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How blockchain could eliminate billions in fraud, delays, and bureaucratic inefficiency
Administering social services represents a complex coordination challenge. Programs spanning healthcare, nutrition assistance, income support, and housing must verify eligibility, distribute benefits, detect fraud, and coordinate across federal, state, and local jurisdictions, often serving overlapping populations through siloed systems.
While current technologies have alleviated some of these concerns, several challenges remain. For instance, Social Security serves over 70 million beneficiaries through an aging infrastructure that struggles with identity verification, cross-agency data sharing, and processing delays that can last months. Medicaid, with 90 million enrollees and an $800 billion budget, faces challenges with eligibility verification, automated prior authorization, and pharmacy claims validation across 50 independent state systems.
The Supplemental Nutrition Assistance Program (SNAP), America’s primary food security safety net, distributes $113 billion in annual benefits to 41.6 million Americans through 250,000 authorized retailers, yet the system is fundamentally inefficient: fraud detection operates with 6–18 month lags costing $6.4 billion annually, bureaucratic burden consumes an estimated 832 million hours of recipients’ time annually, derived from 41.6 million recipients facing roughly five cross-program verification interactions per year at approximately four hours each, merchant settlement delays of 2–3 days create working capital burdens for the 250,000 authorized retailers, while EBT system administration costs taxpayers approximately $6 billion annually, and stigma-driven non-participation results in $50 billion in unclaimed benefits from 25% of eligible people.
There are 50 isolated systems across these programs. The Oregon SNAP database can’t connect with the Lifeline Internet Program. NYC SNAP cannot engage with the MTA and the transit authority. Florida SNAP can’t talk to Florida community colleges. This lack of interoperability leads to bloated verification systems that force recipients to prove eligibility repeatedly, amounting to billions of dollars in annual administrative costs spent on redundant verification across programs.
However, blockchain technology has been heralded as a potential way to mitigate such complex coordination challenges for the administrators of social service programs. Due to its organizational properties of immutability, transparency, and traceability, blockchain offers immutable audit trails where every transaction is permanently recorded, smart contracts that enable programmable compliance and instant policy updates at scale, and zero-knowledge proofs that enable privacy-preserving verification. These properties address the core failures of current systems: mutable and siloed audit trails become immutable and transparent, transaction costs of $0.50–$2.00 drop to $0.001–$0.01, settlement times of 2–3 days collapse to seconds, and single-datacenter redundancy gives way to decentralized validators. Given this potential, the paper explores how blockchain can be used to administer and coordinate complex social service programs.
Through the extended illustrated example of the Supplemental Nutrition Assistance Program (SNAP), the paper discusses how blockchain can be utilized to administer a complex social service program. The proposal is a three-phase blockchain implementation framework: Phase 1 introduces soulbound ERC-1155 eligibility tokens to eliminate redundant verification across benefit programs; Phase 2 implements cryptographic receipt proofs using SHA-256 hashing and AES-256-GCM encryption for real-time fraud detection while preserving privacy; and Phase 3 achieves full tokenization of SNAP dollars as USDC-backed stablecoins with NFC tap-to-pay functionality on a permissioned Polygon PoS zkEVM fork. The paper then addresses blockchain’s particular capacity to mitigate fraud and waste, facilitate interoperability across agencies and jurisdictions, and decrease frictions for beneficiaries. Several estimates presented in this paper are modeled based on publicly available data and comparable systems and should be interpreted as directional rather than exact. The rich assessment of SNAP provides actionable guidance for government services seeking to enhance the administration and coordination of sprawling social service programs.
Currently, the Flow of the EBT architecture is this:
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Source: Cameron Coleman
A glaring issue with this settlement flow is the time it takes for merchants to receive funds, which is 2–3 days. Each transaction costs $0.5-$2, with merchants and the government taking the fall, totaling $250 million-$1 billion per year.
