# CircleChain: Tokenizing Products with a Role-based Scheme for a Circular
Economy

Mojtaba Eshghie
KTH Royal Institute of Technology
Stockholm, Sweden
<EMAIL_ADDRESS>
Li Quan
University of Copenhagen
Copenhagen, Denmark
<EMAIL_ADDRESS>
Gustav Andersson Kasche
KTH Royal Institute of Technology
Stockholm, Sweden
<EMAIL_ADDRESS>
Filip Jacobson
KTH Royal Institute of Technology
Stockholm, Sweden
<EMAIL_ADDRESS>
Cosimo Bassi
Algorand Inc.
Trani, Italy
<EMAIL_ADDRESS>
Cyrille Artho
KTH Royal Institute of Technology
Stockholm, Sweden
<EMAIL_ADDRESS>

###### Abstract

In a circular economy, tracking the flow of second-life components for quality
control is critical. Tokenization can enhance the transparency of the flow of
second-life components. However, simple tokenization does not correspond to
real economic models and lacks the ability to finely manage complex business
processes. In particular, existing systems have to take into account the
different roles of the parties in the supply chain. Based on the Algorand
blockchain, we propose a role-based token management scheme, which can achieve
authentication, synthesis, circulation, and reuse of these second-life
components in a trustless environment. The proposed scheme not only achieves
fine-grained and scalable second-life component management, but also enables
on-chain trading, subsidies, and green-bond issuance. Furthermore, we
implemented and performed scalability tests for the proposed architecture on
Algorand blockchain using its smart contracts and Algorand Standard Assets
(ASA). The open-source implementation, tests, along with results are available
on our Github111https://github.com/Kasche153/CircleChain page.

_Keywords_ Smart Contracts $\cdot$ Blockchain $\cdot$ Second-life material
management $\cdot$ Circular Economy

##  1 Introduction

###  1.1 A Case for E-Waste

The total number of electronic devices globally, such as mobile devices, is
currently more than the number of humans on earth and is increasing [1].
Accordingly, the waste generated by discarding these devices is also
staggering. Based on Global E-waste Monitor (GEM) 2020 report, global e-waste
generation is 53.6 Mt or 7.3 kg per capita [2] with an annual growth rate of 2
Mt. Only 17.4% ($9.3$ Mt) is formally documented as collected and recycled.
This shows recycling activities are neither currently sufficient nor keeping
pace with the global e-waste generation increase. Because of the high volume
in their generation and the possibility of collecting, reusing, and
refurbishing them, providing a system that uses a circular economy (section
1.2) for e-waste would be a significant contribution to a sustainable future.
We will use the supply chains of electronic chips as an example from the
e-waste category to demonstrate how our system works.

###  1.2 Circular Economy

Reusing and recycling products and product parts has environmental and socio-
economic benefits. The closed-loop of reuse and recycling that aims to
minimize resource consumption is called circular economy (CE) [3], which
contrasts with the linear supply chain model of taking, making, and disposing
of. Incorporating CE benefits sustainable development while reducing
undesirable consequences of overuse of resources [4, 5]. This is also part of
the United Nations’ 2030 Agenda regarding sustainable development [6].
Although the linear model is deeply standardized in organizations, the need
for more sustainable supply chains demands abandoning it for CE [7].
Currently, only $8.6\%$ of the worldwide economy is circular [8]. According to
the circularity gap report, [9] this number is steady in the 4 recent years.
This shows the need for platforms and solutions that facilitate CE. Based on
previous research on second-life components management (part of CE) reviewed
in Section 1.4, blockchain is one of these CE enablers.

The Covid-19 pandemic caused material and resource shortages in supply chains
[10]. Santosh et al. [11] argue that using a blockchain to manage second-life
components in a circular economy increases supply chain agility and
localization. Localization is known as designing, producing, or delivering
through in-house technology and features. Agility is an organization’s ability
to actively detect and respond to supply chain risks.
We argue that a blockchain-based system for CE needs to be backed by a
corresponding blockchain architecture where the cost and complexity are
proportional in relation to the products or components. In other words, any
blockchain-based solution used to facilitate a circular economy has to be
justifiable based on carbon footprint, cost-per-transaction, and complexity of
its operation.

