Passionware for Cities: Why We Invested in Colu
Contributing to the First-of-Its-Kind Blockchain Protocol for Urban Coins
Benson Oak Ventures invests in start-ups based on a core thesis around Passionware - tools that enable anyone to provide goods and services to support their passions.
Colu is passionware for cities and communities. The Urban Change Protocol, incubated by Colu, will enable any community to unleash new financial models and governance that benefit a community’s ecosystem by driving incentives, strengthening tribal bonds with locals, and providing shared ownership of their community.
As urbanization grows, there is increased demand to be self-sufficient. Crypto for cities will enable new financial models providing civic engagement and community strength, accentuating citizens’ passion for their home communities
With web3 gaining traction and DeFi one of the leading use cases for crypto, we believe the time is right for a sustainable model for a city coin - one based on key learnings of Colu’s team and the core Urban Change team to which Colu is contributing.
We expect the global crypto community and cities themselves will serve to open up innovation in cities. Existing efforts in Miami, New York, and the 10 communities (including Boston, Akron, San Mateo) who are now using Colu’s current platform to create local currencies are the early harbingers of much more.
Colu: Driving local prosperity
Colu has developed smart city technology focused on helping municipalities significantly increase civic engagement by rewarding residents for taking actions that promote strategic goals for the good of the community. Powered by a unique stable City Coin that can be spent only at local merchants, the platform allows cities to:
reward residents for certain behaviors (e.g. supporting local commerce) when using the city coin
stimulate the local economy through easy-to-implement community initiatives.
Cities directly generate more than 80% of global GDP (World Bank). A city coin acts as the stimulator of the local economy - allowing each city or municipality to be more self-sufficient and promote its own goals.
💡 Using an open Web3 system, Colu’s technology will provide residents a vote and a financial stake in the economic and social wellbeing of cities, with an aim to create long-term, positive behavioral changes that build public wealth, foster a sense of community, and provide local businesses with a platform to connect with communities.
Team and Product
Benson Oak Ventures is pleased to be joining an all-star lineup of investors including Borderless, Aleph, Alumni Ventures, Node Capital and DCG in supporting Colu. Based in Israel, Colu has been active since 2017 in creating cryptocurrency solutions for cities. Under the leadership of CEO Ortal Tevel, the team redeveloped the technology into a white-label platform sold directly to cities (see SAAS Product) and is now creating an open system powered by a token where anyone will be able to create their own coin.
The platform is currently offered as a (centralized) service to cities for implementation by Colu.
🏦 A SaaS platform for municipalities to implement their city currency. The platform includes a white-label app that is custom branded, so every city gets its own branded app and its own City Coin
Colu provides the city a platform with all features customizable including chosen branding (e.g. Boston uses B-Local as its coin brand) and specific stimulation incentives and promotions.
The app then enables each city to engage with its residents and promote its chosen goals, such as stimulating the local economy, promoting diversity, encouraging sustainable transportation, etc. To drive resident action towards its goals, it rewards them with its own branded City Coin (1 city coin = 1 FIAT). These cities explicitly promote their coin to their residents and encourage them to use their City Coin.
Evolution to Web3 and an Urban Change DAO
Colu is incubating a decentralized Urban Change Token (UCT) Protocol that will be soon released. This Urban Change Token (UCT) will enable any city or municipality to create and design its own token. The value proposition inherent in the open decentralized protocol will be the same as the current “centralized” system, with the advantage of faster adoption and value accrual to investors through a token.
The open-source Urban Change protocol will replicate this experience, providing multiple layers:
Stable City Coin - used for merchants and buyers to make payments and get paid, generating a yield from the network on that token.
City Impact Coin - governance and value accrual token for the city itself. These city-specific coins will have capped supply and will be traded on an individual basis, effectively allowing citizens to own a direct stake in their communities (this is a DAO within a DAO!).
Urban Change Token - governs the entire system at the “master protocol” level as a token of the Urban Change DAO. Aside from governance, the token will have cash flow components (staking and DeFi), and accrual value resulting from supply and demand - the more cities use the protocol, the more demand for minting and using a fixed number of tokens.
