Uncommons

Authors | Bu Bai, Shannon, K, Man, Weiwei

💡 The GreenPill Chinese community conducted a systematic and in-depth study of the booming field of ReFi (Regenerative Finance) in web3 last year. After tracking dozens of projects, quantitative analysis and project relationship mapping were conducted, and a report has finally been released to share with the web3 community. Due to the length of the full text, it is divided into two parts for publication. This is the first half, which discusses the concept of ReFi and the active community. The second half will provide specific project introductions.

What is ReFi#

"ReFi" is the cutting-edge movement of regenerative finance in Web3. ReFi is rooted in the theory of "regenerative economics," which explores how to create systems that restore and maintain the material resources crucial to human well-being. The foundation of ReFi is "regenerative cryptoeconomics," which is based on blockchain's incentive mechanisms to involve new systems, applications, or network sciences to meet human needs, generate net positive externalities, and find balance or even create balance.

Kevin Owocki conveyed the concept of "regenerative cryptoeconomics" in his book "GreenPilled: Regenerative CryptoEconomics." He believes that humanity is currently facing systemic risks to prosperity due to global coordination failures, and our traditional institutions are unable to address these risks. The resources provided by Web3, such as global, transparent, immutable, but programmable finance, can create coordinated games to build a more renewable financial system. They refer to any DAO that can create net positive externalities for the surrounding ecosystem as an ImpactDAO, which is the fundamental building block of the regenerative cryptoeconomics movement.

In his book "ImpactDAOs," Kevin argues that the infrastructure of regenerative cryptoeconomics is not just financial capital. It revolves around the eight different forms of capital defined by Gregory Landua and AppleSeed Permaculture, and ImpactDAOs are classified as regenerative finance (ReFi), decentralized science (DeSci), and commons pools, among others. Kevin collected and introduced some projects in different categories, not all of which are decentralized autonomous organizations (DAOs). Among them, he believes that ReFi projects are making our planet greener through funding material and livelihood capital. They are building tools to embed regenerativity into the core of the financial system.

In an article titled "What is ReFi," John Ellison provides an overview of ReFi. He believes that our current relationship with the Earth is unsustainable due to two interrelated and increasingly severe crises: climate change and biodiversity loss. Our economic system's failure to value capital in the development and maintenance of human society has resulted in a range of negative externalities, including greenhouse gas emissions, habitat destruction, and social inequality.

Effectively addressing these crises requires redesigning our entire economic system. We need to internalize negative externalities and protect the common resources on which all life depends. In this reconstruction, the narrative of money is redesigned to focus human efforts on addressing the climate crisis on a large scale and gradually moving towards a new era of human well-being, social justice, and harmonious coexistence with the Earth.

The key assumption of ReFi is "collaboration over competition." The above problems are coordination problems, and we need to eliminate our tribal tendencies and work together to pave the way for a brighter future. Smart contracts and the blockchains they build are the coordination tools we need to solve systemic problems such as climate change, biodiversity collapse, and social injustice.

Based on this background, he believes that ReFi has three pillars:

• Stabilizing our climate - by reducing and eliminating greenhouse gas emissions, primarily through carbon markets.
• Restoring our ecosystems - by nurturing biodiversity, with the potential for value exchange with carbon market infrastructure.
• Building social justice - by rebuilding locally rooted community-based economies.

Carbon markets are at the forefront of the ReFi movement, with billions of dollars in quantity and rapid exponential growth.

A key focus of the ReFi movement is to transform the voluntary carbon market (VCM) to expand with deep accountability and transparency. As more organizations seek to reduce and offset emissions associated with fossil fuels, the voluntary carbon market is expected to grow 15 times by 2030 and 100 times by 2050.

Tokenizing physical assets involves creating a representation on the blockchain that creates a digital asset that can be programmed, monitored, and exchanged. As more carbon credits are tokenized and transferred to the blockchain, countless compound benefits emerge.

Before the release of Toucan and Klima DAO, tokenized carbon experiments had difficulty gaining significant traction. Toucan's bridge and carbon pool design create a highly liquid carbon market, where tokenized carbon credits are deposited into the carbon pool to form commodity assets - as collateral, enabling market speculation to discover prices.

Over the years, many initiatives have attempted to tokenize carbon offsets. Regen, Nori, and Moss are three excellent projects that have made many difficult and groundbreaking explorations in this field, providing the first examples of how tokenized credits can drive carbon market innovation.

Regen and Moss have chosen to collaborate with Klima DAO and Toucan Protocol to continue the development of this carbon market. Since October 2021, this partnership has provided unprecedented expertise, increased liquidity, and helped scale the tokenized carbon market.

Carbon is just the beginning. ReFi needs to seize this opportunity to protect and restore natural capital, including grasslands, forests, coral reefs, and all other vital habitats.

Currently, there are some pioneering organizations working to tokenize natural capital assets and capture and mitigate the shared benefits of carbon. Each project focuses on a specific aspect of the problem and coordinates resources and information to generate greater impact. Some pioneers include Kolektivo, Astral Protocol, Curve Labs, and dClimate.

