- Ripple, in partnership with MCSocialVenture and DIVADonate, is introducing a pilot blockchain-powered aid scheme in Kenya.
- The aid will leverage RLUSD for drought insurance, aiming to meet the need for quicker, more efficient, and more transparent aid distribution in drought-prone areas.
Ripple Labs has partnered with Mercy Corps Ventures, the impact investing arm of Mercy Corps, a global development agency dedicated to helping people in the world’s toughest places, and DIVA Donate, a platform that leverages decentralized finance (DeFi) to deliver parametric conditional donations, to launch a project in Kenya to provide financial support to pastoral communities impacted by drought.
As per Ripple’s report, this initiative will leverage Ripple USD (RLUSD), a stablecoin supported by both the XRP Ledger and Ethereum blockchains. Launched in December 2024, RLUSD is fully backed 1:1 by US dollars held in reserve, offering a high level of stability and transparency for both contributors and recipients.
Pastoral communities in Kenya are increasingly vulnerable to severe droughts that threaten their livelihoods since they are dependent on livestock and nomadic lifestyles. With a fundraising target of $40,000, the pilot project will support 533 pastoralists in Laikipia County, a drought-prone region, by providing timely financial relief and enhancing their resilience to climate challenges.
Operational Mechanism
The pilot employs a data-driven approach to proactive drought relief, utilizing blockchain technology and real-time environmental data. Anyone can contribute to the RLUSD Pool by connecting their digital wallet, such as MetaMask or Coinbase Wallet, to the DIVA Donate platform.
Once connected, users can deposit RLUSD tokens into the pool. By using ERC-20 tokens, the platform ensures quick and secure transactions that are recorded on the blockchain, providing transparency and traceability for all donations. This approach reduces the risk of fraud and mismanagement of funds.
A smart contract, which is a self-executing contract with terms written into code, is used to manage the funds. In this case, DIVA Donate holds the contributed funds in escrow, a third-party account, until certain predefined conditions, known as drought triggers, are met. These triggers could include specific levels of rainfall, soil moisture, or temperature.
To monitor these conditions, the Normalized Difference Vegetation Index (NDVI), a remote sensing measurement of vegetation health, is used. NDVI data is gathered via satellites, providing real-time insights into the state of vegetation in the target area. A high NDVI value indicates healthy vegetation, while a low-value signals drought or environmental stress. This system allows DIVA Donate to assess conditions more accurately and promptly than relying on potentially delayed or inaccurate local reports.
Once drought conditions are detected, the smart contract automatically executes a payout. Pastoralists will receive $75 in RLUSD, enough to subsidize food and water for one livestock animal for six months.
As reported by CNF, $100 million worth of RLUSD was issued on April 1 and 2, sparking comparisons with well-established competitors like USDT and USDC. Additionally, Ripple’s integration of RLUSD into its cross-border payments platform, Ripple Payments, has led analysts to predict that XRP could surpass $3. Currently, XRP is trading at $2.13, following a 1.60% decline on the 24-hour price chart.
