Litepaper by Dr. Josh Lange
From the many funding solutions that exist today, none have addressed the systemic flaws in education finance. Millions if not billions of people need access to education finance, but the gap is in the trillions of dollars, and growing.
Yet on the upside, new ways of looking at learning from a broader spectrum have enabled ‘personalized’ ‘experiential’ and ‘vocational’ forms of learning to take shape online, hybrid, and in-person. The way these various activities are measured are more and more being tied to digital certificates and credentials. Some of these are on the blockchain.
Blockchain, Microcredentials, and Scholarships
Digital badges, first created by Mozilla, Moodle, and others to be a visual representation of an achievement tied to ‘meta-data’ or confirmed information from the badge issuer, have become much more widely adopted through IBM, Credly, Badgr and others.
Although these badges may use a blockchain or other verification method, they lack a direct connection to education finance. Sure, it is a competitive advantage and status symbol to have a verified IBM certificate, but
- When does that translate into tangible pay?
- How does having a new certificate from a big institution help pay down my student debt?
- And what am I doing for the community or the future of education?
What if we could build an ecosystem of education finance built on the power of digital credentials?
By using token economics and user-generated creativity expressed through a user-friendly and low-cost system, the tokenized credential turns into an education investment vehicle fit for any purpose, including but not limited to the payment of existing or future student debts and fees.
With such a system, you could create a digital scholarship at any level, even a microscholarship. You wouldn’t have to go through a centralized “badge issuer” such as a university, but you could also provide a user type that has confirmed institution status. This decentralized ‘open badge’ system using blockchain verification can be integrated into any Learning Management System or curriculum, and people who receive the badges can own their awards as well as earn for even the smallest achievement.
But that is not all, oh, that is not all. If the ‘non-fungible’ digital badges contain not only information about an award or status, but also ‘fungible’ or transferable tokens independent of the award itself, then a whole lot of new uses emerge. Now education can be both directed by and result in unprecedented levels of community financing.
Get$mart Token and Badge system intertwines the need to pay existing expenses while paying it forward for others through gamified digital badges. It is not a fully technical solution, as human actors need to participate in the process. Yet we can set up these “smart contracts” to both solve some existing problems with credentials and education finance, namely:
- Student Debt
- Underfinanced Disciplines
- Low-Income Populations
- Underserved Populations
- Next generation Achievement
- Professional Development Bonuses
- Membership Clubs
There are many questions that need to be answered to build such a software. The title, award and application criteria, evidence, number of tokens per badge, number of badges, expiry for applications, whether listed privately or publicly, description or name of sponsor, and others. Then there are the technical questions of how the sponsors and students interact, which information is on or off blockchain, how the user interface functions and what displays, how images, videos and other multimedia interact, and so forth. In addition, questions arise about the legality and regulation of tokens and student debt repayment, and the separate issues with NFTs. In addition, Get$smart must also account for the risk of token economies.
Crypto and NFTs promise immutable certificates tied to finance that assumes an increase in the tradable value of tokens. In order to make a token increase in value, there needs to be a good supply and demand relationship. From the supply side, Get$Smart token has an upper limit, limited distribution to market, and a proportion in long-term holding (hodling); from the demand side, it fills financial, status, and convenience needs.
1 trillion; Max supply
1 Billion: Max amount of scholarships created before all tokens are minted.
1000 GETS Tokens are ‘minted’ or created whenever there is a new badge claimed by a student (awardee). This approach ensures the value cannot get out of hand or be artificially constructed, and ensures the success of the system is tied to the creation and distribution of tokens through scholarships. The more scholarships are awarded, the more tokens are available up to the max supply.
Using the Pareto principle, the distribution is 80% to the open market and accessible to donors, and 20% to the non-profit to use for either the Community Treasure or to support creation of new scholarships.
So, the nonprofit or DAO managing the platform can put up to 20% of all minted tokens into a Community Treasure, which is in essence a staking pool aimed to pay down student debt.
An additional 1 billion tokens is minted and ‘airdropped’ across all scholarship sponsors when each 100 billion tokens (or 100 million scholarships) are created. For every 100 billion tokens minted, the fee for creating badges drops by 10%, making badge creation free of charge when all tokens are minted.
All scholarships must have an expiration to apply set by the sponsor. This can mean tokens are held in escrow for several years until the badge scholarship is awarded. If nobody applies before the expiry date, then all the tokens connected to the badge are returned minus a fee. On the flip side, if the badge is awarded but not claimed within 90 days of issuance, the tokens are burned. This disincentivizes users from cheating the system for personal gain by rewarding the community with less total supply if the parties flood the system with unused badges. Further, all tokens staked in the Community Treasure have a 365 day period without the ability to withdraw.
This is a long staking period. But we cannot assume crypto or cash scholarships even in the billions could erase $2 Trillion or more in student debt – especially with 7% interest and 8% inflation.
But we can negotiate and erase the student debt using cash gained from crypto investments.
Tokenizing Student Debt
The number of people in student debt in the richest country in the world is staggering – 46 million Americans owe an average of $38,000 and minority women fare the worst, on average owing more debt after 12 years payments than their initial principle on the loan. In fact, the US Department of Education estimates 30% in default by 2029, totalling over $400 billion in defaults, which ruin credit scores amongst other dire consequences. The Supreme Court has rejected outright cancellation, and the problems persist.
With Get$mart, token holders can ‘stake’ into the community treasure for 365 days, and those tokens are invested into the DeFi and digital markets, and any return on investment is transferred by the non-profit to cash and used by the non-profit to negotiate and buy student debt in bulk. We then erase the student debt of our token holders and then make a conditional debt relief for those not yet in the ecosystem.
In a similar case, the nonprofit the Rolling Jubilee Fund negotiated tens of millions of dollars for less than 1% of the value of the student debt in the USA. Pretty cool:
Yet idealistic begging for the scraps of student debt is untenable. Charity by itself doesn’t work because the rich or the government only go so far, and never fix the problem of systemic underfinancing of education.
What works is economic empowerment and democracy.
If only 10% of the people in student debt would own 100 GETS tokens and stake them, and each token was worth $1 dollar, then there would be a US dollar backed pool of 460 million in investment capital. But since the token holders aren’t seeking personal profit but to contribute to the overall reduction of debt, then with a 1% modest yield of $4.6 million we can, under the logic above, buy and erase $460 million or more in student debt. Every tokenholder awarded with debt relief receives 100% debt erasure immediately, and still hold all their tokens! Non token holders benefit with debt relief as part of the public charity to help those in distress or difficult situations as determined by the nonprofit i.e. the new debt owners. This bottom-up approach can be called Collective Tokenized Bargaining of debt.
Within the framing of the US student debt, collective tokenized bargaining yields an average 380 to 1 payout in terms of cutting costs for student debt holders, not a bad risk to take: but with it comes the understanding of “volatility” in the crypto markets and investing in the public interest. However, if one recognizes that they are contributing to the collective a small amount in order to potentially receive a 380 to 1500% return, as well as ‘paying it forward’ to the next generation, then it becomes a very smart way to donate funds.
If users can “create and award” new or “donate” to existing merit-based scholarships,
or “search and apply” for scholarships; earn tokenized awards; and stake, use or trade tokens…
…then the questions of scholarship transparency, transferability, decentralization, verification, scalability, security, and monetization are answered.
Badges support tokens and tokens support badges, and both address one of the most important and largest crises in the world, how to finance education for billions of people and how to recognize true achievements at the same time.
By playing Get$mart everyone wins.