A framework for the on-chain carbon market
How different value pools are emerging within regenerative finance
At the intersection of #climate and #crypto is an emerging market known as regenerative finance (or #ReFi for short). If you’re in climate tech or carbon markets, this post is a quick explainer
Before getting into it - I’m sharing this to start a conversation and to meet others interested in the topic. Over the past year and a half, I've been working on and contributing to a number of different projects in #DeFi and #web3. This use case of the technology, in particular, is most exciting to me because it's now demonstrating that it can help solve some of society's most pressing problems.
So what is ReFi?
At its core, ReFi is about using blockchain as a tech enabler to solve sustainability challenges. To date, this has largely focused on efforts to scale the voluntary carbon market (see Taskforce on Scaling Voluntary Carbon Markets 2021 blueprint report for more info). These challenges generally involve transparency, liquidity, and accessibility, which are largely caused by market fragmentation and the OTC-nature of carbon purchase deals. But ReFi also extends to problems facing carbon project developers (namely access to financing), individual consumers who offset (specifically project and price transparency) and other areas beyond the VCM entirely.
Why is it important?
Carbon credits remain one of the most important tools to mobilize capital towards mitigating climate change, and creating large-scale, liquid and transparent markets is necessary accelerate the shift.
What’s the graphic?
The graphic above shows a simplified framework of the different value pools emerging in the rapidly evolving on-chain carbon market (a subset of ReFi). It shows how projects are divided between the “layers” of infrastructure, data, applications and assets, and it includes brief descriptions of each value pool, alongside some of the key projects involved.