The fraud issue within SNAP is much worse than most realize, and the prevention measures are insufficient. The Trafficking and benefits resale accounts for $1.7 billion in losses annually, according to the USDA’s conservative estimate. Some other studies suggest that the number is around $5.7 to $11.3 Billion.
Benefit Fraud goes as follows: EBT holders sell benefits for cash, usually around 50 cents per dollar, or 60–70 cents in high-density markets like New York City, according to the GAO and USDA investigations. For the average SNAP amount of $187 (FY2024), an EBT holder would receive $112 in exchange for $187 worth of groceries. So the government is paying the full price, and the fraudulent person is pocketing the difference.
Card Skimming is another large issue in the payments world, exploding 300% between 2020 and 2023. The scammers install card readers at gas stations and grocery stores that capture your card number and PIN, thereby draining your account and cloning your card. Over $70 Million was stolen across 9 states during 2022.
Retailer Fraud is also a major problem, with a 5-year period that busted over 3,500 retailers for trafficking, according to the USDA. The store owners buy the EBT benefits for cash, ring up fake transactions, and get reimbursed by the government. With a little digging, some multi-state trafficking rings have accumulated over $20 Million before being caught.
The largest issue is overpayment, which costs US taxpayers $4 billion annually. In 2023, the payment accuracy rate was 89%, with the remaining 11% mostly due to overpayments at a 9.26% clip. Overpayments occur when people don’t report their income change immediately, so the state doesn’t find out for 6 to 18 months on average.
The burden between recipients and states is outlandish. To apply for SNAP, 15 pages of documents must be submitted, including pay stubs, class schedules, and scholarships received for students, and other government documents. According to the USDA, States have 30 days to process your application, but they offer an expedited 7-day service for very low-income applicants or those who have exhausted their resources.
SNAP is not the only issue; it’s the beginning of this bureaucratic journey, especially targeting low-income Americans. It’s proven across programs shown in this order flow:
Administrative costs are shifting from the traditional 50% share to a modeled 75% beginning in October 2026, adding an average of $67 million in annual costs per state, according to Nebraska Public Media.
According to the USDA, 1 in 4 eligible people don’t even apply for SNAP due to the shame and negative stigma. $50 Billion in unclaimed benefits is lost annually (# of People * Average Benefits). This is ultimately just a design flaw in America’s public assistance system.
To top it all off, the opacity of SNAP spending data leaves unanswered questions about the program’s effectiveness. What is being bought, viewing real-time fraud patterns, etc? These are all unanswered questions due to detection 6–18 months post-offense. Nothing is real-time with the government, but that’s a much larger fish to fry.
With blockchain integration, the info is now universally verified. The programs would query the blockchain directly, and no custom integrations would be needed.
This is a brief comparison of the proposed solution:
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The main advantages of this modular design are as follows:
Phase 1: Eligibility Tokens — This solves bureaucratic redundancy by proving eligibility once
Phase 2: Receipt Proofs — This solves fraud detection without surveillance
Phase 3: Full Tokenization — This solves the inefficiency of systems, cost reduction, and instant settlement
Before tokenizing the payments and benefits, proof of eligibility is required. When a state verifies someone for any benefit, but in this example, it’s SNAP, they issue a digital credential, or NFT, proving the eligibility status.
A soulbound ERC-1155 token will be used for this process. A soulbound token, or SBT, is a non-transferable, publicly verifiable digital token that represents a user’s on-chain identity. ERC-1155 is the ETH standard for managing multiple token types under a single smart contract, which will be useful for various credentials in the same wallet. The standard would be modified to prevent any transfers or sales, with its sole purpose to represent identity. This step is the first of many to prevent a secondary market for eligibility credentials.
The token will contain a Program Type, Expiration Date, and Issued Authority (from whichever state). These will not contain any personal information like name, SSN, or income.
The SNAP application and approval process remain unchanged. Upon approval, applicants are presented with two benefit access options.
