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Hey, fam!
Glad to see you here for our 28th edition.

When it comes to Web3, regardless of the industry we are talking about, some terms and topics keep on coming:

Blockchain, NFTs, Bitcoin, Ethereum, volatility, FOMO, DYOR, Immersive, etc.

However, it’s VERY rare to see Web3 being associated with this one: Sustainability.
And here we are considering a broader definition for it: from taking care of communities to protecting the environment.

So today, I invite you to explore this subject that’s often ignored in our space. Get ready to add some new concepts and use cases to your utility belt.

LFG!

“Web3 is bad!”

“Bitcoin is terrible for the environment”

“Failing Crypto Could Be a Win for the Environment”

“The Environmental Impacts of Cryptomining”

All the above are real titles from articles I found online.

This plus the fact that Web3 (as a topic) is rarely associated with sustainable practices led most people to think that it’s impossible to find ways to create a positive impact with things like Blockchain or Decentralized Finance.

Well, despite the prevalent narrative that primarily associates Web3 technology with significant energy consumption – largely spotlighting Bitcoin’s Proof of Work (PoW)/mining model – there’s a lot of untapped potential for environmental stewardship within this space.

I won’t enter this debate today, but the criticism often overlooks the strides being made towards sustainability, particularly with the advent of Proof of Stake (PoS) protocols, which significantly reduce the energy footprint compared to PoW. Moreover, there are many different ways to use Web3 tech for “greener” purposes, including, for example, the possibility of better tracking supply chains to make sure all the workers/materials/companies involved were correctly paid/managed (we mentioned this in a few past editions).

Yes, like ANY other industry, Web3 leaves its environmental footprint. But as I said in the opening section, we are here today to explore how it can be used in projects actively engaging in environmental and sustainable initiatives.

Introducing ReFi:
The hidden gem for a “greener” Web3

Regenerative Finance (ReFi), is a concept that has the potential to revolutionize our approach to sustainability through the lens of Web3.

At its core, ReFi represents a shift away from traditional, extractive financial models towards systems that prioritize the planet’s health alongside economic growth. By leveraging blockchain technology, ReFi introduces a new scenario in which financial transactions contribute positively to environmental restoration and social equity.

In a ReFi-based system, economic activity benefits all of the system’s living participants, instead of solely extracting resources and unfairly distributing profits.

“ReFi is regenerative finance; an economic system that grows in capacity over time and is resistant to shocks. Regenerative finance can mean regeneration of financial systems, but it can also mean the regeneration of social, material, living, intellectual, experiential, spiritual, and cultural capital as well. ReFi is the key to human flourishing in the 21st century”

Kevin Owocki – Gitcoin Co-Founder

“That sounds intriguing. But what ReFi REALLY means?”

At its essence, ReFi is about aligning financial mechanisms with sustainable development goals.

In other words, it seeks to restore, renew, and revitalize our resources, providing value back to the planet.

Yes, this includes greenhouse gas emissions and carbon credits, but the ReFi’s scope is broader than that – and we’ll dive into some of these possibilities (and opportunities).

“Regeneration means putting life at the center of every action and decision”

Paul Hawken – Environmentalist

Sauce: Justice in Action

The broad impact of ReFi: Beyond carbon credits

The Carbon Credits market is HUGE. According to a Global Market Insights report, it’s valued at around USD 103 BILLION, and projected to reach USD 343 Billion in 2032.

So, since “carbon offsetting” and “voluntary carbon markets (VCM)” are terms known in many industries, let’s try and go beyond those.

ReFi envisions a model that incorporates many other roads to reach economic stability and social equity, striving for a balanced ecosystem where financial prosperity does not come at the expense of the planet’s health.

It encompasses a range of initiatives aimed at environmental conservation and sustainability. Tokenization of digital environmental assets (DEA), for instance, allows for the economic valuation of natural assets, promoting conservation efforts and sustainable practices.

