Climate X Crypto. Decentralizing Climate Solutions - Jeremy Epstein

greetings earthlings hello everybody i think we're gonna get started who here's heard uh regenerative finance anybody all right well it's good that's good a few you have and the rest of you i'm gonna blow your minds okay so my name is jeremy i'm the head of fundraising with the open forest protocol i'm very uh honored to be up here telling you all about regenerative finance playing lorax speaking for the trees regenerative finance is about more than just trees so stick with me we're going to go down the refi rabbit hole and you'll come out the other end getting a really good sense of how web 3 might just be the way to save the planet here so we're going to cover what is regenerative finance why do we need it uh what's happening in the space progress to date which has been pretty impressive in a very short period of time and then we're going to dive into a project that's near and dear to my heart that is the open forest protocol so personally i've been in climate my entire career policy and finance and all the things that i've worked over the last decade and a half to try to prevent are getting worse and accelerating in a faster pace i'm not going to lie guys things are looking pretty dim i'm not going to dwell on the depressing ship because you know what that's not where solutions are made let's figure out how do we solve this crisis so as you can see from this graph nation state-led policy solutions for climate seem to be highly effective at doing nothing so why all the agreements and no action particularly when one in four americans now are affected by a climate crisis every single year i live in boulder myself many of my friends lost their homes to a wildfire in december that shouldn't happen and we have climate refugees in my own town governments lack the incentive structure for global coordination that's required to solve a tragedy of the commons the climate crisis nations exist really to have their own best interests in mind which means putting themselves over others and over the commons i think we need to stop looking for policy action i mean let's keep pushing on that angle but i think the real solutions are going to come from a decentralized base now if only if only there were a scalable solution one that was designed with incentive alignment and one that empowers the individual to act in a way that removes gatekeeping governments regulatory bodies and old white men from the equation i'm a middle-aged white man by the way regenerative finance is the answer so let's go a little bit deeper what is regenerative finance i've devised a very simple sniff test so that when you're looking at a project in the web3 space you can tell if it's refi uh and really goes back to first principles of currency as a tool for mass cooperation cooperation for what is the question if the answer is we're using web3 tooling to align incentives for positive social environmental or climate impact then i think we can pretty well call it refi i also created a user manual for good refi good market-based solutions harness the human need for return call it a return on capital call it an investment call it greed call it putting food on the table and feeding your children everyone's aligned on that good refi creates mechanisms to take that global and and shared incentive structure and pull the judo move to align it for regeneration rather than for extraction our economy is based on extraction and negative externalities which means that smokestack coming out of that power plant spewing stuff into the air that makes us all a little sicker and makes our world a little bit worse but no one's paying for that refi can harness globally distributed value and direct it to solving problems at an unprecedented velocity and scale it is the judo move using greed using that need for return and making it for a positive ecological social or climate outcome let's talk a little bit about refi impact to date we're early we're real early we're early overall in this entire space and with regenerative finance the first few projects launched last year regen network i think quantum was the first one to the table uh built on cosmos great project any regens here there we go there's always a few guys around um yeah so that was kind of the og of the space uh and then we had toucan and klima dao launched this last year as well and they've done some really incredible in about six months that they have been in existence so to date twice as much carbon at last year was transacted on chain then was transacted off chain there is a you know if you guys know this there's a global carbon market a voluntary and a regulatory market they're active they're growing we'll get into how they're growing but we're seeing more action on chain than off chain already five percent of all carbon credits have already been sucked into the web3 carbon black holes that have been created that's in six months of action imagine what we're going to be getting through next year and the year after and in a decade this is beginning to have real world impacts let's talk for a second about carbon markets the task force for scaling voluntary markets convened last year is predicting this is gonna be a 50 billion dollar market by 2030 a 500 billion dollar market by 2050. i think they're undershooting i think it's going to be bigger and we're seeing some pretty good market signals to support that so carbon black holes right 2k and klima they sucked up all this carbon they put it on chain for what what does that do to what end well right now we've got 70 of global gross domestic product is flowing through companies that have made net zero goals that's huge so as those goals so so when a company makes a net zero goal they're going to say by 2030 by 2040 we're going to be net zero and when they do that when they try to achieve those goals they're going to hire a whole consulting team and they're going to try to say okay how can we reduce emissions on our supply chain how can we reduce emissions in our production of whatever we produce or bring to the world and then ultimately there's going to come a point where they have to offset the rest that's where they go to the voluntary market and they purchase carbon offsets now we have carbon black holes in action so how do those two things interplay it causes uh it causes the prices for carbon to go up because now we've swept the floor of poor quality carbon offsets those now exist and are basically locked into carbon black holes on web3 it causes emitters to purchase better offsets and it causes them to look deeper into their emissions reductions before even going to the market in the first place so it causes real-world emissions reductions and it causes the purchase of higher quality offsets and it by supply and demand dynamics it's increasing the price of carbon overall so it's having real world beautiful effects the current refi landscape is growing and changing by the minute literally every week there seems to be a new project cropping up if you're not familiar with the space i would definitely recommend getting on twitter looking at hashtag refi refi and just kind of seeing what some of the thought leaders in the space are saying very interesting space to watch this is uh like probably a tenth of the projects that are out there uh so if i missed yours sorry about that but uh it's impossible to keep up collectively we're flipping the script on extraction as the means of creating global value so now i want to go into a case study of a project that's near and dear to my heart the open forest protocol i'm the head of fundraising for this so we're going to talk about this this refi sniff test how do we meld that that need for doing something good that regen and the degen part the need to provide returns unless you have both of those things and you're meeting up in the middle of that venn diagram you do not have a sustainable long-term successful project so we have all those bases covered let's dive into it so open forest protocol you can imagine that we are forest focused the problem we're trying to solve really