Key Trends

Despite lows in cryptocurrency markets and the re-orientation of the tech industry around the generative AI revolution, the blockchain ecosystem has maintained its appeal among developers, designers, and business innovators. Key technology developments include progress in the following areas:

• Downward Trend of Gas Fees: The foundational cost of businesses today is essentially a "rent" paid to cloud providers like AWS, Azure, or Google Cloud, with a highly competitive pricing model. In contrast, public blockchain-based approaches operate on a "pay-per-use" model, where every transaction incurs a “gas fee” i.e. a transaction fee. These gas fees can make pure public blockchain-based solutions more expensive at scale, limiting their feasibility for large-scale applications. However, as blockchain transaction costs—including gas fees—decrease over time, decentralized applications (dApps) will become more affordable to userun. If user costs eventually reach parity with traditional cloud services, a wider range of blockchain-driven business models could emerge. This is a long-term trend, which may take several years to fully materialize.
   
• Bridges and Cross-Chain Communication: Each blockchain comes with its own advantages and trade-offs. For example, Gnosis Chain offers high levels of decentralization, making it ideal for building resilience in data, while Solana provides access to a vast number of coins, enabling crypto-oriented business models like learn-to-earn. Polygon, on the other hand, is well-suited for NFTs, which can be leveraged for marketing. However, these blockchains currently operate in silos, requiring users to manually navigate between them, which adds complexity and friction.
  With bridges and cross-chain communication, enhanced interoperability allows decentralized apps (dApps) to seamlessly interact across different blockchians. dApps can then leverage the unique strengths of different chains—whether it’s speed, security, cost-effectiveness—consequently reducing cost and providing users with more tailored solutions. Blockchain applications may be in the position to pick the “best of many worlds” and fulfill diverse user needs more effectively.
   
• Scalability Enhancements: The exponentially growing adoption of blockchain can overwhelm networks with high volumes of transactions, making systems slower and more expensive to use. Currently blockchain backends are operated by people with costly hardware or a lot of money with some specialized machines. Advances in sharding (i.e.  dividing a blockchain into smaller parts or “shards” to process transactions faster and more efficiently, allowing multiple transactions to be processed at once, improving overall network performance without adding more validators) and memory scalability mean blockchain mining and validation could potentially soon be performed using everyday devices like smartphones. Every phone in the world would be able to contribute to decentralization and resilient global software backbone for innovation. 
  With these advancements, the future of blockchain could become significantly more inclusive and decentralized, enabling anyone with a smartphone and intermittent 3G connectivity to contribute to hosting the network and running blockchain software in the background. This shift would bring two critical benefits: (1) Enhanced resilience—by distributing network participation more broadly, blockchain systems become more resistant to censorship and malicious attacks; (2) Fairer reward distribution—expanding participation ensures that incentives and benefits are more equitably shared, rather than concentrated among entities with specialized hardware and significant financial resources. Such a future would redefine ownership and accessibility, fostering a truly decentralized ecosystem where participation is not limited by technical or economic barriers.
   
• Improved User Experience: Approaches like account abstraction and chain abstraction will make it easier to onboard users. The best blockchain experiences are those whose underlying complexity remains invisible to the user, much like how most drivers operate cars without needing to understand the intricacies of the engine or gearbox. Currently, interacting with public blockchain technology often requires technical knowledge of wallets, gas fees, and network mechanics. However, with these advancements, users will soon be able to engage with blockchain-based applications seamlessly, without needing to understand the backend mechanics. This shift will drive greater adoption and usability, making blockchain more accessible to a wider audience.

How UNICEF Ventures Has Been Exploring Blockchain

These advancements, combined with macroeconomic factors such as regulatory progress (e.g., the Markets in Crypto-Assets Regulation, or MiCA) and increasing grassroots crypto adoption, are fueling blockchain growth across various sectors such as finance (exchange-traded funds or ETFs), and government bonds on-chain etc.), payments (Stablecoins for cross-border transactions etc.), climate action (Markets for carbon credits, transparent environmental reporting etc.), governance (for e.g. Legal recognition of decentralized autonomous organizations or DAOs), and registries and tokenization (data sharing in real estate, healthcare etc.)