If the digital option is selected, the user verifies their phone number, downloads the official application, and receives on-chain instant verification. For current SNAP recipients, an SMS message will notify them that benefits are going digital and that they must set up a wallet.
The technical integration begins with a bespoke smart contract variable for minting credentials, which only authorized state issuers can call. When approved for benefits, the state calls the function with the wallet address you provided, thereby creating an expiring token. To verify, a function that anyone can call (including Government Agencies) takes the wallet address and program type and returns true or false. Also, a revoke function within the smart contract that the issuing state can call if circumstances and eligibility change. This all occurs on Polygon PoS, with a $0.001 per-transaction fee and a 2-second settlement time.
The L2 will use ZK Proofs uniquely. To prove eligibility for some program, the wallet will generate a cryptographic proof off-chain, typically on your phone. The verifiability proof claims you hold a valid credential without revealing private data.
The actual wallet design will be split into two vastly different clusters. With the majority having phones, a noncustodial wallet where users control their private keys will be provided, with a twist. The wallet will use biometric authentication, such as fingerprint or face ID. To recover said wallet, 3–5 contacts will be designated, and any 2 or 3 of them can sign it with a multisig.
For the roughly 15% of SNAP recipients who don’t have smartphones or who don’t want to manage their own wallets, a custodial option is available in which the state holds the keys in a hardware security module. These users receive a physical NFC card they can tap at checkout, and it’s linked to a blockchain address managed by the state.
Weeks later, when applying for a Lifeline internet discount, the recipient clicks “verify eligibility” on the provider’s website, scans a QR code with the wallet application, and a ZK proof confirms eligibility instantly without revealing personal income data. The discount is applied in seconds, eliminating the need for duplicate applications, document uploads, and waiting periods. The same credential can be used for reduced transit fares, college application fee waivers, utility deposit waivers, and housing priority verification, with eligibility confirmed digitally and in real time. By reducing verification friction across programs, this model increases benefit uptake, lowers administrative burden, and ensures that eligible households receive support that currently goes unclaimed.
Phase 1 is distributing wallets to the 41.6 million people on SNAP. The state departments will be taught how to mint tokens, manage multi-sig wallets, and integrate legacy databases with smart contracts, which will be instrumental for Phases 2 and 3.
Say goodbye to an estimated 832 million hours wasted on redundant verification and the estimated 18–25% of eligible Americans who never claim benefits they qualify for, which comes out to $50 Billion.
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With noncustodial wallets built for Phase 1, Cryptographic receipts and Proof of Transaction are next. Phase 2 addresses fraud detection without compromising privacy by tokenizing transaction attestations rather than the transaction itself. Each SNAP purchase’s hash, generated from the receipt, will be recorded on-chain, with the itemized data remaining encrypted off-chain, creating an immutable audit trail, enabling large-scale pattern detection, and preserving individuals’ privacy.
This is first explained with 3 Primary APIs
When a SNAP recipient purchases goods, the merchant’s POS system transmits the itemized transaction to an off-chain validator, which queries the APIs in parallel. Once complete, it will calculate the eligible subtotal and generate a structured receipt containing the merchant ID, timestamp, eligible amount, item count, and attestation.
The storage will be split into on-chain and off-chain components (an encrypted database). On-chain, a SHA-256 hash of receipt metadata will be committed to Polygon. The transaction cost for this would be $0.01.
Off-chain, the full itemized receipt, including the UPC codes, prices, and product descriptions, will be encrypted using the AES-256-GCM, stored either in an IPFS or state-managed database. Added GCM mode to further ensure data confidentiality. Also, this encryption standard is considered quantum-resistant with 128-bit security. The US government adopted AES in 2001, making it the global encryption standard, so the transfer is relatively native. The Federal Privacy Law requires SNAP purchase data to be protected from unauthorized access, hence the upgraded encryption standard.
