Traditional Impact Bonds VS ixo Impact Bonds

In short: Traditional Impact Bonds are very expensive to setup, rely on trusted impact data that is extremely challenging to access/create & only accessible on slow iterations (i.e. every 12 months).

As mentioned in this ixo blog post in October 2017:

Currently, the processes for funding and delivering impacts are extremely diverse and inefficient. Funders often find it extremely difficult to track where their funds have gone and even whether the impact services were delivered correctly. Often large portions of the end to end process are burdensome and extremely expensive, so only a fraction of the initial funds actually make it to the ground. In addition the capturing of claim evidence is often paper based and this data is prone to getting lost and difficult to assess for further optimizations. This is particularly relevant considering that a large number of impacts are delivered in rural under developed areas where skills are limited and the management of the impact delivery paper records is extremely difficult.

The ixo protocol is the rails to optimize the creation of Impact Projects and then to streamline the collection and evaluation of the impact claims. The verified impact claims are then added to a global ledger of impact data which makes it available for analysis to optimize future projects.

Furthermore:

ixo Impact Bonds are implemented based on Bonding Curves (c.f. ELI5 Bonding Curves). Bonding Curves allow real time feedback loop according to the project’s success. For instance if the project succeeds then the interest rate decreases (c.f. risk adjusted bonding curves aka “alpha bonds”). This will improve the performance of the impact project, there is an incentive for the implementers to course correct if the price changes.

This is very different from the way things work now where you either only realise at the very end when a project has fails & there is nothing you can do or you have to go through a very cumbersome process of renegotiating the contracts.

With ixo Impact Bonds, contracts are hardcoded & publicly available. Which means participants don’t need to be trusted & the barrier to entry is lower as many intermediaries are removed.


Recommended Reads

medium.com/ixo-blog/smart-impact-bonds-420324ac720f


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