###  1.3 Tokenization

Tokenization is the process of digitizing any type of asset on a blockchain.
By assigning a token to a product or component, its life cycle can be traced
entirely and transparently. This tracking is _trustless_ in that all the data
storage and computation take place on a shared blockchain without requiring a
centralized authority.

Tokens can be fungible (for stateless components that can be replaced with an
equivalent) or non-fungible (for components or products where provenance or
traceability matters, such as memory chips, artwork, or jewelry). In both
cases, tokens are associated with metadata containing additional information
about them (such as the chip type) and stored off-chain but authenticated by a
hash value stored on the blockchain.

Tokenization increases traceability, thus, making the ownership and pollution
management of the components more accessible. It also makes it possible to
keep a history of the components, which helps obtain information about
products’ composition, ownership, and status. Essentially, we can issue
material passports based on this technology. Specifically, tokenization allows
to trace where they are going for second-life components and if the product
that is working as part of a system is indeed produced in company X and has
performed only Y months. Therefore, after scrapping the original product, its
constituents will not lose their intrinsic value and might be used directly in
other products [12]. In addition, since the reuse of components previously
used in other consumer products (second-life components) is an integral part
of CE, we provide a reference architecture and its implementation on the
Algorand blockchain to be used as a blueprint to implement CE.

###  1.4 Related Work

Research on real-world solutions for handling second-life components has
remained limited to theoretical backgrounds of supply chains, and there is no
functional reference architecture. Most of research is limited to realizing
the potential of blockchain and smart contracts to track and trace the assets
[13, 14, 15]. Bekrar et al. [16] evaluate the opportunities, trends, and
potential uses of the Nexus blockchain [17] in the context of CE by
considering the transportation aspect of CE without proposing neither a
solution nor a design based on smart contracts.

Morrow and Zarrebini [18] explore use cases of tokenization for assets based
on their societal implications. This study emphasizes the pivotal role that
blockchain can play in the sustainability of tires.

Research on waste management via blockchain digitization and governance gives
a perspective on a blockchain-based solution for handling second-life
components. França et al. [19] propose incorporating a blockchain-based green
coins system into an already existing mobile application used to collect and
sell waste and receive points that are convertible to new products in local
stores. Although these works constitute a practical approach to part of the
supply chain management problem we face while studying CE, their research does
not include the architecture or design of a system providing guidelines for
implementation.
The design proposed by Hatzivasilis et al. [20] includes an architecture with
three roles asset operators, asset auditors, and regulators. The counterpart
roles are defined in our system3. However, the asset auditor and regulator are
both defined as authenticators in our system and operators are the same as
users in our system. Furthermore, this work proposes to build the system on
top of the Ethereum blockchain. But, it does not provide an implementation.

Hatzivasilis et al. [21] performed a holistic end-to-end study on the role of
traceability systems in the supply chains of the food sector. They found that
the adaptation of traceability systems has a positive effect on the transition
to a more CE.

Shojaei et al. [22] provide proof-of-concept of a system to enable CE in the
construction sector. They suggest using a permissioned blockchain system
rather than public blockchains.

The most relevant work to the current effort was the blockchain-based supply
chain traceability of COVID-19 [23]. They implemented a supply chain tracing
system using smart contracts on the Ethereum blockchain. Although their design
is product specific, it could be used to solve traceability challenges in
other domains. This study concludes that using smart contracts can reduce
information asymmetry and other inefficiencies in supply chain tracing. The
cost and security evaluation of the system showed that it was feasible as a
real-world application. This study also highlights some limitations to their
system one of them being the throughput of the Ethereum network which is
around tens of transactions per second and limits the scalability of the
system [23]. Another limitation is the time delay of the Ethereum blockchain.
The confirmation time varies from block to block because of the PoW consensus
algorithm.