To link the hash and encryption, Merkle proofs will be used. The SHA-256 hash will be computed and recorded on-chain when the receipt is stored off-chain. The tamper detection would come into play if a modification of the off-chain receipt occurs, as it won’t match the on-chain record. If patterns occur, an investigator will be granted access to decrypt the receipts through the smart contract. Also, recipients and merchants can access their own transaction history and key shares, which are part of Shamir Secret Sharing, for their transactions.
A brief smart contract example looks like this:
function recordReceipt(
bytes32 receiptHash,
address merchant,
uint256 snapAmount,
uint16 itemCount,
bytes32 merkleRoot
) external onlyValidator {
receipts[receiptHash] = Receipt({
merchant: merchant,
timestamp: block.timestamp,
snapAmount: snapAmount,
itemCount: itemCount,
merkleRoot: merkleRoot,
validated: true
});
emit ReceiptRecorded(receiptHash, merchant, snapAmount);
}
function requestDecryption(
bytes32 receiptHash,
string caseNumber,
address[] requesterShares
) external returns (uint256 requestId) {
require(requesterShares.length >= 3, “Requires 3-of-5 approval”);
// Multi-sig authorization logic
// Logs access attempt on-chain
// Returns encrypted key shares if approved
}
Current fraud systems rely on quarterly audits of 90–180-day-old data, excluding the 6–18-month detection lag, resulting in unrecoverable funds.
To combat this, a fraud detection engine will be connected via WebSocket to an ETH node. The system will profile baseline behavior for each 41.6 million wallets alongside the merchants, for tx frequency, order size, geographic patterns, etc. A disparity or pattern interruption will trigger a red flag, thus calling in the investigator.
With the latest fraud-proof reduction, here are the updated economics, including an estimated reduction rate.
The Fed Reserve Payment Study looked at the Fraud Rate: Pre-2010 (0.18% of transaction volume) vs. Post-2015 with real-time monitoring (0.06%), a 67% decrease. So, delaying to real-time achieves around a 65% reduction in fraud.
The current loss of Trafficking is $1.7B, whereas the theoretical reduction is 100 percent. Due to the long rollout, fraud reduction will be positioned at 85%.
For retailer fraud, pattern monitoring reduces detection time from 9 months to days. Healthcare and tax fraud systems, which recently moved to predictive analytics, saw reductions of 70–80%. To use a conservative midpoint, a 75% reduction will be used.
Overpayments are due to delayed income reporting, but Phase 2 doesn’t have a major role in this fraud, with a slight 5% reduction from automated cross-checks.
With current fraud equalling $6.4 Billion, Phase 2 will save ~ $2 Billion, lowering fraud from 5.7% to 3.9%.
The current constraints facing SNAP research are binary, where you can violate privacy by accessing the itemized data or accept the complete blindness of data. Introducing ZK Proofs enables selective disclosure at scale.
A query could be as follows: “For each California ZIP code, what percent of SNAP spending goes to produce, dairy, protein, processed foods?” The query then executes as a zkSNARK computation, enabling one party to prove to another that they know a secret without revealing it.
The circuit then proves that:
An example output would be: ZIP 91208: 23% Protein, ZIP 90210: 67% Processed Foods.
Phase 2 scales Phase 1’s infrastructure to a large scale, where recipients already have wallets and merchants query the blockchain to verify eligibility. The tech adds 2–3 seconds of latency.
The merchants now have a single canonical source, rather than the 50 bespoke state systems. This audit layer also proves that validators are executing their checks correctly, where Merkle proofs reveal what data the validator used.
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Onto Phase 3, which tokenizes SNAP dollars as stablecoins and includes NFC tap-to-pay. The benefits become USDC-backed tokens that settle instantly, while smart contracts enforce all eligibility rules.
For the overall blockchain architecture, a forked Polygon zkEVM will be used. Having this over building a rollup from scratch will deliver the tech in under 1 year with a $5–10m cost. The permissioned fork will enable SNAP-specific governance while still adhering to the blockchain trilemma. If deployed to Polygon, they would control the sequencer, the USDA would have no governance input, and it would delete the sole purpose of a “decentralized” procedure.
