How Blockchain is Disrupting the Ride-Hailing Industry

Evan  |  Aug 1, 2021

Blockchain technology has taken the world by surprise. In the last decade, there have been a lot of projects using blockchain technology to power their services. There's been over 1500 cryptocurrency platforms and applications built on the blockchain. More than 90% of these projects however have lacked real-world use cases and they've tended not to affect human lives directly but recently, that is beginning to change. 

There have been an increasing number of companies using the technology to solve real problems. Big corporations are starting to warm up to the idea of having their businesses run on a Distributed Ledger Technology (DLT). Big firms in the Healthcare, Pharmaceutical sectors and Financial Services have been early adopters of this technology and it has proven to be the right decision for these companies as blockchain technology offers more positives than negatives. 

An industry that is now seemingly experiencing the disruptive nature of blockchain technology is the ride-hailing industry. It is a known fact that ride-sharing and ride-hailing applications have taken over traditional taxi services all over the world. In 2020, the global ride-hailing market was at $42.25 billion and it is expected to grow from that figure to $56.87 billion in 2021 at a compound annual growth rate (CAGR) of 34.6%. According to Businesswire, by 2025, the market is expected to reach $108.15 billion at a CAGR of 17%.

While there are numerous companies in the ridesharing and hailing industry like Lyft (NASDAQ: LYFT), DiDi (NYSE: DIDI), inDriver etc, it is no secret that the biggest player here is the ride-sharing app Uber (NYSE: UBER). However, recently there's been a lot of negative press surrounding Uber and its services and this has increasingly seen the popularity ratings drop consistently. In the last two years, there's been a lot of criticism of Uber and how it has gone about its business. In 2020, the legislature in California passed the AB5 worker law that directed that companies treat their workers as independent contractors rather than full employees. In their response to this, Uber launched Project Luigi. Project Luigi is a scheme that allows Uber drivers to set their prices. This action earned Uber a lot of criticisms as critics suggested it would force drivers into a "race to the bottom" as regards how they price their fares. 

In December 2019, the company lost its license to operate in London because it was considered not "fit and proper" to hold a license. However, this decision was appealed. Another trouble hit the firm in the same month of December when news broke that Uber's stock price had dropped by 2% because around 6000 cases of sexual assault had taken place in the cars of its drivers over the previous two years leading up.

Because of the numerous brouhaha linked with using Uber these days, a lot of customers are now patronising other traditional ride-hailing companies that are popping up in different countries. These companies saw the flaw in Uber and thinking they can do better, decided to step into the market. Now even with these competitors around, there are still some problems still plaguing the industry. And this has finally led stakeholders in the space to seriously consider the opportunity blockchain technology offers. With the issue of control for both drivers and users at the forefront of the cons traditional apps like Uber, InDriver, Well, Yandex, Ola and Lyft face, decentralised ride-sharing apps look like just the perfect solution for a problem that has lingered since the inception of the industry. In 2020, CEO of decentralised ride-hailing app Drife, Firdosh Sheikh, told Decrypt in an interview, "There's a huge potential not only for a decentralised ride-sharing app, or a blockchain-based company but a company who can work more ethically for the betterment of this whole ecosystem."

Blockchain looking to fix ride-sharing services 

Blockchain technology offers a way to make life and work easier, regardless of the industry or class and the ride-hailing industry is one a lot of disruptors and companies in the blockchain space are looking to become major players in. There have been a lot of bold claims about giving drivers and users more freedom through the use of decentralised technology like that of the blockchain. 

One of the companies that have made this claim is Drife. Drife is a decentralized ride-hailing and peer to peer ridesharing platform that was started with the intent of empowering the drivers and riders within its ecosystem. The app is built on the Aeternity blockchain and its business model is built ok taking zero commission from its drivers. Drife will instead charge drivers on its platform an annual fee to access the app. "We believe when there's a driver who spends 14 to 16 hours behind the wheel, he deserves to take back all the income to his home," said Sheikh.

Drife's IDO Advisor & Managing Partner of the Master Ventures Polkadot VC Fund, Orion Depp in a statement said, "Drife's unique business model could set a new standard within the ride-sharing industry. While Uber, Lyft & others were formed with good intentions they have become centralized, continuously paying their drivers less and charging their riders more. Smart contracts fix this problem by putting all ridesharing data on the blockchain. We've seen cryptocurrency usage experience rapid adoption by public and private transport agencies in Brazil. It's now likely that we see similar adoption across South America, Asia, & Europe, especially as innovation accelerates due to the Covid pandemic."

The Drife app has a feature that allows for the calculation of a base fare according to market conditions. This feature also affords the driver and rider the opportunity to negotiate on fare price. These features allow for fairness in pricing. Also, because this is a decentralised application on the blockchain and there would be elimination of intermediaries, Drife removes the issues of fares being unjustifiable increased while a ride is on.

At the start, the company planned to put both payments and ride allocations on one blockchain platform, but according to Sheikh, "You cannot eliminate the whole concept of middleman funders in the ride-hailing space at one go; you have to go step by step." She continued, "So as a company, we will be an escrow for both drivers and riders initially. With time, the idea is that the drivers will have all the awareness that they need to run their whole business on their own and won't need anybody else to control things."

$2.7 million Venture Token Funding, IDO and Listing plans

On July 20, 2021 Drife announced that it had completed a Seed and Private Token Sale of about $2.7 million. The announcement went further to say that the ride-hailing platform would be performing its Initial Dex Offering (IDO) on the 6th of August. The IDO would be carried out on PAID's Apollo-X IDO platform. Drife would also have an Initial Exchange Offering on a Tier 1 Crypto Exchange that's yet to be announced. The private sale had subscriptions of approximately $90 million. That's a 30x oversubscription and the sale was led by Master Ventures, 18 Ventures. GD10Ventures, AU21 Capital, FBG Capital and Titan Ventures. During the event, strategic advisors for the company's IDO that included Orion Depp and Kyle Chasse of Master Ventures were also announced.

After the event, Drife CEO Firdosh stated, "Our capital raise was oversubscribed by nearly $90mm and received interest from VCs and strategic partners in 6 continents. We'd like to thank our international community for supporting the Drife vision. Our upcoming IDO on Apollo-X with Uniswap listing is a first major step towards transforming the ride-sharing industry. We want Drivers to be compensated as fairly for their hard work as Riders are able to pay them and, as such, have put all rideshare and corresponding payment data on the blockchain, through smart contracts. We intend to roll out our service with over 10,000 drivers in India in the coming months and then expand internationally shortly afterwards. We are also launching the use of our DRF token for bid-staking by franchisees in select Tier 1 international markets and for receipt of loyalty rewards by Drife app users."

You can find more information about Drife at:

Official website: https://www.drife.io

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