As we outlined in our blog All About DAOs —
Web3 economies provide an open place for commerce - underpinned by shared ownership, all orchestrated by a common token.
Let's dive into Colu and how addresses our 4 questions approach —
How Big is the Market Potential
Cities generated more than 80% of global GDP and drive an estimated $75 trillion of GDP globally. So yea, its a big market! How will that translate into Web3 opportunities?
Colu aims to achieve a future where any community can have its own stable coin to drive its economic and social prosperity — not to replace fiat but as a complement (think of it coupons on steroids).
Cities, municipalities, even universities (with national and global citizens) can have their own currency to drive incentives across both physical and virtual goods (eg NFTs). Each city and community represents a potential Web3 economy, providing opportunities for new services and unleashing incentives for local commerce and initiatives - where citizens can own, support, and finance their communities.
What Take Rates are being removed and how fast will we Product Market Fit?
Urban economies have their own layers of middle-men impacting local commerce (eg transaction fees of credit cards), as well as the increasing dominance of large brands supplanting local retail commerce.
A local coin will unlock local commerce by providing control to the community and shared ownership. We see the shift already happening with currently now having some 15,000 businesses that accept payment in crypto around the world, and more than 2,000 of them are in the United States.
A local cryptocurrency will enable each city to be more self-sufficient, promote its own goals (while encouraging residents to actively engage in their community), and stimulate the local economy. There are a number of cities already adapting a coin city model - eg, MiamiCoin, where the yields that came from the staking of the city’s own cryptocurrency has already earned over $21 million in the past three months (*CoinDesk* reports).
There is also considerable global potential, especially in cities where (i) crypto adoption is higher and (ii) there is less confidence in fiat (eg Africa) and therefore need for stable coin structures. As communities create a local coin and provide the incentives, citizens are very likely to follow. The early results of Colu’s cities are encouraging.
Scaling the Community and How Will they Win?
Colu has an opportunity to be the winner in the category of “crypto for cities” due to its experience and traction with early adoption and plans to create the first such Web3 protocol, We believe the “first mover” advantage does have importance (not always the case) as a result of branding and credibility among cities and residents alike.
Urban Change's decentralized system will enable residents to be incentivized with a coin that can be used for daily spending in the city where they live. This solution will keep funds local and stimulate the local economy while also enabling ownership with a decentralized coin that is open to a national and global investor base. The Urban Coin protocol, with its Proof of Stimulation, is a mechanism that balances between these two aspects.
Token Incentives and How Will the Community Drive Growth
Colu intends to build an open system where anyone can create a dual coin, with chosen incentives, funding, and rules of engagement. Cities will be encouraged to join as part of branding and word of mouth, as well as direct marketing.
The Colu team and its advisors have deep experience in token economics and structure - both technically and in structuring gamification incentives - and specifically with cities given the Colu experience.
The protocol will use Proof of Stimulation to incentivize residents to stimulate the local economy. Community leaders will have access to the Web3 platform to create a rewarding system of incentives, stimulating public ownership and demand for the coin by residents.
💡 The value of the token will be directly correlated with the adoption of the Urban Change Protocol. The adoption of the Proof-of-Stimulation system will generate demand as cities promote more initiatives and therefore buy more UCTs (Urban Change Tokens). The more creation of coins, and buying of city impact coin, the more demand and the increase in price.
🗣 We believe the time is right for an Urban Change protocol and its creation of a decentralized network of tools and services to support communities and drive their economic and social prosperity to a whole new level. Colu has an opportunity to be the winner in the category of “crypto for cities” due to its experience and traction with early adoption and plans to create the first such Web3 protocol.
For those that want more information about the Urban Change project and how it can be used to support your community - city, municipality, campus, or any local community, please reach out to Colu at —
Ortal and her team are eager to onboard all early adopters of this innovative and unique Web3 protocol.
See here the announcement of Urban Change - the First-of-Its kind Blockchain Protocol for Urban Coins, Announces Its Dual-coin Model To Drive Economic and Social Prosperity. Follow them on twitter for further announcements.
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