The Polygon zkEVM inherits:
The customizations added to the zkEVM are:
3. Consensus Mechanism i. Tendermint BFT (Sequencer Consensus) ii. ⅔ approval to submit finalization batch to ETH iii. Operates up to ⅓ offline nodes
4. Geographic Restrictions
The roles of Ethereum and Polygon are as follows:
Ethereum will provide transaction finality and immutability. The batch proofs every 10–60 minutes, depending on transaction volume. The zkproof verification, state root (Merkle root of L2 account balances), and batch metadata will all be stored on ETH. The cost comes to ~$50- $ 200 per batch, amortized over thousands of transactions.
The zkEVM fork will execute all SNAP transactions focused on privacy and speed, with a block time and finality of 3 seconds. The transaction cost is $0.001-$0.01, but will be state-subsidized. The throughput of the zkEVM fork will range from 5,000 to 10,000 TPS, well above the current average of 200 TPS for SNAP transactions.
The total stablecoin market has $324 Billion in total supply, according to Artemis, with USDC at $80 Billion, or 25% market share. USDT has a higher market share of $188 Billion, but isn’t as well-suited for government integration. The USDC issuer, Circle Internet Group Inc, is US-based and operates under regulatory oversight, including monthly attestations from Grant Thornton that verify its 1:1 dollar peg.
The operational model will look like this:
States convert SNAP funds to USDC through Circle Institutional accounts -> mint SNAP tokens backed 1:1 by the USDC holdings -> distribute to recipients -> merchants receive SNAP tokens, which convert to USDC.
An idea was to have the government send USDC directly to recipients, but that would give up policy control over how SNAP funds are used.
The NFC payment experience will be enabled by a non-custodial smartphone wallet. The transaction will be identical to the Apple Pay UX. The phone’s secure element will generate a cryptographically signed payment request by using the SNAP recipient’s private key. The cryptographic signature will then include the transaction amount, a nonce to prevent repeat attacks, and a timestamp. The phone will then display (ex, “SNAP Purchase: $67.41”) with FaceID. Using biometrics, the recipient will authenticate the transaction, then transmit it to the terminal and forward it to the merchant’s RPC connection to the rollup. The transaction then proceeds to the sequencer network, where the block leader validates the signature, verifies the sender address, and queries the smart contract to complete validation.
Once validated, the merchant will have $67.41 USDC in their wallet just 3 seconds after the consumer taps NFC.
Currently, 62% of Americans used contactless payments in 2024 (Fed Reserve Payment Study), with 80%+ under age 40.
The updated blockchain system for SNAP will facilitate offline transactions, whereas transactions in the current system will fail in areas with spotty cell coverage. The NFC transactions can operate where the phone stores the recent balance and eligibility status in local storage. The terminal will sign the transaction and queue it on-chain once connectivity resumes, with the signature preventing double-spending.
Phase 2 left card-skimming losses at over $200 million annually. The transition to NFC crypto payments in Phase 3 eliminates skimming attacks. The smart contract will verify the signature and ensure that the nonce hasn’t been used before. With no transmitted static data, NFC tap-to-pay significantly reduces the attack surface, unless skimmers relay signals from the victim’s pockets to terminals elsewhere. An estimated 95% reduction in Phase 3 card skimming is estimated to save over $190 million annually.
The introduction of Phase 3’s smart contracts will enable automated monthly income verification from the IRS, quarterly reporting, tax filings, state employment records, and SSA benefits data. The current system catches 40% of overpayments at 6 months, with an average overpayment of $600, and 35% at 12 months. In Phase 3, 70% of overpayments are caught within 1 month, and 8% within 6 months. By calculating a weighted average, the overpayment is reduced from $705 to $178 per person, representing a 75% reduction.
Over 85% of US retailers have NFC terminals for contactless payments, and a simple software update will enable over 250,000 SNAP-authorized merchants to process transactions.