more broadly though is that ensuring markets have better transparency of data and efficiency of capital flow in other words we can provide very good on-chain transparent proof that trees exist and are absorbing carbon and then flow capital from the carbon market right down to that individual actor level very efficiently essentially removing the middlemen from the equation and with all of the savings there we return better returns to the project operators the people planting trees and we take the rest and we make everyone rich humans have removed a land area roughly the size of the united states of forests from our planet annual deforestation is more like the size of greece forests are a natural carbon sink when standing and a carbon source when they're removed and destroyed this has to change and it's a huge opportunity and the benefits go far beyond carbon so right now the carbon market is mature it's active that's where we're focused but forests provide a whole lot more and these are other things that we can add value to and essentially pay people for other goods like biodiversity watershed protection healthy soils micro macro climatic trends and then historical and spiritual homelands for human beings we need forests if they're gone take me out i don't want to be here but forestation has a huge scaling problem so we've got a big market we've got growing uh price per carbon should be a huge opportunity but things scale really really really slow mostly due to a process called mrv monitoring reporting and verification it's the process of providing proof and transparency that projects financed through carbon markets are indeed real that the trees have been planted and that they aren't being cut down have you ever given a charity and thought like where the hell did that money go right that's the kind of transparency or lack thereof that i think stops more investment into good things happening we have created a web3 structure that solves this so this is a side-by-side comparison of the legacy system for accrediting forest carbon versus how it works through open forest protocol a couple key points here the legacy system is expensive which means that it's exclusive people can't afford to participate because of the high fixed upfront costs it's slow it waters down economics to the land holder there's a waterfall in the land holder themselves they're the people at the bottom of the waterfall first you have to pay a broker then a third-party accreditation body then a project developer it's expensive it's slow and the data stream isn't contiguous and doesn't lead to a very transparent data set which ultimately lends credibility and trust throughout the entire market and allows offsetters purchasers of offsets who are actually flowing capital into this market to begin with uh it slows their ability to do so right just like you and me given to charity and wondering where the hell the money went we need to make that very clear for large corporates uh as well as the web3 space so people know where the money's going how we work in a nutshell a basic process is anyone anywhere in the world right this is the decentralized permissionless democratized part of it anyone anywhere in the world can download our app in a very web 2 interface if they can create a facebook account they can work with the open forest protocol app they're going to create an account they're going to upload structured data points which are nested under a utility nft uh that represents their project and their ultimately their capital flow their their their value stream from that project they're uploading structured data points on their forest project once on chain we need to prove that that data is in fact true so we have a tokenomically incentivized team of forest project data auditors that review that data in an escalation game really to ensure that only valid data is passed through and ultimately accredited and accounted for in a carbon sense on-chain carbon credits are then minted so we have a utility token but we also are creating what we call an occ an open carbon credit is the world's first fully on chain blockchain native carbon credit right and the majority of those credits are returned back to that project operator once they've been minted the rest are shared with the entire network so everyone is yielding value in the form of a carbon-backed currency so we actually take eight percent of all the value we create and we share that with the network so that's how we're creating value we're facilitating massive participation from majority of uh the majority of vast uh or of the majority of regenerative land projects which have been unable to or excluded from mrv and we're decentralizing the middleman the legacy system of certification so we end up with far more carbon based value to share with our network and we align incentives with all actors as carbon gets verified the majority again goes to that project operator but a portion goes to those data validators our investors our core community the team and anyone else who is holding utility token and supporting the growth and operation of the network and the numbers can get pretty darn fabulous right so this is a a bit of a like example if we get a land area our kpi at open forest is total hectares locked which means how many hectares are we actually providing measuring monitoring reporting and verification services for and that is additive right like once you're on it's very sticky you stay on and you actually upload data every single year so an area the size of hong kong if you had a hundred thousand utility tokens you would passively yield twenty five thousand dollars worth of carbon into your digital wallet an area the size of israel 100 000 utility tokens you would do over a hundred thousand dollars worth of passive carbon yields into your wallet uh the size of grease now you're talking six hundred thousand dollars worth of carbon passively yielded into your wallet and what do you do with that carbon a you can burn it as your personal or corporate offset b you can hold it because like me you know where carbon market value is going it's only going up or see you can liquidate it sell it trade it for any other currency that you like or off ripen into fiat so um yeah so getting in early with open forest is uh potentially quite lucrative and the way that we like to think about this it's it's a blue chip or more of a bond style uh crypto asset because we all know how volatile this space is and a lot of that volatility is based on social dynamics and hype cycles right bull bear market whatever we're in prices are going up prices are going down the value that comes to refi and particularly through open forest protocol is based on things that have nothing to do with the crypto space it's simply people planting trees and providing proof that they're planting trees and and stewarding those trees to maturity those people are pretty insulated from crypto hype cycles and so as people keep putting more value on chain through the through more proof of their trees the value continues to accrue and that is largely unaffected by what's happening in in the larger uh bull and bear markets we plan to launch in may with mainnet we've got a growing ecosystem we're partnering with individual nations with project developers with individuals who hold land so it's a top-down nation-led approach as well as a decentralized bottom-up approach and ultimately we plan to eat a lot of the world and regenerate a lot of the world and put a lot of value on chain over time as the refi space grows dows can start to invest in land projects fractionalize the nfts that represent those value streams share the value uh we can off-ramp our uh sell our credits to toucan to clema to flow carbon uh there's a ton of coordination to happen in this space so we're early we're just seeing that start to happen so let's talk refi if anyone has questions um we can try you can scream them at me here otherwise i'll be around again my name is jeremy got our white paper and then a whole bunch of contact info for me uh with qr code and i appreciate your time thank you [Applause]