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Feature Interview: Lasha Antadze on Ukraine’s Blockchain-Powered State Property Auction System

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A memorandum has been signed by Ukrainian government officials for the creation and implementation of a blockchain-backed platform for state property privatization and lease. The e-Auction 3.0 platform, which intends to help fight corruption by providing a transparent and decentralized system for the sale and lease of state properties and other rights, will soon start being implemented in participating Ukrainian administrative regions.

On March 23, 2016, a memorandum was signed by Ukraine’s central authorities and major administrative entities, including the President’s administration, the Land agency, the Odessa regional administration, the Kiev city mayor and regional administration, the Dnepropetrovsk regional administration, and the Ministry of Agriculture, among many others, marking the official pilot launch of the e-Auction project.

Released for public testing on Microsoft Azure in February, the e-Auction platform had been awaiting approval from participating parties in Kiev.

“We have a full green light from the authorities and are starting a huge pilgrimage around the country to technically integrate those administrative regions and interested parties with the e-Auction 3.0 system,” Lasha Antadze, the e-Auction project’s lead and a member of the Innovation and Development Foundation (IDF), told BTCMANAGER.

The e-Auction project is most likely “one of the biggest blockchain projects that currently has so many government officials on the board,” he said.

Introduced earlier this year, the e-Auction platform aims to provide a transparent infrastructure for state property privatization and lease backed by blockchain technology.

Antadze said that the system was designed to help fight corruption, minimize mismanagement risks, reduce the state budget expenditure and give open access for participation in the auction process.

“In Ukraine, there is no central authority for managing the whole public assets or for licensing. Regional administrations to have the autonomous right to sell, lease, or manage the land and state property under their governance,” Antadze said.

There are … 24 such regional (oblast) divisions. Existing decentralization allows each ‘Oblast’ to autonomously decide the scheme of carrying ‘privatisation, lease’ process (whether by physical facilitator, outsourcing, or direct ordinance). This unregulated process gave us the possibility to start e-Auction 3.0 integration on [that] governance level.

In Ukraine, one of the main areas where corruption is rampant is in the sale and lease of state property and other rights through paper-based auctions. This corruption ultimately has a negative impact on the development of business and the economy as a whole.

Until now, there was no such thing such as an electronic system for auctions, and the potential of a distributed, immutable system for the exchange and trading of property rights quickly won the support of public authorities.   

In fact, support and demand are “growing in such a fast pace that we can’t keep up with the human and time resources,” Antadze said.

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Antadze expects to see the first trades conducted on the e-Auction 3.0 platform in April. He further said that his team was currently in talks with the Association of Banks of Ukraine on deploying the system for mortgages and confiscated assets.

“This scheme […] gives the opportunity to delegate the process to private platforms unified by the blockchain protocol [and] brings all those clustered entities together in a single information field, but in a decentralized way,” Antadze said.

The e-Auction platform was designed to ensure openness, equity and efficiency while conducting auctions. It is based on the principles of transparency of data and procedures and is being released under an Open Source license. The platform will focus on freedom and ease of access, and will provide participants with an API to access primary data.

The system will allow for the registration of auction transactions in real time and the automatic recording of relative information. It will provide organizers with the ability to search and display all ongoing and past auctions. The platform will also display complaints and questions to auction organizers. Clients will be able to search and display auction archives, make real-time bids, and receive payments for participation.

E-Auction will have two payment options: cryptocurrency payments directly to the platform or fiat bank payments. Cryptocurrency payments are verified via integrated API of bank accounts that received the participation fee. The transaction ledger is signed electronically and afterwards used by the protocol to identify the weight of the nodes.

The project is led by the Georgian non-governmental organization IDF in collaboration with Distributed Lab, Microsoft, Unitybars, OshadBank and PrivatBank. Microsoft has plans to add e-Auction into the Azure marketplace, Antadze said.

The e-Auction platform is just one of the many blockchain projects that has received support from Ukrainian government. In February, a memorandum for E-Vox was signed by Ukrainian officials to develop “a decentralized, transparent and accessible system for group decision-making via blockchain-based instruments” for political elections, online petitions and referenda.

Last week, Yegor Stephanovych, the CIO of Ukrainian Secretariat of Cabinet of Ministers, presented the draft project for an “e-government platform” at the Blockchain Conference Kyiv on March 19.

Stephanovych said that the E-Ukraine platform would be a “distributed online portal for government, business and society interaction” aimed at developing and implementing government policy in the IT sphere.

According to Antadze, Ukraine’s current political turmoil and high demand for reforms, combined with its leading IT specialists, makes the country a perfect fit for revolutionary initiatives.

“Blockchain positions itself as a marvellous, transparent anti-corruption tool, that takes away the monopoly of a bureaucrat, and I guess expectations are matched in this case,” Antadze said.

That’s why we have so many blockchain related projects [in Ukraine], some at a conceptual level, some under development. But overall, this process and diversity will give Ukraine a competitive advantage, and why not, in several years we might see it as a new leader in e-governance.

He concluded:

Everyone agrees with the fact that the major ‘blockchainization’ process will start from the third world and developing countries. It is much cheaper [there] to build e-services from ground zero, than for the developed world, where this infrastructure already exists, operates more or less effectively and there is no rush to modify.