February 8, 2023

What is the Circular Economy, and what role does peaq play in it?

Take, make, use, dispose. For decades this has been the way companies produce and consumers consume - linearly, in one direction. 

Our washing machine stops working, so we buy a new one and dispose of the old one. A new smartphone comes out in green (not white :O), with 20 minutes longer battery life and a camera with 13x instead of 12x zoom, so we have no option but to throw half a month’s wage at it and chuck the 11 month less-new one. 

Each time we produce something, we’re using finite resources. Every time we chuck something, we’re producing toxic waste. 

The circular economy says ‘hang on a minute - it doesn’t have to be that way’. The circular economy is us looking at nature, remembering we’re part of it, and choosing to return to a circular model instead of a linear one, like every other animal in the natural world.

The goal is to make production cycles as self-sufficient and non-polluting as possible. To go back to nature where one species’s waste is another species' food, and the cycle repeats indefinitely; because that’s the only way not to consume our way to self-annihilation. 

How can we produce as little waste as possible when creating products? How can we make products that last longer? How can we breathe new life into dying products? These are some of the questions the circular economy is concerned with.

Which problems with the circular economy can peaq fix?

On the peaq network, people build decentralized applications (dApps) which people use to share vehicles, deliver goods of all kinds, hail taxis on land, sea and sky, and virtually anything else you can think of. 

In short, people can build any kind of dApp for any kind of machine, vehicle, robot or device - exactly the sort of waste that is not biodegradable and causes the most damage to the environment. And that’s exactly where the overlap with the circular economy is. 

Machines are very energy intensive to build and are made up of a lot of finite resources, such as precious metals. We, as a species, should try our best to ensure that these machines are 1) not wasted once produced 2) live as long as possible, 3) are easily accessible to secondary and tertiary markets so that they can be reused, 4) can be easily repaired, restored or partially or fully recycled. peaq, and the apps built on peaq, can bring about all of this through a core principle of Web3 - incentive models.

At the core of any Web3/blockchain network are incentive models. Incentive models are how a network encourages people to do what’s in the best interest of the network or dApp, when there’s no single person in charge, as is the case with blockchain networks such as peaq or dApps built on peaq. Incentive models, in a nutshell, are systems that reward good behavior and punish bad behavior.

The peaq network and dApps on peaq can be programmed to incentivise people to adhere to circular economy principles. Systems can be created which;

  • Reward longer serving machines by charging them less fees 
  • Reward people for turning in broken machines for parts or precious metals, to be disassembled and regenerated 
  • Incentivise manufacturers to create longer-lasting machines
  • Incentivise the community to purchase circular machines (machines that can be returned to their makers for a second life)

These are just some examples. 

Self-Sovereign Machine IDs

How can people using a decentralized network prove that a given machine is as old as it says it is? Self-Sovereign Machine Identities, or SSMIs.

SSMIs are like passports for machines. They’re essentially digital IDs on the blockchain that no single entity owns, but are verified by any number of authorities. Once a machine gets its own SSMI, it can’t be forged.

peaq is pioneering the concept of SSMIs in the Web3 space. For any kind of machine to run on dApps on the peaq network, it must be given an SSMI. These IDs are the way machines can identify themselves, interact and transact with people and other machines. 

If you can’t verify the identity of a machine, you can’t enforce any rules. With SSMIs, you can. So the incentive structures described before, and more, can be put in place.

But SSMIs go beyond the machines themselves. Parts of machines can also be given their own SSMIs. Why is this interesting? Think of vehicle batteries. Expensive parts, forged out of precious, finite resources, notoriously bad for the environment. If we gave batteries their own SSMIs on the blockchain, the verifiability of all data associated with batteries could breathe new life into them, creating secondary and even tertiary markets. This kind of dApp is already being developed in the peaq ecosystem. 

You can read more about SSMIs, here.

Preventing the next era of centralization in IoT

There’s a lot of talk about manufacturers switching from producers of goods to providers of service. What does this mean?

Currently, a car company creates cars and sells them. The consumer purchases the car and then either resells or retires it. A linear path. To adhere to a more circular way of doing things, manufacturers are exploring a new way of doing business. Instead of selling the cars, they lease them. Consumers use the cars and can take them back to be repaired as needed. 

Sounds good on the surface, but beneath the service, this is introducing a new system of corporate reliance and centralization. The crucial element here is ownership. In this new model, people do not have ownership over the machines they rent, concentrating power, value and control into manufacturers hands. Better for the environment, bad for people.

There’s a better way, and as you might have guessed, peaq enables it.

On peaq, people can build dApps that enable groups of people (communities, in Web3-speak) to purchase and own machines, like cars, together, and lease them out to the community. It’s the service-provider model - with ownership included. It’s also possible for manufacturers to create DAOs, or Decentralized Autonomous Organizations, which they co-own and govern with the community they provide a service to.

The future isn’t black or white, it’s purple.

Where the Sharing Economy meets the Circular Economy on peaq

The circular economy is all about us changing from a linear production and consumption model to a circular one, with the goal of reducing the amount of finite resources we extract from the earth and the amount of waste we produce.

The sharing economy refers to the commodification of excess capacity. It’s the realization that we have enough stuff, we just don’t distribute it between us effectively. So sharing economy apps have sprouted up to provide a platform on which buyers and sellers of stuff can transact. Think Uber, or AirBnB.

There’s a blog on peaq’s role in the sharing economy. You can read it, here

As an example, we use our vehicles approximately 5% of the time. The other 95% they’re parked, idle. If we leveraged the sharing economy to commodify that excess capacity - that is to say that we allow for our vehicles to be used when we’re not using them, or to not own a vehicle ourselves - then we could hit the circular economy targets of reducing the amount of resources we need to produce new machines, while also wasting less. 

So where does peaq come in?

The sharing economy only works because of platforms/apps that bring buyers and sellers together. But in today’s sharing economy we do this at our own detriment, because we have to trust corporations with our most intimate data, trust that they use our data in our best interests and not their own, trust that they don’t leak any data or get hacked and trust that they treat the buyers and sellers on their platforms well, among other things. Promises that centralized platforms find a hard time keeping.

peaq is a platform of platforms - a decentralized platform on top of which people build decentralized platforms. That is to say that both peaq and the dApps being built on peaq are community owned and governed. 

The peaq network is specially designed for people to build dApps for people to exchange goods and services to do with connected machines, vehicles, robots and devices. dApps like vehicle-sharing, ride-sharing, delivery of goods, sharing of parking spots or green energy, and so on. We believe that we can only really call it a sharing economy when everything is shared - from the goods and services through to the apps and networks we use to buy and sell them. That’s what peaq enables.

Circling back

So peaq is powering the decentralized sharing economy, while incentivising the circular economy.

peaq is making it possible for manufacturers to sell vehicles, machines, robots and devices directly to communities, not just individuals, while enabling individuals to share their machines with their communities via decentralized platforms, and incentivising everyone in this Economy of Things to act in accordance with circular economy principles. 

What’s not to like?

Hop on the peaq train


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