Through ReFi, blockchain and AI technologies are harnessed to manage environmental resources digitally, offering novel solutions to old problems​.

A Shift from Extractive to Regenerative: ReFi represents a fundamental shift from extractive economic models to regenerative ones, where financial growth and ecological health are interdependent.

Here are some of the ReFi main pillars:

→ Holistic Approach to Sustainability: ReFi integrates environmental, social, and economic factors, championing a comprehensive model of sustainability.

→ Incentivizing Conservation: By economically valuing natural resources, ReFi encourages their preservation and sustainable management.

→ Promoting Social Equity: Addressing the imbalances of traditional financial systems, it offers equitable access to financial services and resources.

→ Decentralization and Transparency: Leveraging blockchain for its transparency and decentralization, ReFi eliminates intermediaries, fostering a trust-based, efficient ecosystem.

→ Smart Contracts for Sustainability: Automated transactions via smart contracts ensure that financial dealings are aligned with environmental goals, enhancing accountability.

→ Tokenization of Natural Assets: By giving economic value to underappreciated natural resources, ReFi incentivizes conservation and sustainable ventures.

In essence, ReFi and the broader application of Web3 technologies present an unprecedented opportunity to address pressing environmental challenges.

By redefining the relationship between economic activities and ecological health, ReFi helps pave the way for a sustainable future where technology and nature coexist harmoniously.

Now that the overall concept of ReFi is covered, let’s jump in some practical examples.

Web3 and climate change:
The role of ReFi

In the fight against climate change, Web3 technologies – particularly blockchain – are emerging as powerful allies.

The advent of on-chain carbon credits offers a new mechanism for enhancing transparency and fraud protection in carbon credit markets.

And that’s important to also help prevent “greenwashing” activities – the blockchain doesn’t lie.

On top of that, unlike traditional carbon credits, on-chain versions introduce the potential for integration into decentralized financial services and the broader regenerative finance (ReFi) ecosystem.

“Huuuum… ReFi is cool, but where’s the actual ‘Finance’ part?”

Sauce: Ideasoft

On-chain carbon credits can serve as the core of the ReFi ecosystem, acting as a “gold standard” for ReFi currencies and economic activities.

Their value extends to collateralization, cash flow financing, and providing retail investment instruments, which are crucial for scaling the pace of climate impact.

This expanded functionality underscores the transformative capacity of Web3 to support more effective and scalable climate action initiatives.

In more practical terms: even if you looking at ReFi solely from a “how can I profit” perspective, many opportunities can be found, including access to the financial instruments/options:

♻️ Access to short-term loans: A consistent pricing framework for carbon credits, facilitated by Web3, enables their use as collateral on decentralized finance (DeFi) protocols.

This accessibility to short-term loans can ensure steady cash flow for projects, aiding in their sustainability and operational consistency.

(If you want to read more about DeFi, check our edition #20)

Sauce: Toucan blog

♻️ Pre-financing for carbon offset projects: Securing financing is a significant hurdle for carbon offset projects.

The ability to sell a portion of estimated carbon credits as discounted forward credits on-chain provides a novel solution to this challenge, offering much-needed upfront capital for project development.

♻️ Expanding investment opportunities: The tokenization of carbon credits and forward credits opens up new avenues for investment, particularly for retail investors.

Through decentralized autonomous organizations (DAOs), investors can engage in pre-financing projects, tapping into the potential for profit from the sale of issued credits.

In conclusion, we can say that the intersection of Web3 and climate change, particularly through the lens of ReFi, brings a lot of opportunities for scaling impactful climate actions.

This segment is only available for BorgoAcademy members.

Career and Business opportunities in ReFi and Sustainable Web3

The fusion of Regenerative Finance (ReFi) with sustainable practices in the Web3 space opens a new chapter for brands and marketers aiming to align with current values of sustainability, community empowerment, and ethical investment.

