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The Future of Decentralised Finance: How Regenerative Finance (Refi) is Changing the Game


The Future of Decentralised Finance: How Regenerative Finance (Refi) is Changing the Game

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What is Regenerative finance? 

Regenerative finance in Web 3 refers to a new way of using blockchain technology and decentralized systems to create financial products and services that promote sustainability and regeneration of natural resources.  

In simple terms, it is a way of using digital technology to create financial tools that help protect the environment and promote sustainable development. This can include things like using blockchain to track the impact of sustainable investments, or creating decentralized platforms for buying and selling carbon credits. 

Let's have a look at the example, 

Celo is a decentralized platform built on blockchain technology. it is the carbon-negative, mobile-first, EVM-compatible blockchain ecosystem leading a thriving new digital economy for all.

It uses a stablecoin called the Celo Dollar (cUSD) which is pegged to the US dollar, Celo Euros (cEUR) and Celo Reals (cREAL) to provide a stable and reliable form of digital currency that can be used for transactions and payments. In terms of regenerative finance, Celo is using its platform to promote sustainable development and environmental conservation.

One example is the Celo Green initiative, which allows users to purchase carbon offsets and invest in renewable energy projects through the platform. The Celo Green initiative allows for transparent and verifiable tracking of carbon offsetting projects, and allows users to see the impact of their investments in real-time.

Additionally, the Celo platform also has a mechanism to reward users who contribute to the network's sustainability, through a mechanism called "Proof of Stake" The platform's Proof-of-Stake consensus mechanism also aims to reduce energy consumption.   

How polygon is also going to the Carbon negative which itself is a step towards the Refi movement 

Polygon’s Green Manifesto announced that it includes the plan to achieve carbon-negative status. For Refi Polygon partnered with KlimaDAO and Polygon is purchasing the credits via KlimaDAO's on-chain carbon market, Klima Infinity, and retiring them using its offset aggregator decentralized app. Polygon will then selectively retire the offsets within the carbon token pools that meet the highest standards for additionality and positive environmental impact. 

KlimaDAO also analyzes Polygon network's energy footprint and supports its emission management and mitigation strategy. Polygon's Proof-of-Stake consensus mechanism also reduces the network's energy consumption. so that's how the polygon is taking the steps towards Refi. 

Klima Dao's initiative 

Klima Dao is a blockchain-based Initiative. Klima DAO gives Web3 builders and users the opportunity to participate in the carbon market through the KLIMA token. Every KLIMA token is backed by a real-world carbon asset. KLIMA tokens represent one tonne of carbon reduction, known as Base Carbon Tonnes (BCTs).  


The process of Klima DAO involves the following steps: 

Verification of carbon projects: The first step is to verify carbon reduction projects, which are then issued carbon credits. These projects are typically focused on reducing carbon emissions and promoting sustainable development. 

Tokenization of carbon: Once the carbon projects have been verified and issued credits, they are then tokenized. This process involves converting the carbon credits into a digital format that can be traded on the blockchain.

Depositing tokenized carbon into the pool: The tokenized carbon is then deposited into a pool, which is managed by Klima DAO. This pool serves as a marketplace for buying and selling carbon credits.

Offsetting carbon: Users can then offset their carbon emissions by purchasing carbon credits from the pool. The carbon credits are then retired, which means they are removed from circulation and cannot be used again.

Earning rewards: Users who participate in Klima DAO's staking process can earn rewards by holding KLIMA tokens. These tokens represent one tonne of carbon reduction, known as Base Carbon Tonnes (BCTs). 

To get carbon credits from Klima DAO, you would need to participate in the carbon market through the KLIMA token. You can purchase KLIMA tokens on the platform, which are backed by real-world carbon assets. These tokens can then be used to offset your carbon emissions by purchasing carbon credits from the pool and retiring them. Additionally, you can earn rewards by participating in KLIMA staking.

 

We all know how important Defi is to make traditional finance better as well as it will be highly useful to help people from unbanked nations. Regenerative finance (Refi) is a new and emerging field that uses blockchain technology and decentralized systems to create financial products and services that promote sustainability and regeneration of natural resources. 

Also read: The role of liquidity in decentralized finance (Defi)

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