On the retail side, carbon labelling is a standard approach to informing customers of their carbon footprint before they purchase online, on airline tickets, or in stores. Lune[xciii] has an API that exposes CO2 emissions calculations to customers, and Carbonis has a carbon label solution. A digital currency linked to the physical assets of nature and renewable energy will create digital asset value while removing regenerative finance carbon from the atmosphere. This by definition is a limited supply store of value circulating widely in a secure registry. Cryptocurrencies originally did not have underlying assets that guarantee their values but now Stablecoins exist, pegged to fiat currency or gold. Carbon credits have intrinsic value and cryptocurrency traders have entered the carbon credit market.

Empowering Your Financial Future with Defiway

Protocols like Toucan, Flowcarbon and Nori are working to build the Web3 carbon market, each with slightly different approaches. What they share in common are providing https://www.xcritical.com/ openly verifiable, transparent, and liquid carbon credits that resolve the inefficiencies in today’s markets, potentially incentivizing tokenized carbon credits in many different contexts. At a time when companies and individuals are highly motivated to take action to combat climate change, the opacity of current carbon markets reduces the tangible action companies can take to offset their carbon emissions.

plant-based NFTs: Pioneering Carbon Removal through Art and Technology

It is all connected to our modern civilization having its very foundation built upon a financial system that takes more than can be replenished. There’s room for many more investors in this space, as the demand for patientcapital deployed to optimize both financial return and impact outstrips supply. Dive in to the 8-week transformational journey re-imaging our economic and financial systems in service to life for 30 hours of your life. Join the interest list to be the first to know when enrollment re-opens for the program. This program requires the completion of two online courses, Investment for a Regenerative Economy and Money & Banking for a Regenerative Economy.

• It uses decentralized finance (DeFi) and blockchain technology to assist in reversing the damaging effects of industrialization, along with systemic financial imbalances.
• It is deeply rooted in the theories of regenerative economics and encourages individuals to generate income by working on and funding public good projects.
• Not only that, but blockchain also removes the potential for duplicity and improves the transparency of carbon credits—a problem that plagues the carbon markets.
• Toucan’s Carbon Bridge connects conventional carbon credit registries with an open, blockchain-based meta-registry, the Open Climate Registry.
• As the VCM grows demand for risk transfer solutions, third-party services, structured products, and capital are required.
• Regenerative Finance can open the door for you to build more sustainable and ecological businesses.
• MRV describes the entire procedure that climate projects go through to measure the amount of CO2e removed from the atmosphere and report that to an accredited third party to verify or reject.

Quick comparison — DeFi and TradFi (or “finance as we know it”)

In today’s rapidly changing world, the intersection of technology, finance, and environmental sustainability is becoming increasingly significant. The concept of Regenerative Finance (ReFi) emerges as a revolutionary approach to addressing systemic issues like climate change and income inequality through innovative financial systems. This article delves into the comprehensive landscape of ReFi, exploring its definitions, trends, challenges, and future opportunities, as presented in “The State of ReFi” report for Q1 2024.

Although it may seem like a new buzzword, regenerative economy has roots that can be traced back to the early 20th century. Eventually, the concept grew from an idea to an actual framework for banking institutions. BanklessDAO enables people to take ownership of their finances through cryptocurrency, as well as aiming to accelerate decentralised media, art and other areas that have traditionally been stifled by ‘gatekeeping’. The open nature of DAOs and the position of members as key stakeholders based on their token holdings means that investment opportunities are not a closed shop, and everyone can feel like they’re doing their bit for causes that they care deeply about.

The same planetary boundaries that constrain the economy with limits to material expansion also imply limits to investment since investment fuels growth. This is something no economic system in the history of civilization has ever before had to contemplate. How much and where large economic actors invest have critical implications for collective global security and, consequently, must become a central concern of global governance. The overall goal is to shift the global economy from being degenerative or sustainable to being regenerative so that shared value can be created. Part of this shift involves shifting from endless accumulation and throwaway culture to a circular economy.

Using Web2 infrastructure, it’s difficult to accurately measure how the carbon is offset for the money being paid. There have been accusations of ‘phantom’ tokens that don’t actually affect any change. Ultimately, it is an attempt to redefine how firms and individuals relate to finance and develop a self-regenerating, sustainable system that doesn’t rely on scarcity or exploitation to create value. Regenerative finance can also help preserve cultural heritage artifacts and historical records by using blockchain to store permanent records. Non-fungible tokens (NFTs) can be used to create verifiable and immutable records on the blockchain for these artifacts, making them an unchangeable part of history.