###  1.5 CircleChain

As suggested in the section 1.4, the possibility of using blockchain-based
architecture for a CE is well-studied. However, there are very few practical
designed systems along with a working implementation that is suitable for
real-world use-cases. Furthermore, the studies that try to provide an
architecture either use obsolete technology or use systems that defeat the
purpose of sustainability. Therefore, first, we gathered a list of
requirements to choose the underlying blockchain system that is presented in
section 2. Next, we designed a reference role-based architecture that complies
with the gathered requirements, and we implemented it on a sustainable
blockchain system. Finally, we tested it in a synthetic scenario to
demonstrate the scalability of our solution for a real-world large-scale
circular economy.

##  2 Tokenized Circular Economy Using Blockchain

We identify the following characteristics required for a blockchain platform
in the context of tokenization of products for CE:

  1. 1.

AFFORDABILITY: This characteristic is with regards to development, deployment,
management, and last but not least transaction cost.

  2. 2.

SUSTAINABILITY: The energy consumption and accordingly carbon footprint of the
platform should be justifiable with the sustainability goals in mind.

  3. 3.

SCALABILITY: The chosen platform should have the capability of handling a
large number of transactions in an increasingly short amount of time.

  4. 4.

SECURITY: Since successful attacks on widely known blockchain platforms are
not an unknown condition [24], the security of a platform that handles
millions of products should be assured.

###  2.1 Algorand

Algorand is a proof-of-stake fast-consensus blockchain platform [25]. Since it
does not work with the concept of miners, the consensus requires a negligible
amount of computation [26]. While there are multiple other blockchain platform
choices for smart contracts, the above-mentioned requirements for a CE are
particularly met with Algorand.

First, each transaction in other blockchain platforms such as Ethereum [27]
costs at least a few dollars. This transaction cost escalates depending on the
logic of the smart contract. Since our design should be useful for different
products ranging from a few dollars (such as electronic chips) to millions of
dollars, we should base our design on a universally feasible platform.
Furthermore, this transaction cost (Gas in Ethereum blockchain) is not
deterministic and it is only possible to estimate it. Second, the carbon
footprint related to each transaction in proof-of-work blockchain platforms
such as Ethereum makes such blockchains a poor platform for CE [28]. Third,
the delay of a transaction in Ethereum is not only considerable but also non-
deterministic and can take from seconds to minutes. Fourth, Algorand supports
ASAs (see Section 2.2) as a Layer-1 primitive, ensuring the same security,
scalability, speed, and costs of the native token (Algo) without referring to
a user-defined token standard (such as ERC-20 or ERC-721 on Ethereum [29, 30])
that introduce complexity or even flaws [31].

###  2.2 Algorand Standard Assets (ASAs)

Algorand Standard Assets (ASAs) are Algorand Layer-1 solutions that represent
stable coins, digital art, securities, etc. [32]. Based on the aforementioned
features of ASAs, it is possible to create both fungible and non-fungible
tokens in only one transaction [33]. In fact, it is possible to create an ASA
using only one goal command as in listing 1.

⬇

1goal asset create \--creator addr \--total 1000 \--unitname uname \--asseturl
"https://path/" \--decimals 0 -d data

Listing 1: Goal command to create an ASA with a total supply of 1000, unit
name of _uname_ and address _addr_

We used ASAs to implement Non-Fungible Tokens (NFT) for chips that are used as
chip passports. Sending and receiving ASA tokens requires a specific process
at which the receiver has to first opt-in to the ASA. Then, the sender will be
able to transfer the asset to the receiver. An opt-in transaction is an asset
transfer with an amount of 0 that can be triggered using the goal command in
listing 2. Notice that both sender and receiver of this transaction are the
receivers of ASA.

⬇

1goal asset send -a 0 \--asset <asset-name> -f <opt-in-account> -t <opt-in-
account> \--creator <asset-creator> -d data

Listing 2: Goal command to opt-in to an ASA

##  3 Role-based Token Management Scheme

Our scheme uses a two-layer architecture for role-based access management. The
tokens are managed as ASAs at the lower layer, while the role-based access
management is taken care of by smart contracts that govern when state and
ownership modifications in the tokens are permitted (see Figure 1).

