Blockchain is the driving wheel of financial development. Decentralized peer-to-peer is not only about the benefit of anonymity, deflating assets, and security. It is also a space for solving global systemic problems. In a previous article, we wrote about the characteristics of DeFi. This time we will take a closer look at Regenerative Finance - ReFi. What does blockchain have to do with ecology? How can it contribute to solving the problem of climate change? Find out in the text!
What is ReFi?
Regenerative Finance can be defined as a movement focused on using the potential of blockchain and Web3 to solve systemic problems such as climate change. It supports areas such as reducing carbon footprint, waste eradication, supporting ecosystem protection and biodiversity. It also seeks to change the economy from extractive to regenerative, promoting sustainable development. ReFi aims to value and monetize natural capital with the goal of positive change with a financial return circulating among communities.
How does ReFi solve problems?
Regenerative Finance is based on the principles of DeFi. It's a community using tools and peer-to-peer services to support regenerative projects with a global environmental interest. At the core of the ReFi focus is the carbon economy. As it stands, carbon footprint generation is traded. Corporations want to offset emissions by paying entities to regenerate the environment by, for example, planting carbon-reducing forests. The process is problematic, however, requiring the participation of many intermediaries who charge a commission, and there is a risk of fraud, such as the double-counting of credits. ReFi projects rely on carbon credits, which are tokenized. One token represents 1 MT of CO2. The blockchain makes the whole process transparent, eliminating possible fraud and reducing costs. Credits are immutable and verified. You cannot apply for the same credit twice. They are burned or withdrawn from on-chain circulation.
ReFi is becoming mainstream
The year 2022 has been media-dominated by the Ethereum Merge, the crypto market downturn and the collapse of FTX. With such information noise, it's easy to overlook the good news coming out of the market. Last year was exciting in terms of ReFI projects that were popularized or emerging. The carbon offset market is valued at around $270 million. A sizable number of blockchains support the low-carbon economy and encourage ReFi projects to implement. Among them can be mentioned: Near, Cosmos, Polygon, Hedera, Polygon, Topl, Celo, or Algorand. Let's take a closer look at some of the ReFi projects:
This carbon bridge allows anyone to transfer their carbon credits to the chain as tokens. It provides traceability and the ability for individuals to participate in the market, driving demand for green solutions.
They support crypto/Web3 companies building infrastructure and tools to scale their climate-impacting activities. It focuses on the Cosmos Network and Regen Network ecosystems helping with end-to-end technical, management, and promotional issues.
A platform with a specialized order book powering spot and derivatives trading. It hedges carbon market exposures, secures prices for offset schedules and investment analysis, and accesses ReFi's on-chain functions.
It focuses on combining the benefits of the community and government. Industry and investors are improving the condition of the oceans. Builds scientific, technical, and economic frameworks to power scaled markets for marine biodiversity credits.
KlimaDAO is a protocol built on the Polygon network to reduce market fragmentation. It provides financing for sustainable development projects. DAO sells bonds and distributes rewards to Klima holders. Every bond sold goes into the treasury or improves liquidity for crucial environmental assets.
In summary - the benefits of ReFi
ReFi beneficiaries make many profits from the emerging protocols for a low-carbon economy. Global interest becomes personal interest. Concern for the environment is in the 21st century, and crucial for the world to be able to provide a clean world for future generations. Economies reap the long-term benefit of reduced outlays to treat civilization diseases, and corporations will pay less for CSR policies by bypassing brokers in the process of buying carbon credits. An investor earning tokens contributes to the general interest and has the opportunity to build his finances while doing something good at the same time. Regenerative Finance is a real win-win for each party.
We power your Web3 future
We are a team of experienced blockchain enthusiasts who are more than willing to help you on your way to Web3. We provide end-to-end blockchain solutions for enterprises and ambitious startups. Let's create your future Web3 success together.