In our interconnected world, businesses and organizations who don’t take a holistic view of the larger system they comprise can be more fragile due to compounding, and unforeseen shocks. These shocks often come from the neglected parts of the system each entity comprises. ReFi aims to use web3 technology and decentralized coordination to help solve these issues and build new incentive structures. One of the significant advantages of ReFi in carbon markets is the increased transparency and accountability brought by the likes of blockchain technology. Using blockchain via ReFi enhances the traceability and transparency of carbon credits, thereby strengthening the integrity and trustworthiness of the carbon markets. There is also the value add of tokenization, which simplifies the tracking and trading of carbon credits, making the carbon markets more accessible and efficient.

Audits on NBS can be sporadic due to lack of resources, leading to errors and omissions. By running dMRV, errors can be detected or avoided with Internet of Things (IoT) data collection. MRV describes the entire procedure that climate projects go through to measure the amount of CO2e removed from the atmosphere and report that to an accredited third party to verify or reject. For carbon shares, a verified report results in adjustment of the CO2e value per share.

This cuts out the middlemen, lowers the cost of transactions, and makes it easier to get sustainable projects off the ground. Energy-efficiency and energy management systems are used by thousands of companies to better track energy consumption (and thus carbon emissions). ESG reporting tools like brightest.io are using Web2 tools to digitalize existing sustainability standards and facilitate data collection and decision-making. ESG ratings like MSCI, Sustainalytics, EcoVadis, and B Corp rely extensive self-reporting and human sense-making to evaluate the ESG credentials of companies and award them some form of recognition. For example, ReFi components could enable systems in which governance is not monopolized but inclusive.

In order to create appropriate credit supply, landowners will be able to apply to register their land as biodiversity gain sites if they meet certain criteria, and will be able to directly extract value from ecosystem preservation and improvement in this way. There are already examples of biodiversity projects in England, such as the Ilford Estate Biodiversity Project, which aim to combine landscape and habitat restoration (generating BNG units) and maintain use for food production. EthicHub is a crowdfunding platform which connects investors and unbanked small farmholders (mainly in South America) allowing them to access finance and also sell their crops (predominantly coffee) to markets worldwide.

Moreover, blockchain technology has the capacity to create verifiable social incentives for communities to benefit the society around them through digital ownership certificates built with non-fungible token (NFT) technology. If ReFi is correctly implemented and widely adopted, the world would see adequate funding of public goods, ergo mitigating the detrimental effects of the tragedy of the commons. When it comes to regenerative agriculture, environmentally friendly resources, and sustainable energy, innovation grows with ReFi. It influences entrepreneurs and corporations to work for solutions that embrace its guiding principles. The creation of more environmentally friendly and sustainable methods and products can be influenced by this creative attitude, which can change how entire industries work.

Smart contracts could be built into these NFTs so that the original creator stands to make continuous income upon each resale. A potentially under-reported aspect of ReFi is the possibilities that Web3 unlocks for the enfranchisement of indigenous communities around the world. KLIMA token holders benefit from rewards from the KlimaDAO just by virtue of their token holdings when others buy into the organisation. There is then an incentive to invest and hold tokens, which in turn helps to reduce carbon dioxide in the atmosphere – a pure manifestation of ReFi in action.

The rise of Real World Assets signifies a crucial step in merging traditional finance with decentralized technologies. The introduction of schemes like BNG aim to drive more sustainable land use by requiring an increased valuation to be given to nature during development and planning decision-making processes. Demand for credits is expected to create enhanced investment in credit generating projects and so we expect ReFi to play its part here. EthicHub provides a decentralised finance (DeFi) system which connects the lender (investor) and borrower (farmer) without an intermediary.

Tokenization also allows for the fractional ownership of carbon credits, enabling smaller investors to participate in the market, thus ReFi makes carbon markets more inclusive as well. There is so much potential that ReFi brings to the forefront in the fight against climate change, especially when it comes to tokenization of carbon credits and carbon markets. Carbon markets play a vital role in combating climate change by setting caps on greenhouse gas emissions and allowing the trading of emission permits, either in regulated or voluntary settings. ReFi has established itself as a viable approach to addressing climate change and income inequality, with real-world impact and innovative financial solutions. The journey ahead involves refining impact verification, integrating with existing technologies, and enhancing coordination within and beyond the ReFi space.

Several new companies are leveraging lidar, satellite imagery, and drones to achieve MRV at lightning speeds and lower cost; Perennial Earth is one company that is scaling up MRV for carbon soils. Imagine that—a way forward to simultaneously remedy the planet and advance the economy. We have two dichotomies to examine humanity’s relationship with the environment’s finite resources—Man vs. Man and Nature vs. Man. And no, this isn’t another one of those “slap a blockchain tag on it and raise money” ideas—the actual execution here is fascinating. In Regenerative Finance challenges arise in both technological aspects and biodiversity methodologies. These methodologies are often intricate and ecosystem-specific, posing potential complications.