Our system is designed and implemented around the following roles:

  1. 1.

Authenticator

  2. 2.

Manufacturer

  3. 3.

User

  4. 4.

Recycler

Figure 1: Two-layer architecture for role-based access to tokens Figure 2: The
life cycle of computer chips and their respective blockchain-based tokens in
our system

###  3.1 Example workflow

The second life of chips is an important application scenario for a circular
economy and sustainable development due to the worldwide shortage of chip
production capacity and the opaqueness of the chip reuse market. For this
reason, we demonstrate the token management scheme with the example of chips.

The second life of a chip includes repeated certification, distribution, use,
and finally recycling of products using them. The participants involved
include chip companies, authenticators, computer companies, users, and
authorized recyclers. Different participants have different interests and
authority, so they need to cooperate with the corresponding management
mechanisms and process designs to ensure a fair and transparent system.

In order to accommodate the needs of the actual business process where
multiple parties are involved with different authorities, we propose a role-
based token management scheme.

In Fig. 2, we show the proposed role-based token management scheme by taking
the second-life process of a chip as a simple example. The proposed process is
shown in Fig. 2. Specifically, the whole management mechanism consists of two
parts: physical processes and on-chain operations. Transparent management of
chip flow is achieved through the mapping of on-chain operations and physical
processes. Compared to the primary mapping between physical components (chips)
and tokens, the double-layer token management scheme adds a new token
management layer (smart contract or application) to it, enabling the mapping
of business processes and on-chain operations. In this mechanism, the Non-
Fungible Token (NFT) represents each unique chip, and the smart contract
represents the integrated product. The NFT is not delivered directly to the
customer but flows between authorized organizations, such as authenticators,
computer companies, or authorized recyclers. An NFT can only be issued by
authenticators and released for use or destroyed by authorized recyclers, thus
avoiding the current disorder and opacity of the chip’s second-life market.

When a computer company produces a computer, the NFT is packaged into a smart
contract that defines the roles and permissions of the chip companies,
authenticators, computer companies, customers, and authorized recyclers. The
authenticator is an independent third-party organization with relevant
professional qualifications. This scheme provides a realistic reflection of
the actual business process. For example, only the authenticator can validate
the initial properties of the chip. After delivering the computer to the
customer, the computer company also needs to provide after-sales service to
the customer. Only authorized recyclers have the authority to handle the
chips.

The management of a chip consists of six processes: production, certification,
usage, distribution, and recycling.

  1. 1.

Production: The chip company produces the chip.

  2. 2.

Certification: After validating the design and manufacturing of the chip, the
authenticator issues a corresponding ASA-based NFT certificate for each chip
separately. These NFTs will include various information about the chip, and it
is guaranteed that this information will be tamper-proof. At the same time,
once these NFTs are issued, they will accompany the chip throughout its life
cycle, which means that only chips bound with NFTs are considered to be
authenticated chips.

  3. 3.

Usage: When the computer company purchases these chips, it is also given the
management rights of the corresponding NFT. For each manufactured computer, it
will come with a package that includes the NFTs of all the chips being used.

  4. 4.

Distribution: When a user acquires a computer, the user will be given the
appropriate user rights in the corresponding smart contract. Note that the
computer manufacturer and the chip company also have rights in this contract.

  5. 5.

When a user no longer uses her computer, she can choose to refurbish/recycle
them to give chips and other components a second life by handing over their
computers to authorized recyclers.

  6. 6.

Recycling/Refurbishment: The recycler can dismantle the computer and remove
the user’s privileges from the smart contract, releasing the tied NFTs for
future use. These chips and NFTs can be delivered to computer companies again
or simply destroyed, depending on the condition of the chips.