So if you are a professional looking for an opportunity in this environment or a business owner who wants to build upon a more sustainable model (or both), here are some insights that will hopefully help you navigate this new road:

💡 Leveraging…

If you want to learn more about BorgoAcademy, hit the button below.

It’s already happening:
Real-world examples of ReFi

Let’s be real: it’s impossible to predict whether ReFi will reach mainstream adoption – or if it will be the “next big thing”.

What we CAN say is that there are already several great examples of how Regenerative Finance can produce amazing results and help solve different problems.

Let’s see some of the best examples that already have a tangible impact in the space. These projects embody the principles of sustainability, community empowerment, and technological innovation, offering a glimpse into the future of finance that prioritizes planetary health and social equity:

The Toucan Protocol: Revolutionizing Carbon Credits

The Toucan Protocol exemplifies ReFi’s potential by bridging the gap between traditional carbon markets and the blockchain.

This platform tokenizes CO2 certificates from verified sources, making carbon offsets accessible and liquid on the Polygon blockchain.

By converting real-world environmental efforts into digital assets, Toucan enhances transparency and market efficiency, encouraging more entities to participate in carbon offsetting.

The protocol’s innovative approach ensures that CO2 savings are recognized accurately, preventing double-counting and fostering trust in digital environmental initiatives.

MOSS: Protecting the Amazon with Blockchain

MOSS focuses its efforts on preserving the Amazon rainforest, one of the planet’s most vital ecological assets.

By issuing the MCO2 token, based on Verra-certified carbon credits, MOSS underscores the importance of targeted conservation projects.

Additionally, its venture into the NFT market, offering conservation parcels of the Amazon rainforest, leverages the popularity of NFTs to fund preservation efforts.

KlimaDAO: A Carbon “Black Hole”

KlimaDAO introduces a bold strategy to combat climate change by accumulating carbon tokens to create scarcity and drive up their value.

Describing itself as a “black hole for CO2” this DAO aims to make carbon offsetting more economically appealing and accessible.

KlimaDAO’s approach has garnered significant attention, managing to collect a substantial volume of CO2 tokens in a short period.

Its success illustrates the power of community-driven efforts in ReFi, highlighting the potential to significantly impact the voluntary carbon market and encourage corporate participation in sustainability.

Crypto Coral Tribe: NFTs for wildlife conservation

With its NFT collection, the Crypto Coral Tribe community leverages art and technology to champion marine and wildlife conservation.

Proceeds from their initiative have led to the planting of 3000 corals across three continents, demonstrating how digital art can be transformed into tangible environmental action.

This project illustrates the potential of NFTs to support global conservation efforts, bringing together creativity and ecological sustainability.

Across borders: Treejer Protocol

Hailing from Iran, the Treejer Protocol is bridging funders with rural planters worldwide, showcasing the global reach of ReFi initiatives.

Utilizing blockchain-based smart contracts, Treejer ensures transparent and equitable distribution of funds to planters, promoting reforestation and ecological restoration across borders.

This project exemplifies how blockchain technology can facilitate global environmental efforts, connecting individuals and communities in a shared mission for a greener planet.

Transformative Impact Across the Board

These projects are pioneering pathways for environmental conservation, sustainable development, and financial inclusion through the innovative use of blockchain technology.

By tokenizing carbon credits, creating digital conservation spaces, and building community-driven environmental treasuries, these initiatives are setting the stage for a more sustainable and equitable future.

Disclaimer: I have no affiliation with any of these projects, nor I’m suggesting you should invest in them.

I just wanted to share some actual examples of how ReFi can have a real impact.

Besides the initiatives listed above, there are MANY other projects around ReFi. And since it’s a concept still flying under the radar this may be a great moment to learn, and eventually build something around it.

If you are already building something with the “sustainability” pillar in mind, you may want to dive deeper into this rabbit hole.

We are still super early for Web3 in general, so imagine the number of possibilities that lie within these “less talked about” topics.

We’ll meet again next week. See you then.

#LFGrow
Diego Borgo

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