In addition, some pioneers are spontaneously organizing discussions on these ideas, such as ReFi DAO and the GreenPill Chinese community. ReFi DAO aims to be the home of the regenerative finance movement, with over 40 ReFi founders regularly meeting and supporting each other to extend climate action using Web3. The GreenPill Chinese community, starting with the collective reading of the book "GreenPilled: Regenerative CryptoEconomics," has gathered a group of people interested in Impact DAO and aims to be a research-driven community exploring better and easier-to-implement solutions to address global coordination failures. ReFi is a crucial area in this regard.

Who is building ReFi?#

Projects Mapping#

In recent years, ReFi projects have experienced explosive growth. According to project data collected by ReFi DAO, the areas they focus on can be divided into carbon offsets, environmental impact calculation, art NFT communities, public chains, developer communities, geographic imaging, community action, oracles, data collection, and more.

• Carbon offsets are the most active area, with a total of 42 projects active in this field. Carbon offsetting refers to the trading of carbon credits (quotas) through compliance and voluntary markets to offset individual or organizational emissions. It aims to offset unavoidable emissions that can only be temporarily used to avoid delaying the transition to a low-carbon or zero-carbon economy. Forest and carbon-related projects dominate this field, accounting for half of the carbon offset projects with 21 projects, including Open Forest Protocol (OFP) and GainForest. The second most common are agriculture-related projects, with a total of 6 projects, including Dovu and Solid.World. There are also projects related to biodiversity carbon offsets, land ownership credits, oceans, and renewable energy.
• Community action is the second most common, with a total of 13 projects. These ReFi communities organize themselves through decentralized autonomous organizations (DAOs) and other forms. Examples include CitizenDAO, which focuses on the United Nations Sustainable Development Goals, and SolarPuck, which advocates for green and low-carbon initiatives.
• Art NFT communities are the third most common, with a total of 12 projects. These communities convey the idea of harmonious coexistence between humans and nature through the release of related artworks, such as Unios. Some projects combine carbon offsets with NFT art, aiming to eliminate tokenized carbon offsets in circulation and force companies and organizations to innovate instead of meeting carbon emission regulations through purchasing, which is what Carbonized.xyz is doing.
• Data collection is also a very active field, with a total of 11 projects. Among them, satellite remote sensing data collection and satellite data oracles are the most common, with a total of 9 projects, such as Astraea and dClimate. There are also projects related to IoT device data collection protocols like Athena Protocol and data cleaning/indexing projects like Astal.
• In addition, public chains, environmental impact calculation, and voluntary carbon markets are also active. Well-known projects include public chain projects like Celo and Regen Network, as well as environmental impact calculation projects like Aerial, Carbonbase, and voluntary carbon market projects like FlowCarbon, Toucan Protocol, and Offsetra.

The industry overview is as follows:

Founders of ReFi projects often discuss and exchange ideas with each other, and there is close collaboration between projects, forming a network of projects. The largest network is centered around Climate Collective and Toucan Protocol. Other active participants in this network include Moss.earth, Flow Carbon, Crypto Climate Accord, Socialstack, Celo Camp, Offsetra, and KlimaDAO. Together, they constitute the core forces in the ReFi field.

Analyzing the connections between projects provided by ReFi DAO, it is found that Climate Collective has generated 34 connections, followed by Toucan Protocol and Crypto Climate Accord with 11 connections each, Celo Camp and Curve Labs with 8 connections each, KlimaDAO and byterocket with 6 connections each, and others with 5 connections or fewer.

1. Climate Collective's core members include Celo Foundation, Toucan Protocol, Curve Labs, byterocket, and Moss.earth, among other popular projects. Its members also include Flow Carbon, which recently completed a $70 million financing round, ClimateDAO, Carbon Path, ReFi DAO, Closer Protocol, and others. It has collaborated with Prime Launch, Socialstack, and Celo Camp.
2. Toucan Protocol's main products are Toucan Carbon Bridge and Toucan Carbon Pools. It has achieved interoperability with Atem, Senken, Return Protocol, and Changeblock, and has deep collaborations with Curve Labs, KlimaDAO, and byterocket.
3. Crypto Climate Accord is dedicated to helping the cryptocurrency and blockchain industry decarbonize and has agreements with projects such as Dovu, REC DeFi, Toucan Protocol, Moss.earth, and Offsetra.
4. Celo Camp participants include projects such as Shamba, Sacreage, Binkabi, Athena Protocol, Closer Protocol, Climate Guardians, and Bru Finance.
5. Curve Labs has incubated projects such as Spectre Protocol and PrimeDAO and has deep collaborations with Kolektivo Labs, Toucan Protocol, Symmetric, and byterocket.
6. KlimaDAO forked EthaverseDAO and EcoRise.
7. byterocket has extensive collaborations with Senken, PrimeDAO, Kolektivo Curacao, Toucan Protocol, and Curve Labs. It is also a core member of Climate Collective.

The number of connections represents the level of activity of the projects, and the level of activity to some extent reflects the role the projects play in the network. Most of them are incubators, communities, and funds, but there are also project teams themselves, such as Toucan Protocol. In the Web3 era, the connections with other projects often reflect the progress and performance of a project. Sometimes, the ability to establish deep connections with core project circles can directly affect the success of a project. For example, Flowcarbon, which recently raised $70 million, is a member of Climate Collective and has partnerships with Centrifuge and Droneseed, as well as interoperability access with Atem. (To be continued)