Our token management scheme is generic and adaptable to a variety of use
cases. Different companies and organizations can define their own token
management functions based on specific business scenarios and business logic
on top of the architecture we provide and still maintain the generality of the
underlying tokens.

###  3.2 Implementation on Algorand

In the double-layer token management scheme, the lower layer manages the
tokens, while the upper layer manages access by different entities. The lower
layer is implemented using ASA-based NFT and the basic information of the
chip, while the smart contract in the upper layer maintains the relationships
and permissions between various entities. The Algorand blockchain provides a
fine-grained token management mechanism. For instance, a computer is bonded to
a Contract Account. Manager Address and Reserve Address will represent who can
manage ASAs and who reserves other ASAs.

The Algorand blockchain provides two ways to implement smart contracts: (1)
Smart Signature and (2) Application (smart contracts). A SmartSig is a
stateless program that can control an Algorand account, based on Transaction
Execution Approval Language(TEAL) logic. It can programmatically
approve/reject transactions based on conditions. A SmartSig can not handle
local state and dynamically change values or access an ASA’s state.
Contrarily, Application is a stateful program that can read and write the
state of the chain, including accounts’ states, ASAs’ states, and global/local
states. An Application is associated to an Account, which can create and
submit transactions.

For example, when there are three ASAs $a,b,c$ of three chips, SmartSig
achieves the recycling process with the following actions:

  1. 1.

SmartSig approves AssetTransfer if and only if is triggered by a known trusted
entity in collaboration with the current Asset Manager.

  2. 2.

SmartSig approves if and only if $a,b,c$ are sent to Asset Manager.

  3. 3.

SmartSig approves if and only if the Product Account is destroyed in the same
call.

In the current work, we use Algorand smart contracts rather than smart
signatures.

###  3.3 Components

One of the options to write the smart contracts (applications) in Algorand is
PyTeal [34]. PyTeal enables writing the smart contract front-end system using
py-algorand-sdk library. Without PyTeal one has to use TEAL which is Algorand
bytecode language. This would make the process of writing smart contract logic
harder for the developers. Besides, the notion of front-end refers to off-
chain components for smart contract management.
Our front-end of implementation consists of creating, compiling, deploying,
and interacting with a smart contract that is the backbone of our system. Each
of the operations is defined using functions in PyTeal in a contract.py
available in our repository.
Listing 3 shows how the smart contract is created, compiled, deployed to the
blockchain, and interacted with.
At line 16 (listing 3) you can see the workflow of the system in Figure 3 is
implemented to initialize, set user, or release operations using a contract
call. Every call to the main application can contain a list of assets in case
the logic requires them based on request parameters.

The complete version of the smart contract implementing the backbone logic of
the architecture as well as utilities written to handle operations is
available in 11footnotemark: 1.

⬇

1algod_client = algod.AlgodClient(algod_token, algod_address)

2creator_private_key = get_private_key_from_mnemonic(user_mnemonic)

3clear_state = clear_state_program()

4approval = approval_program(mnemonic.to_public_key(recycler_mnemonic))

5

6app_id = deploy_new_application(

7 algod_client, creator_private_key, approval, clear_state)

8

9app_add = logic.get_application_address(app_id)

10asset_id = create_asset(creator_public_key=computer_add,
creator_private_key=computer_key,

11 asset_name="CircleToken", unit_name="CT1", algod_client=algod_client,
manager_public_key=computer_add,

12 total_supply=1)

13

14algo_transaction(add=computer_add, key=computer_key,

15 reciver=app_add, amount=1000000, algod_client=algod_client)

16call_contract(app_id=app_id, args="Init", assets=[asset_id],

17 private_key=computer_key, public_key=computer_add)

18send_asset(algod_client=algod_client, asset_id=asset_id,
asset_sender=computer_add,

19 asset_reciver=app_add, sender_private_key=computer_key)

20

21call_contract(app_id=app_id, args="Set user",

22 private_key=computer_key, public_key=computer_add)

23call_contract(app_id=app_id, args="Release",

24 public_key=user_add, private_key=user_key)

25send_asset(algod_client=algod_client, asset_id=asset_id,
asset_reciver=computer_add,

26 asset_sender=app_add, sender_private_key=recycler_key)

Listing 3: Front-end usage of our Algorand smart contract system for second-
life material management Figure 3: Workflow of system parts in CircleChain.
The boxes with blue backgrounds represent roles the system is built around.

