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Using Decentralized Networks and Distributed Ledger Technologies for Foreign Aid Distribution and Reporting
AuthorPetersen, Hunter Alan
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The U.S. federal government is responsible for the creation and disbursement of roughly $95 billion worth of international spending packages annually. Of this amount, nearly $45 billion is allocated for the advancement of economic and humanitarian aid initiatives. However, these programs often face challenges when attempting to distribute funds to individual recipients in regions lacking stable government or reliable financial infrastructure. In addition, existing inefficiencies within the allocation process for these awards may introduce various inequalities through bias or other procedural complexities. As a result, many aid initiatives are not administered in a cost-effective manner and the subsequent lack of transparent reporting makes it difficult for the public to audit these programs and assess outcomes. To address these challenges, a new mobile based (Android/iOS) application has been developed in which foreign aid awards are distributed through the transaction of digital currency and asset-backed stable-coins on the Stellar network. Following user registration and onboarding, the application confirms that users meet the required qualifications through the use of a novel crowdsourcing mechanism comprised of previous recipients. Network validators are incentivized through continued awards to verify new recipient eligibility and further expand the verification network. Once confirmed, the application allows users to transact their awards in USDC, network-native Stellar lumens (XLM) or transfer their tokens to other marketplaces and asset representations with minimal transaction cost. While other available software addresses each of these issues separately, this application combines the end-to-end transfer and housing of aid funds into a singular process for both administrators and recipients. Furthermore, the awarding of these funds is recorded on a public ledger that allows for detailed analysis of initiative outcomes in a verifiable and trust-less manner. Finally, a simulation script was constructed for the purposed of modeling network growth and efficiency in relation to incentivizing future participation in validating new applicants.