UNICEF has been actively exploring blockchain applications to advance its mission. Key initiatives in 2024 include:

• DPG DAO Prototype: Developing a prototype to understand how Web3 governance models can sustain open-source digital public goods.
• Digital Financial Registry in Burundi: Piloting a credit scoring mechanism based on a verifiable financial data registry to reduce lending risks and improve financial inclusion for marginalized youth.
• Carbon Footprint Calculation: Measuring  the carbon footprint of UNICEF’s Cryptofund holdings and eventually offsetingthem using on-chain protocols.
• Institutional adoption of supply chain tracking: Supporting the institutional adoption of a blockchain-based vaccination track/trace solution in Bangladesh.
• Supporting Climate oriented startup solutions in areas such as parametric insurance and citizen-driven climate action.
• Research into injecting Digital Assets for Cash Transfers: Supporting the building of foundational tools—such as low-tech wallet solutions—for enabling digital assets in humanitarian cash transfer programs, including areas with no internet access.

What More to Unlock for Development and Humanitarian Work

The outlook for blockchain technology in 2025 is promising, with stablecoins emerging as a key area of growth for UNICEF. Stablecoins are cryptocurrencies whose values are pegged to a reference asset, such as a traditional currency. Due to their reduced volatility and utility in cross-border payments, they are poised to become critical tools for humanitarian aid and financial inclusion. Additionally, we are looking to explore the following applications in the coming years:

1. Impact Tokenization and Funding:  Impact tokenization and funding involve developing or utilizing existing blockchain-based platforms to reliably record and tokenize impact data, enabling UNICEF programmes to obtain donor funding in a transparent and innovative way. Rather than relying solely on traditional reporting, programs with clear, measurable impact—such as providing clean water to communities or delivering life-saving vaccines—can convert their outputs and outcomes into digital impact claims certificates. These claims can be verified by multiple third parties as applicable. These certificates, securely recorded on the blockchain, act as proof of verified impact and could be sold in a specialized marketplace to raise additional income for the projects. Think of it like carbon credits (where CO2 positive actions are paid for by others who emit CO2)), but for all kinds of social impact—where donors or organizations can purchase tokens to support verified, real-world change. This approach enhances transparency, increases funding opportunities, and ensures greater accountability by creating an immutable, traceable record of results, ultimately driving more resources toward impactful initiatives.
    
2. Innovative Data Collection + Reporting: Leveraging blockchain to innovate on data discovery and collection (e.g. to iterate on prediction markets and crowd sourced field data as an oracle—a trusted data source for decision-making). UNICEF can potentially incentivize U-Reporters (or any other field contributors) to collect and submit real-time data that informs programmatic decisions and delivery. For example, field reporters or enumerators could provide on-the-ground insights into the functionality of toilets in WASH programmes or track the presence of ready-to-use-therapeutic-food (RUTF) in local black markets, ensuring rapid response to critical issues. Once data integrity is verified through blockchain mechanisms, public portals can be created to provide real-time insights into programme performance and field realities. These portals can then support more transparent and responsive decision-making to improve the effectiveness of humanitarian and development programmes.  
    
3. Verifiable Credentials: Through blockchain-based verifiable credentials, tamper-proof digital records can allow individuals to securely store and share crucial information about their children and their families. With this, key documents such as birth certificates or vaccination records are digitally owned and held by parents or caregivers of the children, and can be provided on demand for seamless access to life-saving services, reducing reliance on paper based systems that can be lost, damaged, or forged. In Latin America and The Caribbean, for example, migrant children often face challenges in providing their vaccination history, leading to either missed immunizations or unnecessary duplicate vaccinations. Verifiable digital credentials allow healthcare providers to instantly confirm a child’s immunization records, ensuring continuity of care across borders. 
    
4. Transparent Action: By exploring decentralized autonomous organizations (DAOs), on-chain reputation systems, and attestations, UNICEF can promote a more collaborative, transparent, and accountable approach to decision making backed for programme implementation. These tools enable strong governance mechanisms, ensuring that actions within UNICEF programmes—from decision-making and execution to proof of impact—are recorded on an immutable, auditable ledger, enabling greater public accountability. The immutability of the blockchain and its open auditability would essentially create an “auditable online reputation” which can be leveraged for fundraising and partnerships. This would deepen our commitment to transparency and openness.
    
5. Public trust systems: With the rise of AI agents, generative AI bots, and associated misinformation/disinformation, systems to prove one's humanity and the veracity/provenance of a piece of data have become increasingly critical—especially for safeguarding children's online safety. Blockchain approaches to this are critical to explore. UNICEF can explore mechanisms that help distinguish between real human interactions and AI-generated content, mitigating risks associated with fraud, manipulation, and harmful misinformation. 

While we continue advancing our work on blockchain and exploring how this technology can help deliver results for children, we remain committed to safeguarding privacy and ensuring regulatory compliance. This includes carefully addressing risks such as the potential exposure of beneficiaries’ personally identifiable information (PII) and adhering to the specific legal and regulatory frameworks surrounding blockchain in each country where we pilot the blockchain-based solutions.