##  4 Discussion

###  4.1 Scalability of CircleChain

One of the most important considerations in creating a blockchain-based system
is its scalability. The notion of scalability depends on the context in which
the system is used for. Here, it is important to have a system with high
throughput for managing product tokens.
One potential bottleneck is where the tokens (ASAs) are sent and received.
This is where opt-in operations also happen which we discussed in section 2.2.
Here, it is possible to put as many transactions into API requests and send
them. This will theoretically increase up to the block capacity. In other
words, we will be able to send opt-in transactions since there is no need for
grouping them for atomic execution. The practical maximum transaction per
block in Aglorand is 5000 and a new block is produced every 4.5 seconds.
Therefore, we can assume a throughput of 1000 transactions per second.

###  4.2 Design Choices

####  4.2.1 Algorand vs Other Blockchain Platforms

The main differences between four of the most known blockchain platforms are
demonstrated in table 1.

As also obvious from the table, most of the current blockchain systems in use
do not have a deterministic transaction delay. This makes it hard to
understand the behavior of the application created based on these systems at
scale. For instance, our tests in section 4.3 would not provide deterministic
results if the time between two consecutive blocks in Algorand was not
deterministic.
The other factor is the transaction cost which should be as low as possible so
that building an application for supply chain management systems is
justifiable. This will be of much more importance when the value of the
commodity being handled is not high. In our used example, the electronic
chips, this effect of transaction fee is projected because of the product
value.
An alternative is to use a private deployment of Ethereum or any other
blockchain platform which can be configured to have higher transaction
throughput and redefine the transaction fee manually [35]. However, such an
approach would defeat the purpose of using a blockchain system in the first
place since a permissioned blockchain does not have the same distributedness
that a public blockchain has such as Ethereum main network.
Last but not the least, we need to take into account the environmental impacts
our transactions have. Traditional proof-of-work (PoW) consensus systems are
not environmentally friendly and should be avoided. This along with the
current transaction throughput are the main reasons for not using Ethereum
main network to deploy our application.

Table 1: Comparison of blockchain platforms and their characteristics to be used in a large-scale circular economy.  Platform |  Consensus |  Considerations |  Transaction cost222 The cost of the transaction is reported at the time of writing this paper. |  Throughput333 the throughput is measured in transactions per second (tps), and is defined as the total number of transactions issued by network participants that the the ledger can confirm in a second. |  TX Delay
---|---|---|---|---|---
Algorand [36] |  PoS |  ASAs, PyTeal: Python language binding |  constant $\approx\$0.0005$ |  $\approx 1000~{}tps$ |  4.5 secs
Ethereum [27] |  PoW |  Turing-complete and easy to use language, Vulnerabilities:reentrancy, etc., huge community of developers and experts |  variable, unbounded transaction time. $\approx\$1.78$ |  $\approx 30~{}tps$ |  15 sec - 5 mins
Solana [37] |  PoH |  - |  $\approx\$0.0002$ |  65000 tps |  secs - mins
Avalanche [38] |  Avalanche |  Uses EVM |  $0.00025 |  5000 tps |  2-10 secs

####  4.2.2 NFT vs FT

The proposed architecture can support Non-Fungible Token (NFT) and Fungible
Token (FT) as essential asset representatives, depending on the type of asset.
For example, for chips, each chip is unique and has a unique identification
number. This makes it difficult to tamper with and fits the characteristics of
NFT. In the case of products that each unit is not or does not need to be
represented as unique, FT is suitable. For instance, glass as a building block
of other products might fit with FT tokenization.
Since ASAs act as a template for creating tokens in Algorand, changing the
type of the token is as easy as changing the total parameter in an asset
configuration transaction. It is also possible to add more information to the
token to unit name and asset name parameters based on the token type.

####  4.2.3 Authenticators

A big issue in reusing and recycling products is the quality of products built
with second-hand materials and premature recycling. Our current system and
implementation do not include a procedure to prevent these issues. However, we
included an authenticator role that keeps account of recyclers and can be
effective to tackle mentioned problems. This role can be extended to further
include other features as well.

####  4.2.4 Recyclers

As mentioned earlier, a circular economy is defined by not just recycling, but
also by refurbishing, reconditioning, repairing, and upgrading products or
product parts. This means that the current role with the name recyclers in our
system can in fact have different roles in the real world other than merely
scraping and recycling an otherwise reusable product.

###  4.3 Testing at Scale

As pointed out earlier our current design choice for the type of tokens is NFT
which means for each product (here: chips) a new token will be issued in the
form of Algorand ASA.
To show how this scheme will scale when large batches of tokens are issued for
physical products, we issued batches of token creations and measured the time
it takes for the transactions to be confirmed for all of the tokens in the
batch. In the tests, we ran all token creation transactions from the same
machine, and the creators of all tokens in the batch are the authenticator
role, as it is shown in figure 3.
As the results of this experiment in figure 4 shows, the total time it takes
to create a batch of tokens increases linearly with the size of the batch.
This shows that increasing the scalability of the system by parallelizing the
API calls to the Algorand client for token creation is very effective in
keeping the asset creation time within reasonable bounds.

The environment setup where the scalability test was performed is shown in
table 2. The performed tests are available in our CircleChain Github
repository444https://github.com/Kasche153/CircleChain/tree/main/sandbox/tests.

Figure 4: The time it takes to create a batch of tokens with consecutive API
calls to Algorand Testnet.

###  4.4 Basic Functionality

In our present model as well as implementation the access control mechanisms
that restrict access to the contract in a dynamic way are missing. In other
words, the access control mechanisms currently in place only allow a defined
set of accounts to be used with permissions to create the tokens. This
provides the basic functionality required to operate a circular supply chain
and the more complex functionality will be left for users to implement.

###  4.5 Sustainability Contributions

We identified the following two contributions to the sustainability of supply
chains:

  * •

CircleChain provides a tokenization architecture and implementation that
enables track and tracing of products. This enables recycling in the context
of a circular economy for more sustainable supply chains.

  * •

According to GEM [2] fate of $82.6\%$ of generated waste globally is
uncertain. The architecture of CircleChain can be configured to add reporting
capabilities that integrate information from all issued tokens to determine
the fate of products.

  * •

Providing an authenticator role enables the system to ensure the quality of
products as well as audit the refurbishment, reuse, and recycling of the
recycler role. This helps prevent premature recycling of products.

##  5 Conclusion

We proposed a reference architecture that facilitates the management of
products in the context of a circular economy. Our system is highly scalable
and secure and can be used in real-world applications. Furthermore, we have a
complete open-source implementation available on our Github page
555https://github.com/Kasche153/CircleChain. We also tested the scalability of
the system and demonstrated how well it performed in scenarios where thousands
of tokens are created and managed.

Our system uses a two-layer solution where the lower layer manages the tokens
representing the digital twin of the physical products and their state in
their life cycle, whereas the upper layer manages different entities in
different roles that access the tokens. Using this double-layer approach makes
the whole system less prone to design and implementation flaws since the
system is designed with respect to the capabilities that Algorand Standard
Assets provide, not user-defined tokens with arbitrary capabilities. We have
demonstrated the workflow in the context of producing and reusing chips.

Table 2: Scalability test environment setup Experiment Parameter |  Description
---|---
Test Environment |  Algorand Testnet (3.5.1.stable)
Synchronization |  Fast catchup
Node type |  Normal participant node
OS and hardware |  Windows 11, 16 GB RAM, SSD, Intel Core i7-10700 CPU @ 2.90GHz
SDK |  py-algorand-sdk, asyncio

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