Empowering Communities: Unleashing the Potential of Web3. New Podcast Available!
Join us as we explore how Web3 can revolutionise community finance and challenge financial inequities. This new podcast, ‘Empowering Communities: Unleashing the Potential of Web3,’ facilitated by Liz Gillies, CEO of Menzies Foundation, and featuring insights from an esteemed global panel Joy Anderson, Founder and President of Criterion Institute; Michelle Baldwin, Senior Advisor at Community Foundations of Canada and contributor to SuperBenefit DAO; and Anna Powell, CEO of Collaboration for Impact.
Key topics explored in the podcast include:
- Decentralisation: How removing intermediaries empowers individuals and communities, providing direct access to financial services.
- Security and Transparency: The role of blockchain in ensuring secure, immutable transactions and fostering trust among users.
- Financial Inclusion: Strategies for using Web3 to bridge financial gaps and offer services to underserved populations.
- Community Empowerment: Real-world examples of how communities are leveraging Web3 to drive social change and economic growth.
Listen to our podcast and gain valuable insights into the transformative potential of Web3 technology.
Finance is one of the most powerful systems in the world. It can drive a community’s economic growth, create jobs, and support the development of housing and other crucial infrastructure. It can enable new and innovative sectors — such as renewable energy — to flourish, and support communities, organizations, and households through crises or otherwise disruptive transitions. Finance makes it possible for individuals to start or grow a business, purchase a home, pay for higher education or vocational training, and achieve independence, stability, and security.
Yet the power within the financial system is controlled by a relative few. Of the US$69 trillion in assets under management in the US investment industry, 98.7% is managed by firms owned by white males. Important voices — those with expertise on social issues and the inner workings of local communities — are kept out because of bias, discrimination, and complex processes that fail to value their needs and input. As a result, billions of people around the world lack access to capital that is appropriate to their circumstances, and investments are made that reinforce injustices while causing unintended consequences that harm people, extract from communities, and devastate our planet.
In recent years, a variety of financial innovations enabled by Web3 and blockchain technology have emerged as transformative forces, aiming to challenge the status quo and address the systemic inequities ingrained in traditional financial systems. Web3 can increase access to capital, democratize financial design and decisionmaking, and empower communities to pool assets and collectively determine how to manage and invest their resources. The core tenet of these innovations — decentralization, or the removal of intermediaries and centralized power structures — enables communities to come together in new ways and to decide what they value and how value creation is rewarded and incentivized.
In short, Web3 has the potential to transform community finance — and the broader financial system — as we know it. This paper aims to explore that potential and the possibilities that exist for Web3 to radically shift who holds power in the design of financial innovations, with emphasis on community finance and related themes. It examines existing and hypothetical applications of Web3 for community finance; analyzes the power dynamics at play within Web3 financial innovations; outlines specific strategies for addressing those power dynamics, with examples of transformative projects underway; and offers recommendations for potential next steps.
WHAT IS WEB3?
Web3 refers to the next generation of internet technology that aims to reshape how people interact, collaborate, and transact online. In simple terms, it represents a decentralized vision of the internet where individuals maintain control and ownership of their digital lives, in theory enabling them to participate in and create a more democratic and inclusive online ecosystem.
The first iteration of the internet, or Web1, was primarily made up of static websites that served a singular purpose of conveying information. Web2, by contrast, emerged with the creation of e-commerce, social media networks, and other user-generated content-sharing platforms. Web2 allows for greater interaction among users, but ownership and control of the ecosystem is largely centralized on corporate platforms that hold and control user data and content.
Web3 leverages blockchain technology (a decentralized digital record-keeping system which will be explained in more detail later in the report) to create a more transparent, secure method of handling transactions and information exchange that prioritizes data protection and user privacy. This decentralized infrastructure enables direct peer-to-peer interactions without the need for corporate or government intermediaries.
REPORT RELEASE: Designing Web3 Financial Innovations for Social Change
This report is powered by the Menzies Foundation. It builds upon Criterion Institute’s more than two decades of work to radically expand who sees themselves as having the power to influence financial systems and to play a role in designing new interventions. It follows the publication of “Community-Centered Blended Finance: Towards a Transformative Approach,” also powered by the Menzies Foundation and authored by Criterion’s Arianna Muirow, Jinita Prasad, and Pranay Samson. It draws on the publication’s discussion of regenerative finance and the work the authors have done to document community centered approaches to financial design and decision-making.
In addition, this report utilizes Criterion’s Framework for Analyzing Power in Investments, developed and iterated over the past several years in collaboration with key branches of the Australian and Canadian governments, investment fund managers, and a diverse set of civil society organizations. The report also utilizes Criterion’s Five Strategies for Using Finance as a Tool for Social Change, the methodology that underpins Criterion’s TOOLKIT workshops and the publication series, A Blueprint on Using Finance as a Tool for Social Change.
