERC1155 token, $LYS
  • Credit Buyer: Institution or high net-worth individual who buys the $LYS token from a specific Project Developer (e.g. buys $LYS tokens from a rural health facility in Uganda)
  • Methodology Verifier: a health economist who verifies a methodology is suitable for the Project Developer (High level verification)
  • Impact Verifier: a research organization that calls Beneficiaries to confirm Impact such as 60_db. (Detailed or low level verification)
  • Beneficiary: the patients receiving the health treatment (e.g. a pregnant mother in rural Uganda)
  • Agent: someone who facilitates the sale of $LYS credits connecting the Project Developer and Credit Buyer (effectively a sales agent)

Interaction

Investor buys $IMT token with Ethereum or DAI. They can hold it in their wallet, sell it on UNISWAP or stake it in the protocol. Stakers earn interest for their commitment to the protocol and can vote on proposals.

Project Developer applies to be verified by buying $IMT as a deposit (to avoid spam) and submitting documentation (certificate of registration, a business plan and a methodology they propose using). A Methodology Verifier confirms the Project Developer has chosen a suitable methodology and files a report. 3 random Stakers are chosen to vote on the Methodology Verifier’s report.

Project Developer keeps track of the relevant metric of the Beneficiaries. For example, if the chain of clinics treats pregnant mothers, the Project Developer must keep track of the number of pregnant mothers and deliveries carried out in their clinics.

Project Developer submits their impact report with the relevant metric. Impact Verifier calls a random sampling of the Beneficiaries and creates a report. 3 random Stakers vote on the report to approve the credits for the market.

Project Developer sets the price of the $LYS credits they want to sell and list them on the marketplace. They choose an Agent to help them sell the credits or sell the credits themselves.

A Credit Buyer signs in with their wallet to the marketplace and purchases credits with DAI. The NFT $LYS are transferred to their wallet where they are non-transferable. The NFTs are displayed on the Credit Buyer’s profile. The purchase price is divided amongst:

  • Project Developer
  • Staking Pool
  • Treasury for R&D and management
  • Agent (if any)

Stakers vote on the amount that each role receives once a year, as well as the budget approved for management and R&D. The R&D budget includes financing new methodology development.

Though this system may seem complex, it is relatively simple compared to MakerDAO (DAI) stablecoin. It’s worth reading about it here as it has similar oracles to our  Health Economist and Impact Verifier roles.

Fonts and Colors

Connections/Advisors

  • Dann Moreno at Giveth
  • Andrea Feigl CEO at Health Finance Institute
  • Matt Bonds at Impact Markets
  • Morgan Rivers Effective Altruism
  • Melissa Menke Founder Access Afya Kenya
  • Griff Green founder of Giveth

$LYS NFT attributes

Attributes for MVP: Trading Name, NFT Image, country of operation, Health Service Provided.

Attributes for full version: Trading name (doing business as name), Official name, NFT Image, country of registration (or chain of registration if a DAO), registration number (or link to DAO contract if a DAO), year of registration, country(ies) of operation (an org might be registered in the US but operate in Uganda), Health Service provided, Logo.

What am I missing as far as crypto

Is there a more elegant solution?

How else can we raise aside from ICO

Griff Green notes on raising capital:

Print a token, not ico. Superfluid. Fork giveth code. Regen farms (merkle drop doesn’t have).

Or airdrop. Who could assess impact.

NFTs.

Token lockup

Farms for liquidity. Finimatix.

Jobs to be done—customer discovery

Fund health care orgs in developing countries in the most cost effective way.

[1] The tokens will be ERC-1155 tokens that combine the benefits of tokens and NFTs.

[2] Fungible means identical, one to the next, the way each dollar bill is functionally identical to the next dollar bill.

[3] Like Numerco, Natural Capital Partners or SouthPole

[a]are $LYS standardized DALYs? Why would they be priced differently? Wouldn't a DALY reduced in NYC be the same value as a DALY reduced in Kenya?

[b]See comment below on Carbon Credits :-)

[c]I didn't know about this. Is it true? Why? Is this true because of signaling? Would it stop being true when the companies have to buy carbon credits because of true legislative limits?

[d]I'm referring to the Voluntary market here rather than the Mandatory market.

[e]I'm still kind of confused why the voluntary market pays a different price for different carbon credits that all represent the same fungible ton of C02.

[f]yeah, it's really weird. I was surprised when I learned this too! :D

[g]Do we know what that difference in willingness is attributed to? I guess there are awareness campaigns?

[h]Cement factory vs. Amazon rainforest. Which one would you buy?

[i]Do we have examples of how people show their carbon credit?

[j]Good questions. I haven't found any centralized leaderboard or "trophy case" to display the credits. 

