Note from SwissVite: This article has been written by the Vite community member KG 1024, also known as Code Geass on Discord.
This is a fairly long article. FOR A QUICK SUMMARY, PLEASE READ THE BOLD PORTION AND SKIP THE REST!
Vite partnership announcement with US-based city, Syracuse, is a testimony to the team’s strong business acumen and sets a foundation for spreading roots in the planet’s largest economy, the United States of America. The partnership also has read-throughs for other Vite initiatives that I will be discussing in detail in this article.
For the less informed readers, Vite had announced its partnership with American City of Syracuse to design a P2P micro loan program in the month of January 2019. Vite was selected as 1 of the 3 startups by the city of Syracuse as a part of its 2019 Startup in Residence (STIR) program to address challenges related to permit transparency, security deposit loans, and trauma response. More specifically, Vite Labs has been tasked with creation of a crowdfunding platform to connect low-income renters to people willing to provide short-term no-interest loans for security deposits. Please check this link for more details: https://ourcity.syrgov.net/2019/01/city-of-syracuse-announces-three-startups-selected-to-participate-in-ground-breaking-startup-in-residence-program/
While all of us have heard of a few blockchain startups (although technically Vite is not really a blockchain, you get the point) associating with governments in the past, there are a few special aspects of this incredible partnership that deserve a mention. Let’s look at these, one by one.
- Firstly, on degree/strength of coordination: Is this merely a research collaboration (more like a memorandum of understanding) where Vite will be advising and assisting? Not really! Vite CMO confirmed in response to a question asked in Vite Telegram AMA held last month that this is not a cosmetic association in simplistic advisory function but rather a full fledged advanced partnership with a government agency where Vite has been tasked to specifically enable public financing through “frictionless and feeless payments”.
- Secondly, the project will use Vite’s technology as the underlying infrastructure and the setup is expected to be similar to a Dapp developed on main Vite platform (and not a separate platform) which if true, implies that the process will be powered by Vite tokens, with explicit requirement to stake & hold Vite tokens for higher throughput requirements (for more details, please see the link to AMA responses by Vite team here: https://medium.com/vitelabs/best-questions-from-vite-in-telegram-ama-5da481c8a80). At this point, we can only speculate and it seems more plausible that the P2P micro loan structure will likely be using a stablecoin (possibly USDO or perhaps some other stablecoin designed specifically for fund-raising by municipalities/P2P microloans), with the Dapp required to buy & hold Vite tokens for its throughput requirements as the system grows. Details on what role, if any, will native Vite token play relative to this partnership hasn’t been revealed yet by the team yet (lack of details is fairly understandable due to compliance & disclosure agreements and relatively nascent stage of project development). Nevertheless, in plain hindsight, there lies a significant value for Vite tokenholders even if native Vite token is not directly used to power the Syracuse government platform as the usage of Vite platform on this scale alone will bring substantial adoption for the platform and increase investor interest for Vite- if this requires Vite tokens to be staked for the required throughput (like we expect), that would be an “icing on the cake” for Vite tokenholders.
- Thirdly, don’t undermine the fact that the partnership in question is with an “American” city government. While blockchain partnerships with government bodies are not unheard of, those have been prominently with local/state governments in Asia and perhaps a few in Europe. A partnership with a US government (even on a city level) is unique and is very rare (if not non-existent) in crypto space. Given that US is often seen as the guiding beacon for adoption of nascent technology, Vite’s contribution in enabling better governance through an end-to-end product design for government agencies provides the team with a strong footing to further deepen relationships, form robust partnerships and increase project adoption in US. The partnership also demonstrates team’s strong understanding relative to capturing the United States market (note that Vite’s COO, Richard Yan has a solid education background in US and he has worked as a former Vice President of mortgage strategies at Goldman Sachs). Further, there seems to be ample possibility for other city municipalities/cities/state governments from US to use this setup as a template for fund raising for public sector initiatives (eg. Homeless and Social Services, Financial empowerment centers, Chambers of Commerce, Small Business Administrations, New Business Agencies etc.).
- Finally, we should not forget that this partnership entails a payment infrastructure platform and can have strong read-throughs for Vitepay. While Vitepay is aimed towards enabling crypto payments by/for merchants and enterprises, the Syracuse Application platform is meant for use by residents of city of Syracuse and municipalities. And what better platform for merchants and enterprises than the one being used by governments in US, which saves millions of dollars for your business through instant, low fee transactions?
In a nutshell, this development with a city government illustrates the real value savings associated with a DAG platform for payment-related applications. In light of the 4 reasons outlined above, I feel that the opportunity underlying this association is being underestimated by the community and we will likely get to hear much more on this in the coming future.
Note: This article is not a financial advice and represents my personal views based on the publicly available information. Community is welcome to report/discuss any inaccuracies or misinterpretations, if any, in this article.