Where Roads Can't Reach, Blockchain Drones Just Might Travel

A metal frame with four small and two large propellers – carrying a container the size of a refrigerator – rises into the air with a roar, hovering above an empty road amidst snowy fields.

The video was shot on the airfield near the Russian city of Kazan, which is located to the south-east of Moscow, and the machine is a SKYF drone, designed by a team of Russian aviation engineers.

According to its makers, the drone can carry up to 880 pounds, travel as far as 220 miles and work up to 8 hours. And everything that happens to these drones is going to be recorded on the project's own blockchain, SKYFchain.

The SKYF team is trying to crack into a rapidly growing ecosystem, with PwC valuing the emerging global market for drones at over $127 billion in 2016. As of today, drones can only carry small objects, but the SKYF team aims to open a totally new market for heavy-duty cargo drones.

The idea is that they'll serve multiple purposes, such as delivering large amounts of cargo, fighting fires and spraying insecticides and fertilizers on agricultural lands.

SKYF is a decidedly Russian project. The drones are being produced domestically by OKB Aviareshenia Ltd., a subsidiary of British entity ARDN Technologies. Both entities were founded by the same team of engineers and tech entrepreneurs: Aleksander Timofeev and Ilya Rodin – managing partners of the FPI venture fund – engineers Dmitry Arsentyev, Marat Sabirov and Nail Zinnurov, and others.

To financially support the project, the team is holding an initial coin offering (ICO). In February, Skyfdrones Services OU, a company registered in Estonia by Alexander Timofeev, registered the token sale with the U.S. Securities and Exchange Commission under the Form D (Rule 506(c)) exemption, declaring a goal to raise $30 million.

Recently, this plan was adjusted – thus far, the project has managed to raise around $6 million, and they plan to raise some $500,000 more before the end of the ICO. Timofeev told CoinDesk that 45 percent of the funds will be spent on R&D.

Trusted delivery

According to Ilya Rodin, SKYF's GR manager, the use of blockchain in this context is aimed at creating a trust layer between stakeholders, including public and private sector interests.

"We need a blockchain to create trust between the counterparts: the banks, leasing and insurance companies, drone manufacturers and users, government agencies, licensing bodies, self-regulating organizations, and so on," Rodin told CoinDesk.

The idea is that the data being stored will encompass various pieces of information about the drones. This includes information about what licenses the manufacturers possess, the drones' flight paths, their performance and data on the people operating them.

"Drones are a new thing, banks don't know how to evaluate them and calculate interest rates for them, how to monitor their use," added Olga Budnik, a PR director of ARDN. "So they would rather deny a loan or a leasing agreement than take a risk. And we give them a tool to follow the entire life of a drone."

The idea for the startup came about in 2014, when Dmitry Arsentyev was trying to create a flying motorbike – but in the end, he wound up working on an industrial drone with Sabirov and Zinnurov. Soon after, they got investment and support from FPI back in 2014, Inc. magazine wrote.

"Initially, the guys had a prototype of a self-piloting flying taxi," Alexander Timofeev explained. "We realized that the system was new and viable, but we convinced them to transform it into an unmanned cargo platform."

Timofeev believes that drone delivery will be in demand in the areas with bad road infrastructure. This is especially the case in places like northern Russia and the banks of large Siberian rivers, where bridges are far apart from one another and getting from one side to the other using road vehicles means miles of extra driving.

Putting drones to work

Even though things are in the early stage, the startup is pushing ahead with its ambitious plans for its blockchain-connected fleet.

At the heart of the project is the token, which the team says will serve a key role in managing the fleet.

"From the start of SKYFchain the SKYF drone autopilot will require authorization in the SKYFchain to lift off," the project's white paper states.

ARDN has manufactured three drones so far, but the plan is that, by 2021, there will be more than 1100 SKYF drones operating worldwide. Looking farther, the aim is for other manufacturers of air-borne, sea-borne, and ground-borne cargo drones to join the SKYFchain network.

And within that time, the project's backers hope to see as many as 12.5 million transactions made on their purpose-built blockchain.

What's more, company has already secured partnerships with Vietnamese port ITC, a Chinese delivery company ZTO Express and a number of Russian entities, including agricultural, delivery and oil and gas companies, as well as the Department of Transportation of the Far East region of Khabarovsk, ARDN says.

The parties involved have signed preliminary agreements to test the SKYF drones for possible applications in their businesses.

Drone image via SKYFchain website