OPTIMIZATION OF CHARITABLE DONATION TRANSPARENCY MECHANISMS USING SMART CONTRACT TECHNOLOGY

Abstract

The article provides a comprehensive study of mechanisms for increasing the transparency of charitable activities using distributed ledger technologies. The relevance of the work is determined by the rapid growth of the charity sector in Ukraine and the need to overcome the trust crisis caused by cases of misappropriation of funds. Technical shortcomings of traditional centralized platforms were identified, specifically the vulnerability of relational databases to manipulation of transaction records. The transition to the «algorithmic trust» paradigm, where transparency is guaranteed by immutable program code, is justified. A conceptual model of an information system built on a hybrid architecture is proposed. It combines traditional web technologies for managing non-critical data (interfaces, fund profiles) with a financial core on the Ethereum network. The choice of the Ethereum ecosystem is justified by its high reliability and the Solidity language’s powerful capabilities for implementing complex financial algorithms. The conditional escrow mechanism implemented in the smart contract logic is the system’s key instrument. A developed sequence diagram is described that models the donation lifecycle: from locking assets in the contract balance to the step-by-step release of funds after confirming the completion of specific project milestones. The software structure of the smart contract, including the donate, verifyAndReleaseFunds, and refund functions, is analyzed in detail. The automatic refund function is considered a tool for protecting donor rights if the fund fails to meet its obligations. Significant attention is paid to cybersecurity issues: the use of access modifiers and the Checks-Effects- Interactions pattern to protect against Reentrancy attacks. To solve the problem of storing reporting documentation, integration with the decentralized IPFS system is proposed. The article describes the mechanism for recording unique file hashes (CIDs) on the blockchain, ensuring public accountability without overloading the network. The designed model allows each donor to track a donation’s path from their wallet to the final beneficiary, based on mathematically proven facts.