For small merchants, who make up 72% of merchants, the POS will retrieve on-chain data from vendor-operated RPC nodes. The vendors will update the terminal to enable merchants to accept SNAP payments. For large chains that occupy 60% of SNAP volume, there will be custom integration RPC nodes with sub-50ms latency, direct API connections with local caching, and real-time item validation. The projected cost is a maximum of $100k per chain, but it solves the $25 million in working capital tied up due to delays.
The US Government will need to provide $500 grants to merchants to incentivize integration, totaling over $125 million in upfront costs. With current midpoint transaction fees totaling $625 Million and on-chain fees at $2.5M, the savings will be $622.5 Million annually, paid back within 3 months.
The value proposition for merchants involves instant USDC settlement, chargeback elimination, and cryptographic dispute resolution.
Cross-state portability is another beneficiary of the blockchain-based system, in which wallets serve as geographic-agnostic identifiers. The tokens exist as balances within the smart contract jurisdictions, so moving states doesn’t change addresses.
function validatePayment(address recipient, address merchant) internal view returns (bool) {
for (uint i = 0; i < 50; i++) {
if (eligibilityTokens[recipient][stateID[i]].isValid &&
eligibilityTokens[recipient][stateID[i]].expiration > block.timestamp) {
return merchantRegistry.isAuthorized(merchant);
}
}
return false;
}
The annual savings calculated are as follows:
Combined, the US government is saving $7.1B, which is 6.3% of the current $113B budget.
The time returned to the consumer saves Americans an estimated 832M hours in Phase 1 and 100M hours in Phase 3, totaling 932M hours annually. With stigma reduction from NFC privacy and automated verification, an increase of 5–8 million people are eligible to claim benefits, costing $10–15B annually in newly claimed benefits.
Phase 1 of the model contributes:
Phase 2:
The states will possess blockchain node operations, smart contract interactions, multisig management, trained staff, vendor relationships, and emergency procedures. The electronic records that are recognized under ESIGN and UETA indicate that blockchain-based credentials may satisfy legal document requirements when aligned with statutory standards. Implementation would need to preserve administrative due process protections and account for the privacy treatment of wallet addresses as pseudonymous identifiers under existing federal and state regulations.
The blockchain framework portrayed in this paper is based on estimates rather than observed outcomes. The figures used, such as fraud savings, were based on assumptions and comparisons with similar systems in recent years and were therefore presented as directional values rather than exact figures.
Digital literacy and trust in new systems, which lead to onboarding complexity, will be barriers to stimulating adoption among recipient merchants and state agencies. Real-time monitoring and automated verification systems have shown success in payments and healthcare, and thus translate to SNAP at the current level. The cost estimates for infrastructure deployment are approximate as well and will ultimately depend on execution, vendor selection, and rollout scale.
The savings that the blockchain-based model will total $7.14 Billion (~6.3% of the budget). The 11.3% waste rate becomes 3% under blockchain. The 932 million hours will be returned annually to American citizens, leaving the burden on the lower-middle class. Smart contract automation will eliminate the entire verification process woes via cryptographic eligibility tokens, which require zero recipient time. Real-time fraud detection shifts its focus from punishment to prevention, slashing the 6–18-month window to mere seconds. The ethical improvement states: protecting vulnerable recipients from victimization rather than punishing post-victimization.
Current government regulations prevent itemized access and the disclosure of nutritional impact. Zero-knowledge circuits enable the aggregation of statistics without individual access, making privacy violations technically impossible and enabling an evidence-based policy for the first time in SNAP history.
The $50 billion in unclaimed benefits, targeting 25% of eligible people, represents how policy failure is equal to fraud losses. Reducing SNAP stigma (NFC Privacy), application simplification (auto-verify), and cross-program benefit discovery address the root causes of the system. A participation hike of 10% (75%-85%) will represent an additional 5 million people receiving assistance, accounting for $10 Billion newly claimed benefits flowing to those disproportionately benefiting from accessibility improvements.
