60 What is Regenerative Finance ReFi? Kanga University

Decentralized Finance (DeFi) refers to financial services that use blockchain technology without traditional intermediaries, such as banks. ReFi is an evolution of DeFi’s foundational principles, emphasizing sustainable and equitable economic systems underpinned by smart contracts and community-centric decision-making. While many DeFi projects can be short-term and speculative, ReFi projects have a much longer-term vision, focusing on creating lasting https://www.xcritical.com/ positive impacts.

Why Blended Finance Might be a Climate Saver

As with any Web3 cryptocurrency project, what is regenerative finance regenerative finance projects can be used in scams. There are always risks when investing in alternative assets such as crypto; regenerative finance isn’t immune to these. Carbon Exchange Traded Funds (ETF), with diversified holdings and tracking of a specific index, are a low-risk way to invest in carbon markets and diversifying portfolios. Carbon pricing is a political matter so ETS and carbon taxes can both be applied by trading off mitigation and tax revenue to address competition. The market is further broken into nature-based solutions (NBS) and renewable-based solutions (RES). While household credit issuances are important and part of financial inclusion, they are outside the scope of this paper.

Social Finance: Driving Impact Across Assets & Approaches

Digitisation of the carbon market by applying blockchain technology with regulatory reporting and measurement will ensure projects meet specific standards. With mitigation and risk assessment in place, carbon credit insurance provides buyers with a level of protection around project quality, giving confidence in increasing carbon pricing as required by the Paris Agreement. There are several kinds of carbon credits/offsets, but the two main types represent the NBS and RES markets, respectively.

Regenerative Finance: The Future of Sustainable Blockchain Technology

Certain projects are issuing blue carbon credits which help marine protected areas track the health of their ecosystems and generate revenue to fund their conservation projects. Public goods are available to everyone — things like parks, clean air, or free education. There are real-world public goods, like the ones we mentioned, but also digital public goods — specifically free and open source software, open datasets and open source standards.

Sustainable investment is the greatest economic opportunity

More efficient production advances economies and improves productivity and quality of life. Applications on a blockchain could be poorly designed or malicious — after all, access is open so anyone can create a decentralized application. Not many regulations are in place yet, so users of DeFi products need to carefully evaluate which services are safe to use and trustworthy.

Preservation of Soil and Water Quality

There is also a need for policy makers and regulators, both nationally and globally, to promote ReFi initiatives and adoption. Accordingly, Stern (2011) provided a set of seven design principles for evolving the governance of global commons, which can serve as a guiding framework for the ReFi ecosystem. First, investing in scientific research is essential to comprehend the resources and their interactions with users and stakeholders. Second, establishing independent monitoring of the resource and its use is crucial to ensure accountability to a range of interested and affected parties. Third, the meaningful participation of participants in framing questions, defining the scientific results, and developing rules is necessary. Sixth, it is important to engage and connect a variety of institutional forms, from local to global, in developing rules, monitoring, and sanctioning.

The Future of Regenerative Finance: Navigating Challenges and Unlocking Opportunities

This is to shift thinking from the ‘take-make-destroy’ model towards a more holistic worldview and examine the current financial incentives for businesses to engage in ethical commerce. Many organisations, large and small, have started to review and realign their business models towards more sustainable practices. Blockchain, the underlying technology that cryptocurrencies are built on, is recognised as having a plethora of use cases, from automotive manufacturing to supply chain, luxury goods to gaming and beyond. This is in part because, across all industries, it excels at aligning incentives to clear and measurable goals.

The risk/return profile is akin to bond investments to de-risk the cash flow volatility. The Boston Impact Initiative Fund directly supportsentrepreneurs using a spectrum of integrated capital tools — loans, creditenhancements, equity investments, royalty finance, direct public offerings,crowdfunding, grants and more — with a focus on economic justice. When choosinginvestments, the fund applies a race-based lens that considers the enterprise’sownership, opportunities for meaningful livelihood and advancement, and thedegree of worker participation in allocating resources and setting directions.

• Disrupting the extractive dynamics is far more complex than “just” improving information flows and coordination but requires breaking the foundational logic and approach of the system.
• ASEAN countries are progressively embracing ReFi principles, positioning the region for a greener, more sustainable future.
• ReFi seeks to solve this problem by using a decentralised and trustless blockchain to record individuals’ involvement in funding or overusing public goods.
• D-MRV and the creation of an information commons that leverages the potential of decentralized and transparent data can increase trust and transparency and support the development of novel and alternative financing and governance models.

The EU ETS has implemented Carbon Contract for Differences (CCfDs)[cx] where companies reducing CO2 emissions will receive grants especially for replacing fossil fuels with hydrogen. Energy-intensive industries are compensated by climate protection agreements for a period of 15 years to cover production conversion costs to hedging against carbon price volatility and regulatory risk. Japan Blue Economy Association’s (JBE’s) J Blue Credits[cxi] scheme is focussed on the creation of offsets from seaweed sequestration. This leads to blue carbon initiatives, including the establishment of seaweed beds in several regions.

CoinCentral’s owners, writers, and/or guest post authors may or may not have a vested interest in any of the above projects and businesses. None of the content on CoinCentral is investment advice nor is it a replacement for advice from a certified financial planner. The concept of a carbon market was unveiled in the 1997 Kyoto Protocol as a mechanism to incentivize carbon-emission reduction.

The Capital Institute is a 501(c)3 non-profit organization reimagining our economic and financial systems to promote the transformation to a more just and regenerative world. The Voluntary Carbon Market indirectly tries to incentivize the funding of carbon reduction projects. ReFi is taking this a step further by leveraging the power of web3 to fund reforestation, regeneration and conservation more directly. This leads to minorities and marginalized groups turning to ReFi, and using it as a tool for innovation and growth, often at a faster pace than people from communities with more privileged access to resources. In ReFi, there are no gatekeepers telling minority developers, founders, or creators what to do; everyone can just build or contribute to whatever they see lacking or what’s serving the needs of communities and environments.

When a company buys a carbon credit from a government, the company gains permission to generate one metric tonne of CO2, carbon revenue flows to regulators, and excess credits can be sold. This is exciting news forsustainable, mission-driven businesses, because regenerative finance is fullyinvested in their mission of creating long-term value for everyone. RSF recently launched the Racial JusticeCollaborative— a philanthropic fund that provides diverse forms of capital to US-based socialenterprises with BIPOC owners and leaders.

A global open marketplace allows companies and individuals to buy, sell, trade, and manage carbon credits, providing carbon footprint certification, monitoring, and dMRV. This creates digital assets classes and enforces the data integrity/identification features of blockchain technology. Credits issued by regulators from compliance markets can only be applied in one jurisdiction; but in the VCM, a credit produced in one country can be applied against emissions of a company in another.