🏞️Building A Carbon Economy

Core Problem: Climate Change

The main issue remains climate change and how we can collectively address it. The problem at hand is that we are running out of time to limit global warming to 1.5Β°C which is the target level needed to prevent climate change from getting out of hand. The IPCC report recommends a pathway to "Net Zero" by 2055, to limit warming to 1.5Β°C and avoid a rise in temperatures to 3.2Β°C which we could see this century. While repeated outcries for action have instigated the following:

  • 2015 Paris Agreement, a legal-binding framework for fighting climate change (191 countries signed)

  • 44 Nations declaring they will go "Net Zero" by 2050

Efforts for decarbonization including carbon reduction and removal solutions are not being promptly incentivized. Among the many roadblocks carbon markets face, they are currently inaccessible to the majority of the public. This lack of widespread access has limited public knowledge about the carbon markets which in turn limited overall market participation. Over the years, all these factors have inhibited the formation of a sustainable and growing carbon economy, that ideally supports project developers and rewards other action-takers.

Carbovalent recognizes the deficiencies that plague the carbon market and cause its shortcomings, with that, we aim to use Web3 and its inherent properties to eliminate the limitations of a Web2-based carbon market. With an adequate infrastructure in place, we can eventually establish an ecosystem housing a carbon economy that will proactively address, normalize, and incentivize decarbonization across communities.

Leveraging Web3 for Access

At the core of the Carbovalent Protocol lies inclusivity.

We firmly believe that in order to accelerate the advent of climate action, everyone should have unrestricted access to a moment in time when carbon credits and offsets are freely understood, utilized, and integrated into our innovations and financial incentives.

Carbovalent democratizes the carbon market by bridging the gap between sequestered off-chain registries and Web3's open-source nature, creating decentralized access through interoperable on-chain registries and on-chain carbon credit trading. When credits exist on-chain their accessibility is maximized with the only requirement being a Solana-compatible wallet.

Apart from tackling accessibility, Web3 can play a major role in developing a community-driven carbon credit network. Web3 solves all data-storing requirements needed to create transparency around ownership, trading, and retirement of credits. This transparency can mediate huge awareness about the carbon markets and provide the fundamentals needed to establish a carbon economy, with the race to "Net Zero" underway.

Creating Value For What We Value

We value our environment as much as the global markets value it. However, it is evident that the global markets have failed at servicing the financial instruments that are essential for the longevity of our future. This is inherently due to the limitations of Web2 and its capacity to host the carbon market.

By understanding the complexities that make carbon credits unique and valuable, we understand that they are very much different from traditional assets and cannot be truly represented on Web2. We also recognize that carbon credits require a highly robust and flexible infrastructure that can accommodate their high variability and truly represent them as digital assets.

The Carbovalent Protocol proposes an infrastructure that harnesses the true value of credits on Web3. By establishing a foundation for the carbon market on-chain we can enable major scalability and adoption. This is achieved as communities pursue the use of carbon credits to power their innovations and ensure all their future endeavours on Web3 are climate-positive.

To further unlock value for carbon credits we believe in delivering regenerative finance (ReFi) applications to the Solana community. This entails creating use cases with real-life impact using carbon credits as the primer. Examples of ReFi applications for credits include developing climate-positive payment systems, using carbon as collateral for borrowing, and using carbon credits as currency to purchase fractional ownership contracts in sustainability projects. With many other unimagined ReFi applications we can galvanize the utilization of on-chain carbon assets to adequately support carbon projects and reward their measurable impacts.

Carbon Life Cycle Optimization

While it may be perceived that carbon credits only exist to be retired. The useability of credits between the duration in which they are sourced until they are retired is widely underestimated. By nature credits are deflationary assets, as they are retired or expire over time, they are also regenerative as they continue to be generated over time. This alone makes them highly lucrative financial instruments. Their true merit, however, is that they create a direct link between carbon projects and capital flow harnessed from outstanding markets. We anticipate that Solana's informed community will recognize the opportunities credits offer, and together Solana's rapid infrastructure and immense volume will support credits and all those involved in the carbon life cycle.

The Carbovalent Protocol allows us to witness the value carbon credits can derive from current financial systems as they enter the Web3 space. To achieve this we believe in creating the most possible exposure to carbon credits between the duration in which they are sourced until they are retired.

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