Incentivizing Climate Action Via Regenerative Cryptoeconomics - TOKEN2049 London 2022

good afternoon everybody my name is Drew I am representing Cleveland today Cleveland Dao is a decentralized autonomous organization with hundreds of contributors from around the world and tens of thousands of community members that we affectionately call our climates the mission of climadau is to accelerate the delivery of climate Finance to high impact sustainability projects and we do that by interfacing with something called the voluntary carbon Market now the voluntary carbon Market involves the trading of carbon credits and carbon as a commodity is relatively new in fact the market itself has only been around for about 20 years and in that time there's certainly been growing pains regarding the supply and the monitoring of carbon projects but one thing is abundantly clear if we actually have a chance of limiting global warming to do degrees Celsius or less we need to dramatically increase the financing to projects which both mitigate carbon emissions but also remove them from the atmosphere so there's a number of technologies that we then interface with in this market on the mitigation side you have things as simple as a renewable energy installation that displaces fossil fuel you also have projects that actually protect existing biomass and forests and this is actually one of the most scalable and high impact ways that we can actually fight climate change because over 11 of anthropogenic emissions come from deforestation and land degradation so carbon offsets have a huge role to play in that domain on the other side you have carbon removal itself and again it's as simple as planting a tree but increasingly we are seeing technological removals that actually you know sequester greenhouse gases from the atmosphere and then store them underground so to put things simply to achieve Net Zero we need to scale the finance that is going to these types of projects and the disintermediation of the market is one key piece of this and something that web3 strongly enables because we want ultimately more financing to actually go to the projects themselves now the market is still quite small in crypto terms last year was about 1.2 billion USD but it's on track to scale by 15x by 2030 and grow by more than 50x by mid-century so we believe there's a great opportunity to bring this entire climate Finance space onto the blockchain and we're not alone here in fact even the World Bank noted the the strong benefits of blockchain technology and being able to track assets and provide transparency and ultimately empower the market but there's some other benefits as well related to the D5 space that we see and that's that there's this extremely strong culture of innovation and you have a lot of interoperable applications that ultimately lead to a lot of new products and services so there's a few key um distinctions in the market um that we need to make and one of them is well hey blockchain technology maybe you shouldn't be using this that's bad for the environment and we get this a lot when we talk with you know traditional Market players and it's key that we have Nuance here of course the energy consumption of Highly computationally intensive proof-of-work blockchains could be some cause for alarm but actually where climadau is located on the polygon blockchain it's a proof of stake Network and its energy consumption is equivalent to just a few hundred laptops so you know there's not really a problem there now in regards to the off chain or the traditional carbon market and what's now emerging in the web 3 space there's a few few key differences here uh one of them is in regard to sourcing time so if I'm a traditional company in the market and I want to buy carbon offsets I may need to reach out to countless Brokers and Traders I'm gonna have to send out emails and get spreadsheets back that show availability and the entire process itself could actually take weeks to sometimes months and by the time I'm ready to actually buy a project it might have been sold to someone else in contrast to this what we've built with our infrastructure on chain right now allows individuals or corporates to actually source and see what's on the market uh and then retire carbon offsets all within the span of about 30 seconds so we've taken a process that involved many many actors and way too much time in a very inefficient Manner and then condense that down into something that can be done that can be done seamlessly another important piece is on the fragmentation itself so you have a lot of different actors in the carbon Market it's typified by a lot of OTC opaque trading and for what exchanges do exist in the carbon Market they're often gated they're siled and the information really doesn't make it outside of their borders so there's not a lot of information in the market for demand side participants like corporates in contrast the on-chain market right now is you know full of different deeply liquid carbon pools there's Interpol Arbitrage happening and the price and the volume information for these assets is available in near real time and then that brings us to the transparency piece itself so again in the off chain Market you have a lot of information asymmetry but on the on-chain space because of the tools that clementow has helped build and the fact that we can monitor what's happening in the blockchain in real time we're really bringing unprecedented insights into the Dynamics of the on-chain carbon Market so how does this Market work in practice well it all starts with something called a carbon Bridge so you have different types of Registries that actually issue the carbon credits themselves after they've been verified by Third parties what we need to do is then take that information batch it and bring it on the blockchain and this information is generally stored as a non-fungible token it includes key criteria about the projects it could be the Vintage the technology type the geography of the project Etc these nfts are then fractionalized into erc20 tokens and each of those represents one metric ton of carbon dioxide equivalent that's either been mitigated or removed and that's the standard unit of measure in the industry now one of the unique things though about web3 is that you can then take those erc20 tokens that represent these individual projects and you can actually pull them together to build more deeply liquid pools and this is in a sense commodifying the carbon based on certain characteristics one example of this would be Moss's mc02 token so this token itself represents an index of projects that come from nature-based projects in the Amazon region other examples would be the BCT token this includes a lot of projects that might be nature base but also renewable and it's a very deeply liquid market for BCT there's over 18 million tons that are available on the blockchain another key piece of what we do is that we've developed this bonding mechanism whereby we can actually work to increase the liquidity of these assets on the blockchain so by bonding people are able to actually submit the carbon tokens themselves or the liquidity tokens that represent a carbon trading pair to the clean medow Treasury and in uh and then in response to that we can issue a carbon-backed currency in return and this is how we've been able to actually build up such deep liquidity for carbon assets on the blockchain it's also an important way for there to be a price signal for the project developers themselves that they can see these different carbon pools that are available see the pricing and then understand what they would be able to do to actually commercialize their project on the blockchain there and of course then it builds diversity for these assets themselves now moving on to Data Insights I pointed out the transparency aspect of the blockchain and this is really one of the most powerful Paradigm shifts for the carbon