If one thinks of it, decentralized ridesharing seems to be an almost perfect use case for blockchain and Web 3.0. However, despite the promises by several project teams reaching as far back as 2015, it still has not materialized even in beta. The question is whether something is fundamentally wrong with the idea or the technological hurdles have turned out to be harder to overcome than they seemed.
Why ridesharing and Web 3.0 look like a perfect match
Decentralized ridesharing has long seemed like one of the most ripe industries to be disrupted by blockchain and Web 3.0. To start with, ridesharing operated by centralized companies like Uber and Lyft has been subject to serious pushback from governments and organized interest groups of existing taxi drivers. In countries like France, it has essentially been banned. The advantage of a decentralized system would be that a ridesharing app with peer-to-peer interactions and payments, that stores data and processes communications outside of centralized server architecture would be almost impossible to shut down.
Secondly, from the economic standpoint, P2P ridesharing achieves two desirable things. It removes the fees claimed by the intermediaries like Uber that can reach 35%. This may both lead to a reduction in fare prices and somewhat higher incomes for the drivers.
Moreover, it allows prices for rides to be set in a more spontaneous manner, replacing Uber’s algorithm that currently sets them with a more genuine market. It also makes it much harder for the drivers to engage in price fixing through collectively fooling the algorithm.
Finally, the existing numerous ridesharing users are already accustomed to using an app that is almost peer-to-peer and trusting non-professional strangers to drive them to the destination. The remaining step to truly P2P ridesharing may, thus, be much smaller than for the other potential use cases of blockchain and Web 3.0. For instance, if we take prediction market platforms as an example, very few people have the experience even with centralized prediction markets, let alone Augur.
The basic tech seems to be there but no DApp even in beta
The basic tech needed to make decentralized ridesharing a reality seems to be in place, too. Interactions involving value transfers can be handled by smart-contract blockchain platforms like Ethereum. Even though none of the existing platforms is scalable enough at the moment to facilitate millions of rides on-chain, layer-two solutions could already be used for beta versions, as complete decentralization is not so much of a concern there.
Communications between drivers and clients can be dealt with using distributed chat protocols like Whisper. Finally, the data about rides, reputation of drivers and riders and so on can be stored using distributed storage protocols like IPFS or Swarm.
In spite of all this, to my knowledge, so far, no decentralized ridesharing application that does not appear to be a long-running scam like Arcade City is available even in a beta version. There are, however, at least three projects still actively pursuing the goal that are briefly discussed below: Swarm City, Chasyr and DRIFE.
The ongoing projects and their challenges
Swarm City is perhaps the longest-running P2P ridesharing project around. It started as Arcade City but the development team had to separate themselves from the scammy founder Christopher David. The project underwent several iterations. Until recently, the project team had focused on, first, delivering a more general platform for P2P transactions called Boardwalk, into which particular use cases like ridesharing could be plugged in the form of “storefronts.” The first version of Boardwalk released in 2017 failed to impress and the team has almost completed a remake by now. In the process, they have faced serious financial difficulties due to the crypto price crash, and especially the Parity multisig freeze. Now, the team appears to have realized that their background tech is still unworkable for ridesharing and that the IPFS storage component needs to be replaced with Ethereum’s Swarm.
Another project pursuing the P2P ridesharing dream is Chasyr founded by former Swarm City community leader Tommy Marquez. At present, the development appears to be at a prototype stage and the project team has decided against launching of an ICO for its token.
Finally, one more effort worth mentioning is DRIFE, developed, unlike the two former, on EOS instead of Ethereum. Like Chasyr, the project currently appears to be at the prototype stage, although according to the roadmap, it should have been in beta by now.
It would appear that a hurdle faced by all the three projects is funding. None of them has so far received investments remotely comparable to what seemingly far more speculative DApp projects garnered.
Why have investors largely snubbed P2P ridesharing?
One things that stands out about the ongoing P2P ridesharing projects is how little money they have managed to raise over the years. DRIFE’s seemingly ongoing IEO may buck the trend but this looks unlikely, given how non-transparent it seems to have been so far.
One question that could be asked is whether potential investors have perceived something about ridesharing that ultimately requires a centralized layer that has discouraged them from embracing it.
There are two potential bottlenecks that could, in theory, undermine its prospects. One is that ridesharing typically involves relatively small payments, and potential clients may not be motivated enough to learn the new technologies to reduce occasional small payments. A related issue concerns on-ramps or the way an average client would get her hands on the tokens needed to pay for rides. The existing methods of buying even the major cryptocurrencies like BTC and ETH are still rather cumbersome.
On balance, however, the idea that investors perceive some unique risks in decentralized ridesharing appears dubious. Instead, it may be that the initial choice by the current Swarm City team to join forces with Christopher David set them on a path where it was very hard for them to deliver workable tech quickly. This may have created a perception in the blockchain community that decentralized ridesharing was not a promising line of development.
In sum, it appears that the most probable explanation for the time it is taking for decentralized ridesharing to arrive is a combination of a poor initial trajectory and the nitty-gritty technical details being more challenging than they had seemed. Especially for the level of resources the development projects ended up having access to.