The implementation process of the revised SNAP program will work like this:
Phase 1 Pilot: 3–5 states are selected for demographic diversity, with each state targeting 5–10k recipients to validate wallet distribution, time savings, and adoption rates. The Federal USDA innovation waivers enable the state pilots under the Section 22 authority for program improvements, approved within 90–120 days. It targets expanding to 35–40 states by 2028, covering over 30 million recipients.
Phase 2 Expansion (2028–2030): Pilots, post Phase 1 graduation, will target large chains like Walmart and Safeway first. Federal grants will cover 75% of the integration costs in year 1, then shift to 0% in year 4 once acceptance meets the SNAP authorization requirement. POS vendors receive $5–10 million in development grants to fund their module creation, targeting a distribution to the remaining 180k small vendors in 2029–2031.
Phase 3 Rollout (2031 -2033): The 2028 Farm Bill, which is currently being curated, will authorize USDA blockchain implementation, appropriating $2.5B over 5 years. The Polygon zkEVM customization costs $5–10 million, with an estimated 12-month development phase followed by a 6-month pilot with 100k recipients validating its architecture. The zkEVM is targeting 20 states for a full tokenization process by 2033.
SNAP framework extends to the 150M+ Americans and the $2.8T federal benefit budget.
A unified infrastructure creates network effects impossible under siloed systems. The single wallet holds credentials to multiple programs, states share eligibility infrastructure, and the fraud detection identifies the cross-program schemes. The interoperability breakthrough addresses a fundamental American safety net failure: 50 independent state systems, separate benefit program infrastructure, and repeated poverty-proof requirements. Fragmented eligibility systems across federal and state programs create substantial administrative inefficiencies, requiring recipients to repeatedly verify the same information across agencies.
During the ETHGlobal Cannes hackathon, my teammate, Drew Manley, and I implemented a functional prototype of this system using a different set of production-ready protocols to validate key components of the proposed architecture. Worldcoin, Hedera, and Arc were integrated to simulate identity verification, eligibility credentialing, and payment execution.
Worldcoin was used for initial human verification via World ID. Following verification, users submitted income documentation, which was processed into a zero-knowledge proof attesting that eligibility thresholds were met without revealing raw financial data. Upon successful verification, a non-transferable eligibility credential was issued as an NFT on Hedera, serving as a reusable proof of eligibility for other government programs, such as Medicaid.
Finally, transactions were simulated using Arc, leveraging Circle’s USDC infrastructure to model programmable benefit distribution and constrained spending. This implementation demonstrates the practical feasibility of combining identity verification, privacy-preserving eligibility, and tokenized payments within a unified flow.
This prototype differs from the full architecture proposed in this paper, which utilizes a permissioned Polygon zkEVM, and instead prioritizes rapid development and composability using existing infrastructure. The project was awarded top 3 in the World ID track for best use of World ID 4.0.
This paper presents a 3-phase blockchain implementation framework addressing the systemic failures of the United States Government, specifically in the SNAP sector. Phase 1 introduces the soulbound ERC-1155 tokens, which eliminate an estimated 832 million hours of redundant verification and address the 18–25% of eligible Americans who forgo benefits entirely, by distributing wallets to 41.6 million recipients. Phase 2 installs cryptographic receipt proofs using the SHA-256 hashing and AES-256-GCM encryption to achieve $2 Billion in annual fraud reduction. This occurs through a real-time pattern detection, which enables privacy-preserving nutritional research via zkProofs on Ethereum. Phase 3 presents full tokenization of the SNAP process, where SNAP dollars are USDC-backed stablecoins with NFC functionality on a permissioned Polygon zkEVM fork operated by a consortium of 50 state nodes, 5 USDA nodes, and 3 tech operators, leading to $7.1 Billion in annual savings. This framework provides a viable pathway to modernizing the American safety net infrastructure of $2.8 Trillion.
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