Eco-friendly investments. How to help the planet by earning on crypto assets

What is the concept of regenerative finance (ReFi) and what projects help to invest in helping the environment
How the concept of regenerative finance (ReFi) works and what decentralized economic models can contribute to solving environmental problems

The ReFi concept is a direction of decentralized finance (DeFi), within the framework of which complex and harmonious economic models are created, participation in which, in addition to direct material remuneration, favorably affects the environment or contributes to the solution of social problems.

Restorative or "regenerative" finance, like most Web 3.0 industry terms, has a multi-part and vague definition. Proponents of the concept are trying to solve an important, to some extent utopian problem. The ReFi model is still poorly used in real project developments, and existing solutions are still used only by a small number of truly interested participants. Nevertheless, the scale of the concept over time can make the idea of ReFi much more popular, and with it change the attitude of the public towards cryptocurrencies in general.

Eco-friendly investments. How to help the planet by earning on crypto assets

A New Understanding of Liquidity

Within the framework of the ReFi idea, making a profit when working with liquidity is not a goal in itself. Instead, the movement of liquidity is understood as a means and link in the chain for the integrated solution of social, environmental and scientific problems. The circulation and movement of capital, rather than its accumulation, are the focus of regenerative finance. With the possible popularization of the ReFi idea, the cryptocurrency sphere has a chance to update its image. For the general public, the use of crypto assets can be perceived in isolation from the "real world" and associated only with speculation in fiat coins with the sole purpose of getting rich quick.

Traditional methods of financing new projects are too limited to provide comprehensive solutions to existing systemic problems. The increasing inclusion of environmental, social and governance criteria in investment decisions is a positive trend, but the focus so far has been primarily on mitigating the adverse effects of the existence and operation of a project. The latter is gradually becoming a trend even for the existing functionality of some platforms.

The decentralized SushiSwap protocol (SUSHI) recently when working in the Polygon network (MATIC) proposes to make user token swaps harmless to the environment. To solve this problem, the project works in partnership with KlimaDAO. The digital asset of the project (KLIMA) is provided with compensatory units of carbon dioxide reduction. The cost of the "green" swap will cost less than $ 0.01 more expensive than a regular transaction.

Investors focused solely on making a profit tend to focus on a limited set of goals. They often do not take into account how the result is achieved, or who ultimately benefits from the implementation of the plan. In this respect, the ideals of ReFi keep pace with the aspirations of many modern companies, which, for example, try to minimize harm to the environment and the health of workers in their own production.

Royalties when trading NFT

Most NFT platforms allow you to set the percentage value of royalties for issued tokens. The creator of the liquid and actively traded NFT, continues to earn rewards from each trade. This feature allows you to integrate ReFi initiatives into almost any NFT collection.

A pre-described formula for using funds in the form of royalties for socially useful tasks or charity gives special meaning to the trading of tokens from the collection. With this approach, the profitable resale of NFT solves several problems at once: it brings profit to the seller, finances a useful initiative, and also strengthens the ties between entire ecosystems.

One example of such NFT collections is the TON Animals Red List project. 25% of the value of each transaction is transferred to the International Fund for Animal Welfare. The potential of such initiatives in the field of NFT is enormous, given the multimillion-dollar daily trading volumes in popular collections on the largest marketplaces. At the same time, NFT trading volumes can continue to increase as long as they want without the risk of damaging the planet: the sale and "production" of NFT do not imply problems with logistics, waste disposal and recycling or ethical problems with the exploitation of cheap labor.

To some extent, the royalties of NFT projects that adhere to the ReFi concept may vaguely resemble a form of taxation. However, unlike taxes in the classical sense, here the amount of payments is determined in a decentralized way, and their distribution is more transparent and available for analysis through blockchain browsers or analytical services. Creating formulas for calculating royalties, initially taking into account the ReFi approach, can help in the development of a healthy competition of alternative concepts of decentralized voluntaristic "taxation", because NFT collectors themselves have the right to decide which tokens to trade them.

Active projects

The CELO blockchain actively uses the rhetoric of ReFi in marketing. The project community regularly holds meetings both online and organizing special conferences. Several projects have already been launched on the CELO blockchain. For example, Flow Carbon tokenizes carbon credits to keep track of them on the blockchain, which makes it easier to return funds to funded projects. Astro Protocol develops tools to interact with user location data that are available for regenerative financing protocols. Moss is engaged in the protection of the Amazon rainforest, the token of the MCO2 project allows users to realize the purchase of carbon credits from certified companies operating in the region. It is the use of blockchain that makes the process accessible to ordinary users.

With all the importance of ReFi concepts, it is too early to talk about the practical benefits of projects that adhere to the idea of regenerative finance. The main reason is the low interest of a wide audience, while few people are ready to participate in such initiatives. The daily trading volume in pairs with MCO2 is only $ 64 thousand, according to CoinMarketCap, although the token is traded on major crypto exchanges, including Coinbase. The value of TVL (total blocked value) in the MCO2/CELO pool on the Uniswap exchange was $87,<>.


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