Here is an article with graphs: https://capitalmonitor.ai/sector/tech/who-buys-carbon-offsets-and-why/

Here's how walmart seems to display it: https://corporate.walmart.com/esgreport/esg-issues/climate-change

Other major buyers: http://www.perillon.com/blog/12-companies-that-are-buying-carbon-offsets

[k]per year?

[l]per whatever unit of time, yes :-)

[m]Do we mean funders or implementers here?

[n]Implementer/project developer

[o]Do we also need an independent verification firm for certifying the value? Or is ImpactCredit taking the role of certifying value?

[p]This is the same as the verification described below.

[q]This kind of sounds difficult. Do you expect it to be?

[r]Interesting that it sounds difficult. Why do you say that? In the Carbon Market this is how it works. See a list of methodologies here: https://verra.org/methodologies/

[s]ah, I guess that's why it sounds difficult to me. Dozens of formal definitions 50 pages long for varying methodologies seem hard to put together in a non-biased and scientifically rigorous way that doesn't take a huge amount of money or time. But I guess the carbon market found a way to do it? Do you know how they did/do this?

[t]I guess you and I are going at impact certificates in opposite ways in a sense: you want to do broad-based impact for anything and the market will decide what it's worth (but hard to verify and standardize bc each kind of impact is unique). Meanwhile, i'm getting granular. First I focus on Health, and then focus on methodologies within health. (the downside is that it's not broadly applicable but standards can be created)

Methodologies actually save a lot of repeat work: once we know the impact of setting up a maternal clinic treating 1,000 pregnant women then we can apply that method to other clinics and multiply the impact by the number of people treated.

I hope that helps. It's interesting what you are trying to do with broad-based impact certs. If you can make that work it could save a lot of time and be applicable to many different kinds of impact. My theory is that the One Ring To Rule Them All approach will be hard to pull off because each kind of impact has it's own peculiarities. But hopefully you are right and your approach works. :-)

[u]Oh, I don't think we've thought about the verification/auditing enough yet to have a good opinion. My initial thoughts though:

I think impact certificate issuers would have to be very clear about what they did and make it as provable and verifiable as possible. I was thinking that the initial market would be things that are trivially verifiable. Things like open-source software libraries where the authors are known and can prove that they are the issuer. Like ethers.js https://gitcoin.co/grants/13/ethersjs-complete-simple-and-tiny

Then if the market grew to wider audiences like health you could have 3rd party audit/verifying DAOs that specialize in different areas. And either funders or issuers could pay a fee to these 3rd parties to be audited/ranked/evaluated.

But mostly I think we need to be thinking about this more so I'm not sure my above approach is actually good.

[v]These 3rd parties would be judged by the market on their accuracy/reputation. It would be trivial to see the record of these audit DAOs to see if their top-ranked/well-audited certificates actually get funded by sophisticated final funders.

[w]Given that many chronic diseases are hard to be cured, but can be treated, I think it might be helpful to discuss how different disease types has different verification process.

[x]Yes. great point. Each disease/condition needs a different methodology for verification. Are there three major diseases you think we should start with? Could you recommend a verification methodology?

[y]if this is the case the whitelisted orgs would have to be effective ones.

[z]The orgs that pass validation are those that pass so I don't think you need to say whether they are effective or not. Donors/buyers can decide for themselves if an org is effective. It's a market-based mechanism. If an org is ineffective, they will charge a lot for their credits and they won't be competitive compared to other solutions. Does that make sense?

[aa]I basically agree with Kyle. I would generally strive to onboard more effective ones rather than less, especially in the beginning phase.

[ab]Totally agree that a market-based approach is ideal. But you wouldn't want to onboard 100 NGOs that technically pass but only like 2 are supereffective (10x+ more effective than the 98 other NGOs). Maybe you just make the validation process prove some sort of effectiveness.

I kind of think of it as comparing charity navigator to give well. Sure, some charities are super "clean" and would pass any audit or verification, or test you put in front of them. But they could be 1/100 as effective as the top charities.

[ac]Maybe I'm misunderstanding, but I think the market-based approach solves that. If a healthcare company is ineffective and decides to list anyways then they are just wasting their own time. So they would either become more effective or not list so they don't waste their time. The market is transparent so any healtcare org knows what the market price is and wouldn't go through the effort if they didn't think they had a chance of someone buying their credits, you know?

[ad]Oh definitely, you'd just have to make sure that some effective ones make it into the whitelist. Maybe that's trivial so it's fine. But if the first few batches of NGOs to apply and get whitelisted aren't very effective then the EA community will check it out and won't be very interested.

Maybe I mean you should definitely attract/reach out to effective NGOs so you're certain your market has at least some super effective NGOs.

[ae]Definitely. For the MVP the health orgs will be hand selected to get access. Need to seed the market with the best of the best! Just like Facebook started with Harvard :D