Intro
The introduction of 5ire to the blockchain space is endorsing a real-world problem of combatting global sustainability issues, aligning to the UN’s 2030 agenda for sustainable development. At the core of 5ireChain (5ire’s native blockchain), we have implemented a SPoS (Sustainable Proof-of-Stake) consensus mechanism that incentivizes validators towards sustainability to receive higher rewards. 5ire’s goal is to combine blockchain with sustainability, whilst bringing governments’ and institutions’ operations and reporting, related to sustainability-focused real-world assets, on-chain.
In this blog post, we will be delving into why 5ire has chosen this unique approach of incentivizing sustainability on-chain, with a belief that financial incentives can be a driving force in pushing the sustainability agenda forward. We look at this rationale from a philosophical aspect and through analysis of the current sustainability trends.
Financial Incentivization Rationale
The last 50 years has demonstrated that capital markets and productivity work well with incentivization. Humans have shown that motivation and output align well to incentives — humans act on incentives. Furthermore, financial incentives appear to be the easiest and broadest way to incentivize humans, at a macro level. Financial incentivization can be seen from both positive and negative angles: positive → rewards / negative → penalties. This can be viewed as the carrot vs the stick debate. As 5ireChain’s consensus mechanism already has the slashing function (for unscrupulous validator actions), the position we have taken with our SPoS consensus is to focus on the positive incentives — increasing rewards for increased sustainable behavior.
Also, without financial incentivization, our sustainability-focused chain would likely only appeal to a minority of sustainability-conscious stakeholders who are willing to adopt 5ire simply based on our mission, which is driving towards sustainability and achieving the UN’s 2030 agenda on SDGs. With financial incentivization, this gives 5ire access to a new, mainstream audience that would otherwise not be conscious about sustainability.
Market Trends for Sustainability Incentivization
Research suggests that novel social mechanisms are appearing in the market to financially incentivize companies and the general public to act sustainably.
- Some studies within the UK, the EU and China have shown that incentivization (discounts and rewards) produces positive environmental results from a recycling perspective, and that gamification (specifically with regards to plastics recycling) can produce even better results amongst the general public. [1][2][3]
- A growing number of companies are linking executive pay to sustainability metrics. [4]
- Governments of 19 countries have implemented incentivization programs for companies by using green taxes, green cash grants and/or green tax incentives. [5]
The market trend appears to show a move towards financial incentivization for sustainability, and 5ire is actively participating in this trend by developing a blockchain product based on such, and targeting partnerships with governments and institutions that actively promote sustainability and related incentivization programs.
Conclusion
In conclusion, as 5ire steps into the blockchain arena with a resolute commitment to addressing pressing global sustainability challenges, we recognize the significance of aligning our mission with real-world impact and real-world assets (RWA). Our implementation of the SPoS consensus mechanism within 5ireChain underscores our dedication to incentivizing validators towards sustainability, a strategy that resonates with the United Nations’ 2030 sustainable development agenda. By focusing on the “carrot” of increased rewards for sustainable behavior within our consensus mechanism, we aim to channel this fundamental human trait towards sustainability, promoting a virtuous cycle of eco-conscious decision-making.