Market with what we've been doing so we developed something called the state of digital carbon dashboard tokenized carbon this dashboard actually showcases the different assets that exist on the blockchain these different carbon pools the volumes available the pricing and even the geographic distribution of the projects and one thing you'll note here is that there's actually been over 25 million tons of carbon that have been tokenized thus far and to put things in perspective to you all that's equivalent to 38 million round-trip flights from New York City to London and actually the on-chain carbon Market as it stands today represents the single greatest source of liquidity in the carbon Market both off chain and on-chain one of the unique things that you can do with the carbon dashboard is that you can actually dive into individual carbon pools so in this example here we have the nature-based offset from C3 and you can see the individual projects that actually make up that pool and you could trace those all the way back to the carbon registry itself so to reiterate being able to trace the carbon assets back between the different players like we can right now in the blockchain is something that is simply not possible in the traditional carbon Market and so essentially What's Happening Here is that we're moving from what used to be you know very retrospective survey-based way of understanding carbon market dynamics to being able to in near real time understand the volume and the pricing information and the General Dynamics of what's happening for the on-chain carbon market and of course all this information that's available allows us to build some really awesome Integrations so at the base of all this is a tool called the retirement aggregator the retirement term refers to when one is claiming the environmental benefit of a carbon offset and when you do that it can no longer be traded to anyone else now this is really important because we can imagine that as a company if I claim the environmental benefit from a carbon offset I wouldn't want another company to claim the same benefit and so the retirement Tool uh basically enables this functionality through something that's akin to a token burning mechanism and then it also allows them to actually clock in that information into the retirement such as you know who's the company that's doing this why are they retiring the carbon and so on and so this retirement aggregator handles that and it also handles all of the routing to the different digital carbon assets that exist in various decentralized exchanges and you can see on the right hand side here that we also track all of that so if you're a company or you're an individual and you want to track those different retirements you have all that information there of course it's all stored on the blockchain and we make it easily accessible this is the interface for that and you'll note that you can pay with usdc you can also pay with the carbon tokens themselves or the climate token and as of last week you can even pay with a credit card so one of the things that we're really working on is to make the interfacing for this Market as simple as possible because to really scale this we need to move Beyond just the D5 space itself right we want to transform the market and bring these players onto this infrastructure so that we can really scale things now one of the the coolest Integrations that we've been able to deploy in the last few months is with sushi Swap this is called The Green Feed Tech stack and it enables something called programmatic offsetting so through smart contracts you can essentially have an automated way of offsetting carbon credits you know depending on certain criteria maybe you want to only support nature-based projects or Renewables Etc and based on certain information that would trigger that retirement you can then actually have all that automated in the background so with sushi swap what we did is that people can opt in to actually offset the emissions associated with all their swaps and as you can imagine this is something that then you could integrate into other types of fintech applications that exist in web3 and I should note this also involves a great partnership with chain link to be able to automate the batches of these retirements at the end of each day so moving beyond web 3 though this technology has been deployed by our partners Confluence Analytics they developed something called the climate optimized direct index so what they do is they develop different types of investment portfolios that generally have an ESG Focus to them and their tool is actually able to automatically compute the emissions associated with those investment portfolios now when you combine that with the information that we have for digital carbon you're able to actually programmatically offset the emissions associated with those investments in near real time and this is something that they're starting to Target different funding managers fund managers with as well as platforms such as Robinhood where you can then have a green portfolio like this and again this is all enabled by digital carbon so what's the impact that we have achieved thus far well we had our protocol birthday uh on October 18th this past month uh for one year and um in that time we've accomplished quite a bit there's over 18 million tons of carbon that are actually in the protocol's treasury itself much of this is just the native digital carbon tokens themselves and also a lot of the liquidity tokens we have over 70 000 holders and we've helped importantly over 100 organizations both in the web 3 space but also in the web 2 space to achieve their sustainability goals and that's utilizing the tooling that we've helped develop for on-chain carbon and in addition we've published that you know state of the tokenized carbon dashboard which is really a step change in the availability of data for the carbon market and I think one of the strongest cases for moving this entire industry onto the blockchain now I'd like to leave you with two uh further thoughts on decentralization and the way ahead for our protocol the first is an aspect of us being a Dao so as a Dao we're building public infrastructure and we want to do so in a way that there's you know there's fairness that the actors themselves that are involved in the system have a say and have governance rights and one of the things that we've had happen especially in the past like two or three months when we talked to traditional Market players is they say you know who actually owns the protocol and who actually makes decisions and has you know governance over this and we say well it's the token holders themselves and so where we're moving with this is that the users of the infrastructure itself become the owners and the decision makers of the protocol right and this is a paradigm shift for the carbon Market itself and it's something I think is a very web free phenomenon finally uh there's thoughts on well what does this mean for our financial infrastructure so I'm sure I'm not alone in this room when considering that a greater share of our economic activity is actually going to make its way onto the blockchain concurrently we have a lot of developments and you know such as with Confluence analytics and being able to automate a missions analysis and when you combine this with digital carbon essentially what we can do is we can start to embed the costs of our you know these negative externalities of our economic activity into the financial fabric that we're utilizing itself and this is something that's enabled by the infrastructure rails that claima has developed as well as digital carbon but importantly it's been enabled through the continued collaboration of different partners in the web 3 space so with that said I'd like to thank you all for this opportunity and I hope to work with many of you here as we build a more sustainable future together thank you