Regenerative finance (ReFi) projects are blockchain projects that are developed so that the resources used over time are regenerated. Be aware that for ReFi and regenerative tokenomics to be truly regenerative, all aspects and dimensions (internal and external) need to be integrated. The principles and solution proposed here to develop and apply integral regenerative tokenomics at scale following the RCD framework is only viable if the internal dimensions of human regeneration are equally taken care of by all. Our challenge now is how to (re)design our systems such that the systemic behaviors of which we are part cease to what is regenerative finance bring forth this divisive polarization effect. To (re)design our human systems in such a way that we finally become evolutionary coherent and supercoherent with our planetary and cosmic systems.

Regenerative finance in action: Food systems, racial justice and mission-first business structures

• Conventional finance approaches are too myopic to fully address the systemicfailures we’re facing.
• This makes investments that were once limited to a select few more accessible and democratized.
• The industrial economic theory works perfectly when Land, Labor, and Capital are present, but the cycle of prosperity breaks when Land no longer exists.
• That’s great, as it brings the actual utility of blockchain technology into focus, instead of zooming in on technological advancements, or enforcing a (too) radical change to old systems and approaches.
• Based on open code and secure ledgers stored on consensus networks, ReFi offers a way to implement a more democratic and inclusive alternative to traditional financial systems.

That is the act of emphasising the sustainability of a business’s products and services (even if they aren’t sustainable at all) to https://www.xcritical.com/ capitalise on consumer trends around environmentalism and gain a competitive advantage. As finance use cases in Web3 continue to evolve, there is one relatively new concept called Regenerative Finance (ReFi) that is gaining significant traction. This combines Decentralised Finance (DeFi) with positive social-economic and environmental goals – such as removing carbon dioxide from the atmosphere. You’ve found yourself at a unique intersection of many complex trends that has the potential to reshape the very foundation of our economy.

What are the Potential Benefits of Implementing ReFi?

Blockchain ReFi can be thought of as a valuation of natural assets on the blockchain. This article will open your eyes to the potential of ReFi, including impacts, potential growth, pitfalls, and real-world use cases. In addition to the ESG criteria, this concept also focuses on technologies such as blockchain, artificial intelligence (AI), and the Internet of Things (IoT). By using these technologies, the financial system could become more transparent, trustworthy, and efficient. ReFi aims to use crypto for good by harnessing the potential at the intersection of profit and purpose and introducing the idea that it pays to help the planet. These assets are liquid on marketplaces such as Opensea, Voice.com (the leading carbon-neutral NFT marketplace), Nifty Gateway, SushiSwap, and others.

Regenerative Finance – embracing a sustainable future

In the view of these complex system thinkers, promoting the health of the underlying human network is vastly more important than increasing the volume of economic output (GDP growth) per se. To get a broader picture of the potential of regenerative finance, read our research report, Real World Assets for Real World Purposes. Its data storage structure reduces risk of fraud and foul play in regenerative projects and Impact Investments. RWAs allow the connection to the real world and add a layer of stability for value. Furthermore, they deploy the Web3 and sustainability megatrends that fuse together, to create the Regenerative Finance model. 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.

Our economic system lacks the right incentives, and there’s no way to coordinate at the level needed in a globalized world. We have plenty of resources available to address inequalities, but they often end up in the wrong hands or they can’t be distributed to the right places due to simple friction points, like issues with transferring money. Additionally, a lack of transparency in our systems has made it easier for unprincipled actors to extract profits. Allowing people access to financial services and markets that they’ve been traditionally shut out of, which could improve their daily lives, represents one of the core tenets of ReFi. Communities across the globe could make use of DAOs (decentralised autonomous organisations) for community activism, finance and social projects. It is now a call to action, driven by the need to address the failure of traditional markets to account for the negative impact of carbon emissions and the inefficient allocation of resources.

Rooted in the principles of regenerative economics, ReFi aims to forge a more balanced and just economy. A cornerstone of regenerative finance rests upon the concept of “regeneration” — the belief that financial systems can be artfully engineered to amplify and invigorate the foundational natural systems supporting our economy. Furthermore, “ resilience “ is another aspect of regenerative finance, necessitating investments safeguarding against risks and instabilities.

A new, five-year regenerative finance initiative called Funders forRegenerative Agriculture seeks to address thesechallenges by collaborating on systemic solutions that put people who stewardthe land first. Members commit to taking on more risk, commensurate with theurgency of the problems we face, and to watch for and avoid the negative impactsthat can flow from even the best-intentioned investments. Early uses of ReFi include designing novel ways to fund public goods (like open-source software) and tokenizing environmental assets (like carbon credits) so they could be used in DeFi applications (like DEXes).

Projects like Proof of Humanity, Circles and GoodDollar offer an unconditional UBI payment to all members trusted by other members of their respective communities. Digital technologies, and especially Web3 tools, show a lot of promise to help provide UBI to people around the world. 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.

ReFi operates on the assumption that the creation of monetary value must be decoupled from the unsustainable extraction of resources from our planet and communities. As with any Web3 cryptocurrency project, 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. The goal of ReFi is to create an economy that thrives off mitigating climate change, reversing some of the effects of carbon emissions, and pursuing social change. These projects can assist by helping companies invest in carbon credits, incentivizing regenerative land-use practices, or even creating platforms to help organize climate-saving initiatives.

Regenerative Finance is supporting the efforts to create a sustainable economy, propelling interest, investment, and innovation. – It leverages Decentralized Finance (DeFi) and blockchain to counteract the impacts of industrialization and systemic financial imbalances. Carbon isn’t materially underpinning these organizations, but DAOs and other crypto-based collectives aggregate voice, influence, and marketing with basic blockchain-based infrastructure support.

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. There’s room for many more investors in this space, as the demand for patientcapital deployed to optimize both financial return and impact outstrips supply. Despite knowing the purpose of ReFi, this financial model is not an easy idea to understand. However, over 90% of us have heard a story about the tragedy of the commons and a world in need of a regenerative model of finance. Web3 ignites a modern-day Renaissance, merging diverse ideas to address our planet’s challenges.

Many notable venture capital institutions such as a16z and USV are actively investing in the category; new funds like Allegory are focused exclusively on the intersection of crypto and climate. