From REA to hREA: A Journey into Decentralized Economic Systems

Jul 25, 2025

After completing the Holochain Dev Camp (March 2023), Sacha joined the Sensorica lab in Montreal, contributing to research and development in decentralized resource planning (hREA) and collaborative ecosystems. Now actively involved in the hAppenings.community with the Requests & Offers HC/MVP, he is committed to building the next generation of P2P marketplaces with Holochain.

In a world grappling with the limits of centralized control and outdated accounting, a new set of tools is emerging. These frameworks promise to reshape how we model, manage, and understand economic activity in a more decentralized, transparent, and holistic way. This article takes you on an explanatory journey through four key innovations: REA (Resources, Events, Agents) accounting, ValueFlows, Holochain, and hREA.

We’ll start with the foundational concepts of REA accounting, see how ValueFlows expands its potential, understand the unique role of Holochain as a decentralized platform, and finally, witness how hREA weaves them all together into a powerful toolkit for next-generation economic coordination.

1. Back to Basics: What is REA Accounting?

REA (Resources, Events, Agents) is a conceptual model developed by William E. McCarthy starting in 1982 to revolutionize accounting for the digital age. Instead of the abstract debits and credits of traditional double-entry bookkeeping, REA focuses on the tangible economic activities that drive a business. It has since become a cornerstone of modern Accounting Information Systems (AIS) and influenced international standards like ISO 15944-4.

The Core Trio: Resources, Events, Agents

The REA model is elegantly simple, built on three core components:

Resources: Valuable economic entities. This includes tangible assets like inventory and cash, but also services or intangible assets like intellectual property.
Events: Economic activities that create, transform, or consume resources. Think of sales, purchases, production runs, or service deliveries.
Agents: The people or organizations participating in events. These can be customers, suppliers, employees, or entire companies.

How REA Works: A Simple Sale

Imagine a customer buying a book from your bookstore. In traditional accounting, you’d record debits and credits. In REA, you model the reality of the event:

Agents: The Customer and the Bookstore (your company).
Resources: The Book (inventory) and the Cash (payment).
Event: The Sale transaction itself, which links everything together. The Sale event decreases the Book resource and increases the Cash resource. The Customer is the receiving agent for the book, and the Bookstore is the receiving agent for the cash.

This creates a rich, semantic representation of business activities, effectively forming an “ontology” of the business. It eliminates obscure accounting artifacts and ties records directly to real-world phenomena.

Traditional Accounting vs hREA Real World Agreements

Benefits of REA

Intuitive: It mirrors how people naturally think about business operations.
Flexible: It can model highly complex and varied business processes far beyond simple sales.
Digitally Native: It was designed from the ground up for databases, making data storage and querying incredibly efficient.

2. Leveling Up: How ValueFlows Enhances REA

ValueFlows is not a replacement for REA, but a powerful extension. It’s a standardized vocabulary and specification built upon the REA ontology, designed to model economic flows within complex, networked environments like supply chains, circular economies, and community ecosystems.

Key Improvements Over REA

ValueFlows turbocharges the REA model in several critical ways:

Comprehensive Resource Representation: ValueFlows expands the definition of “resource” to explicitly include goods, services, money, knowledge, energy, and even ecological factors like CO2, nitrogen, or atrazine (an herbicide). This makes it a versatile tool for any value system.
A Network-First Perspective: Basic REA often focuses on the activities of a single agent (one company). Both ValueFlows and modern REA include the concept of a “collaboration space,” allowing accounting for entire networks. You can track resource flows across a whole supply chain, within a local community, or even through a global commons.
Ecological and Social Accounting: ValueFlows is designed to track more than just profit. It can meticulously record environmental impacts (like water usage, soil health metrics, or waste reduction) and social contributions, making it ideal for sustainability and regeneration-focused initiatives.
Input-Process-Output (IPO) Pattern: It formalizes the modeling of transformation processes. A Processtakes Resource inputs, transforms them, and produces Resource outputs (e.g., raw materials → production → finished goods). This provides a granular view of any value chain.
A Multi-Level Structure: ValueFlows adopts McCarthy’s REA multi-level organization of economic information into three layers:
1. Knowledge Level: Defines the “rules of the game”—classifications, policies, and standard processes that a network agrees upon.
2. Plan Level: Captures future intentions—offers, requests, schedules, and commitments.
3. Observation Level: Records what actually happened—the concrete economic events, as they occur.

With ValueFlows, accounting becomes a real-time log of economic reality, capable of generating both standard financial reports and rich, non-standard analyses like supply chain traceability or ecological impact assessments.

3. The Decentralized Foundation: What is Holochain?

Holochain is an open-source framework for building truly peer-to-peer applications. It offers a compelling alternative to blockchain for creating decentralized systems, especially those that need to scale.

Agent-Centric by Design

Unlike blockchain’s data-centric model (where everyone shares one massive, global ledger), Holochain is agent-centric. Each user runs their own instance of an application on their device, operating under shared rules called DNA (Distributed Network Application). They have their own personal “chain” or ledger, giving them full control and ownership of their data, while the shared DNA ensures they can coordinate effectively as an organization or community. (Editor’s Note: It’s possible to run hApps using a web browser via Holo Hosting for those who don’t wish to download the applications to their device.)

Data is shared with others on a need-to-know basis using a Distributed Hash Table (DHT)—a technology similar to what powers BitTorrent. This combination of individual autonomy with shared organizational rules means there are no centralized servers and no need for every participant to validate every transaction across the entire network, while still maintaining coherent collective coordination.

Holochain vs. Blockchain

Holochain and Blockchain: Complementary, Not Competitive

While often compared, Holochain and blockchain are better viewed as complementary technologies designed for different purposes. This stems from their foundational architectural difference: one is data-centric, the other is agent-centric.

Data-Centric Architecture (Blockchain): The system revolves around a single, canonical dataset—the ledger. All participants collectively maintain and agree upon the state of this data. This architecture naturally creates a one-to-many interaction pattern where the central ledger serves multiple participants. The system operates more like a state machine—rigid and deterministic—which is perfect for establishing global consensus and providing an immutable source of truth for objective facts, like asset ownership. It acts as a digital notary.
Agent-Centric Architecture (Holochain): The system revolves around the agents (users) and their individual perspectives. Each agent maintains their own local source of truth and shares data selectively. What’s crucial is that agents share the same rules (DNA) while maintaining individual autonomy—this combination enables many-to-many socio-economic interactions where agents can interact directly with each other while operating under agreed-upon organizational protocols. This shared DNA is what makes building coherent organizations and communities possible, as it ensures coordination without centralization. The agent-centric approach is inherently more flexible, allowing for rich contextual information about each interaction, while data-centric systems are more state-machine-like and rigid in their operations. This provides local autonomy within collective coordination and is built for scalable, nuanced organizational structures where individual agency and privacy are key.

These two models are not mutually exclusive; they solve different problems and can be powerfully combined. An application can be primarily agent-centric for its day-to-day operations—leveraging Holochain’s scalability, flexibility, and contextual richness—while using a data-centric blockchain as a trust anchor for high-value assets or identity verification (like DIDs). For instance, a complex manufacturing process tracked in real-time on a Holochain app could settle its final multi-party payment via a smart contract on a secure blockchain, getting the best of both worlds.

4. The Grand Synthesis: What is hREA?

This brings us to hREA (Holochain Resource-Event-Agent). hREA is the fusion of the powerful economic grammar of ValueFlows with the scalable, decentralized architecture of Holochain. It is a software toolkit that implements the full ValueFlows specification as a modular library for Holochain applications.

hREA provides a ready-made, decentralized platform for economic coordination that leverages Holochain’s agent-centric architecture. By encoding economic coordination rules as shared DNA, hREA enables organizations, communities, and commons to coordinate their economic activities through many-to-many interactions while maintaining individual agency and collective coherence. This creates transparent, peer-to-peer economic systems that can scale from small cooperatives to large networks.

How hREA Works: The Technical Details

hREA provides developers with a powerful, out-of-the-box backend system for economic coordination. Here’s how it works in practice, based on its official documentation and resources:

GraphQL API: The primary way to interact with hREA is through its extensive GraphQL API. This provides a flexible and efficient way to query and mutate economic data. The API is designed for both browser and Node.js JavaScript projects, as detailed in its developer documentation.
Unified Implementation: hREA implements the ValueFlows specification as a comprehensive DNA (Holochain application), providing a complete economic coordination system out of the box.
Bring-Your-Own-UI: Because hREA handles the backend logic and data integrity, it allows developers to build any user interface they need. This separation of concerns means teams can focus on creating the best user experience for their specific application, whether it’s a complex supply chain dashboard or a simple community mutual credit app.
Current Status: hREA is under active development, with the current release being v0.3.2. Its API is stable and being used to build the first generation of applications. The project is open-source under an Apache 2.0 license. Check the official website for the latest updates.

hREA Use Cases

The combination of ValueFlows’ rich economic grammar and Holochain’s agent-centric architecture makes hREA a versatile tool for organizational coordination. Here are a couple of examples.

Use Case 1: A Community Food Cooperative

Imagine a local food co-op where all participants share the same organizational DNA while maintaining individual autonomy. Using an application built with hREA:

Farmers perform the Harvest (process) of Produce (resource), logging the associated events.
Distributors commit to a Transport (plan) and later log the Delivery (event).
Consumers place Orders (plan) and complete their Purchase (typically involving two events: payment and receipt).

The shared DNA ensures all participants follow the same coordination rules while enabling many-to-many interactions throughout the network. The system seamlessly tracks the flow of food and payments across the entire cooperative without centralized control. Each agent maintains their own records while contributing to the collective intelligence of the organization. It can generate real-time inventory reports for the co-op, traceability reports for consumers, and fair payment distributions for farmers. Furthermore, it could track ecological data—such as water usage for irrigation, soil health indicators from the farm, or waste produced during distribution—adding another layer of verifiable value that all network participants can access and validate.

Use Case 2: Mapping Cardano Smart Contracts

hREA can serve as a powerful off-chain “economic lens” for on-chain activities. Consider Cardano’s eUTXO (Extended Unspent Transaction Output) model. In this model, transactions consume inputs (UTXOs) and create new outputs (UTXOs), each carrying value and data. This is fundamentally an accounting system.

We can use hREA to map this on-chain reality into a rich, queryable database:

Resources: The assets (ADA, native tokens, NFTs) held within a Cardano UTXO, as well as the wallets themselves. The datum attached to a UTXO provides rich descriptive data for the resource.
Agents: The entities (people or organizations) that control wallet addresses and sign transactions.
Events: A Cardano transaction is a transfer event that consumes input resources and produces output resources.
Agreements: Smart contracts on Cardano can represent agreements between agents, defining the rules for resource transformation.

By mirroring this data in hREA, developers can create applications that offer powerful analytics and insights that are difficult to achieve on-chain. For example, one could easily trace the entire lifecycle of a specific NFT across dozens of transactions or analyze the complex flow of liquidity through a DeFi protocol over months—all without having to run expensive and slow queries on the blockchain itself.

Current Status

hREA is currently in beta. Its core is stable and usable, with its development roadmap toward a v1.0 release to support widespread adoption.

Conclusion

REA, ValueFlows, Holochain, and hREA are not just isolated technologies; they are a composable stack for building a new paradigm of organizational economic coordination.

REA gives us the foundational grammar for modeling economic reality.
ValueFlows expands that grammar for networked, holistic value systems.
Holochain provides the agent-centric substrate with shared DNA that enables coordination without centralization.
hREA brings it all together into a practical toolkit for many-to-many economic coordination.

As these technologies mature, they offer a tangible path toward creating economic systems that are more transparent, equitable, and sustainable—systems where individual agency coexists with collective coordination through shared organizational rules. They provide the tools to move beyond centralized control and rigid state-machines, enabling flexible, contextual, peer-to-peer economic coordination that can scale from small cooperatives to global networks. It may not be the Zenith of Computational Divinity, but it’s a darn good start toward truly decentralized economic organization.

Useful Links

🌟 Latest News from hAppenings.community

Holochain Advocates and Developer Group Testers Wanted!

Last Chance! Our Alpha Test, on the Holo Hosting Network, begins July 29th and 30th! We would love to have a few more Holochain Advocates and Developer Groups (who are working on a hApp) to join the test. It’s a 3-month test, with a commitment of about 5 hours per month, which includes a Zoom (or individual) meeting monthly! Who wants to play? Apply here!

If you’re new to “What’s hAppening” and the hAppenings Community, WELCOME! We invite you to explore our website, hAppenings.community, our Holochain Project Database (searchable), and we would love if you would join our Discord Server!

Also, if you’ve you’d like to see a type of retrospective of Holochain projects, check out the back issues of this newsletter. It’s rather amazing! And we always appreciate new and paid subscribers (who help keep the lights on!) Thanks, Anita Halcyon & Sam Turner!

🌟 Latest Official News and Events from Holochain, Holo & Unyt

Event: Holochain Horizon - Fireside Chat with Eric Harris-Braun and Madelynn Martiniere, Wednesday, July 30th at 15:00 UTC

Join us for the inaugural Holochain Horizon - a series of online conversations to update the community on the state of Holochain, news from the ecosystem, and the strategic direction of the Foundation. Our first session is a fireside chat between Holochain Foundation Executive Director Eric Harris-Braun and Madelynn Martiniere, the Foundation's newest councilmember and Director of Ecosystem. Together, they'll share more about the vision for the Holochain Foundation, updates on the state of Holochain development, and ways to get more deeply involved.
Whether you're a longtime community member or new to Holochain, this session will provide valuable insights into where we're headed and how we're working to advance the Holochain ecosystem.

Video: Holochain Roadmap walkthrough with Eric Harris-Braun

Following last week's launch of our new, transparent development roadmap, we are pleased to share a detailed video walkthrough led by our Executive Director, Eric Harris-Braun.

In this video, Eric explains how the roadmap provides data-driven insights into our project velocity, release schedules, and future planning. This is a valuable resource for developers, stakeholders, and anyone interested in our organizational processes and the future of Holochain.

Blog: Holo Q2 Review: Laying the Foundation for Decentralized Hosting

We're pleased to share our Q2 in Review, highlighting significant foundational deliveries for Holo Hosting. This past quarter was marked by the successful launch of two crucial components designed to enhance self-service capabilities and accessibility for our growing community.
Key Q2 achievements include the release of:
The Cloud Console: Empowering users with essential account and API key management.
The Public Deployment API: Enabling programmatic interaction with the Holo network.
These releases have collectively achieved a critical milestone: self-service onboarding. Users can now independently sign up and deploy their applications, significantly streamlining the user experience.
This foundational work sets the stage for our intensified development efforts in Q3, focusing on top priorities like static site hosting and the broader migration of HoloPorts to the Allograph network. This progress is vital for future product development, testing, and scaling production workloads.
Read the full review to understand how these foundational elements are shaping the future of decentralized hosting.

Join Holochain.org’s Developer Portal: https://developer.holochain.org/

For a complete listing of all of the Holo Ltd and Holochain Foundation events go to their ‘Upcoming Events’ page!

🌟Latest News from the Holoverse:

Article: Reimagining AI for Community Justice - Arkology Studios

Something's been brewing with Arkology Studio and SDI. (Slum Dwellers International) ..
What if the most sophisticated AI technologies could serve the most marginalised communities without extracting their knowledge or compromising their autonomy?
Know Your City Academy (KYCA) creates "Living Libraries"—community knowledge bases that integrate qualitative "warm data" (oral histories, images, voice notes) with structured datasets, enabling dynamic peer learning whilst ensuring communities retain complete sovereignty over their knowledge.
For 28 years, SDI. (Slum Dwellers International) has connected 5,000+ settlements across 18 countries. Communities constantly innovate solutions—but these innovations rarely spread beyond their origins.
Check out the rest of the article on LinkedIn!

Update & Video: On Our Wrists: How the Day Device is Taking Shape, Cirdia

From concept to wrist—Cirdia’s day device has entered a new phase.
This behind-the-build video shares how we moved from renderings to a full physical prototype. We're now testing for comfort, weight, and wearability in real-world conditions.
In parallel, our privacy-first architecture remains intact: no cloud syncs, no ad trackers, no compromises.
We’re not in a rush. We’re in rhythm.

🌟Other Related News & Events

Event: DWeb Meetup — Decentralized Tech to Resist Authoritarianism - July 30th, 10am PT - Facilitated by DWeb Senior organizer, mai ishikawa sutton

Hey there! Our virtual meetups have been on pause for a few months there but we're BACK with our monthly events — our next one is next week on Wednesday July 30 at 10am PT / 1pm ET / 19 CET.
What DWeb technologies exist today that people can use to self-organize through mutualistic, peer-to-peer power?
Come hear about the tools and approaches people are using to resist authoritarianism. We’ll demonstrate tools in use today around the world that combat censorship, promote privacy, and strengthen p2p movements.

Event: DWeb Camp Cascadia, August 8-10, 2025

Last year, the decision was made to decentralize DWeb Camp, and now, the first-ever DWeb Camp in Canada is happening! The amazing team from the DWeb Vancouver Node has been hard at work to launch this lovely and incredible opportunity to gather together.
DWeb Camp Cascadia is a cozy, collaborative gathering for the DWeb community taking place August 8–10 at the Salt Spring Island Farmers’ Institute — a beautiful community venue in British Columbia with open fields, rustic charm, and room to camp under the stars.
Enjoy three days of mesh networks, shared meals, workshops, conversations, music jams and more! Come relax, connect, and contribute to the spirit of decentralized, community-led experimentation. Whether you're deeply involved in DWeb or simply curious, we welcome you to come to Camp!

Get Tickets

Article: Visa Was Just the Beginning by Will Ruddick

Visa was just the beginning: Dee Hock built a global trust network among banks.

Now it’s our turn ... to build trust networks among communities.
Commitment pooling lets us share food, care, skills & time ... just like banks share credit (but better).

Not just money. Not just banks.
Trust is for everyone!

Podcast: Shaping AI for Good: Prosocial Hybrid Intelligence for a Thriving Future

In this episode humanitarian leader Cornelia Walther and evolutionary biologist David Sloan Wilson explore how we can build AI systems that truly serve people and the planet.
They dive into the concept of Prosocial AI, technology that’s designed to support human connection, equity, and environmental sustainability — and the emerging field of hybrid intelligence, where human empathy and creativity team up with AI’s speed and precision.

Event: ProSocial Action Lab - A Transformative Journey in Collaborative Skills and Social Impact. - August 2025, 10 weeks

This course brings together groups from around the world to learn, research, and enhance their collaborative skills. This is an opportunity for your team to join others dedicated to deepening relationships, finding shared purpose, and improving group effectiveness.

Survey: Help inform All Tech is Human’s upcoming Responsible Tech Guide by responding to this Survey!

Do you work in Responsible Tech?! Help us map the landscape of Responsible Tech careers!
The Responsible Tech field is rapidly evolving, but there's a significant gap between how these roles are described in job postings and what practitioners do day-to-day.
This 20-minute survey will inform our upcoming Responsible Tech Guide and additional reports. This is being led by Deb Donig, our Siegel Family Endowment Research Fellow.
Your experience matters, and we need your insights to help build a more accurate picture of this work and its challenges. This survey will create the first comprehensive snapshot of skills gaps, organizational challenges, and evolving needs in Responsible Tech work, providing data that can inform better hiring practices, training programs, and career development across our field.

Event & Podcast Taping: Responsible Tech Mixer + Live Podcast Taping in NYC, All Tech is Human, August 18, 2025

As we mentioned in a recent newsletter, community is resilience—so let’s come together. We hope you can join us on Monday, August 18th, for a casual Responsible Tech Mixer + live podcast taping of Ethical Machines with Reid Blackman. Reid, author of the book with the same name, will be in conversation with All Tech Is Human’s David Ryan Polgar.
Bonus: Rose Guingrich, a Princeton University GradFUTURES Social Impact Fellow with All Tech Is Human, will be there to discuss the report she is leading, AI Companions and Chatbots, that will be released in late July. If that is a topic area you are interested in, let us know through our form here.
Our Responsible Tech Mixers fill up fast, so sign up below if you can make it!
Join us in NYC on August 18th

Resource: Emerging Technology Directory

A note from Anita: I ran into this resource recently, and wanted to let you all know…just in case you would like to list YOUR projects here! Check it out!

Do You Have News & Updates?

If you are a team member of a Holochain Project and would like to share your latest news and updates, please…

If you have a question, request, or simply a desire to connect more about hAppenings.community please click the link above!

A guest post by

Sacha Pignot

Writing about P2P economies, Open Value Networks, Holochain, Mutual Credit, and digital commons. Decentralization isn’t just technology—it’s a movement.

"What's hAppening?" Newsletter

Discussion about this post