Singular Internal Circulation and Cooperative Tokenization: A Case for Water-Based Infrastructure Investment in Rural Ukraine

 Title: Singular Internal Circulation and Cooperative Tokenization: A Case for Water-Based Infrastructure Investment in Rural Ukraine

Presented at: Manchester Cooperative Association Conference 2025

Prepared by: Vitaly Ischenko, OK GBK KMB 

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Abstract: This report proposes a decentralized financial mechanism based on dual-layer monetary architecture in Ukraine. It is designed to attract cooperative stakeholders into direct, productive participation in rural development, focusing on water infrastructure. The project introduces a digitally maintained internal currency, the "Copper Hryvnia," that operates in parallel to the national fiat system, with a focus on localized economic cycles and tokenized real utility metrics.

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1. Introduction

Ukraine, as a unitary state, has faced systemic limitations in the decentralization of capital and infrastructure development. Centralized budgetary flows and top-down allocation mechanisms have stifled local initiative and made public investment heavily politicized. This has led to ineffective infrastructure provisioning in rural areas and limited access to project-based capital.

The objective of this paper is to present a cooperative-friendly, bottom-up framework that incentivizes community-level stakeholders, including foreign partners, to invest in tangible local improvements while preserving local ownership and utility.

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2. Structural Problem Overview

• Overcentralization of Public Funds: Funding is allocated through politically motivated subventions rather than economically sound mechanisms.

• Lack of Incentive Structures: The current tax and utility pricing systems do not reward local efficiency or community-led project management.

• Monetary Constraints: The fiat system prioritizes export and fiscal surplus while leaving domestic infrastructure cycles underfunded.

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3. Proposal: A Dual-Currency Model for Cooperatives

Gold Hryvnia (GH): Tied to national currency reserves and conventional monetary policy; used in trade and formal accounting.

Copper Hryvnia (CH): A locally issued, digitally monitored, and project-bound internal currency for cooperatives.

• Non-convertible externally; only exchangeable through a registry of utility metrics (e.g. water output, energy use).

• Tokenized stakeholding: Cooperatives issue CH to participants in return for their investment or labor in specific local projects.

• Time-coded valuation: Value of CH may vary based on project output over time, encouraging long-term participation.

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4. Use Case: The Britivka Water Corridor Cooperative

Location: Britivka village, Odesa region

Project: Construction of a 300 m3/day water treatment facility and an artificial river feeding neighboring villages for irrigation and livestock needs.

Structure:

• Foreign contributors (e.g. Dutch cooperatives) receive Copper Hryvnia tokens as proof of participation.

• CH tokens tied to real water delivery metrics.

• Local stakeholders jointly manage the infrastructure, with transparent logs maintained via blockchain or DLT (Distributed Ledger Technology).

Outcomes:

• Improved agricultural productivity

• Retained local ownership

• Shared governance and participatory accounting

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5. The Cooperative Registry with Protocol of Useful Deeds

Each participating cooperative maintains:

• A digital registry of CH holders

• A "Protocol of Useful Deeds" — documented contributions tied to community value (e.g. volunteer work, technical skills, operational efficiency)

• Community decision-making rights based on usefulness rather than nominal capital

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6. Benefits for International Cooperative Partners

• Low-risk, high-transparency entry into local economies

• Real-time utility metrics to verify impact

• Long-term access to outputs (e.g. water rights, agricultural produce)

• No exposure to currency volatility or bureaucratic instability

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7. Call for Participation

We invite international cooperatives to:

• Co-develop protocols for utility-backed token issuance

• Participate in infrastructure planning and governance

• Share technical expertise and management tools

Britivka is only a pilot — this model can be scaled across hundreds of Ukrainian villages, building resilience, reducing emigration, and restoring cooperative traditions in modern, digital form.

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Contact: LII lab. https://www.facebook.com/LorraiInvestment

Appendix:

• Sample Token Registry Entry

• Draft Cooperative Charter

• Technical Outline for Water Output Smart Contract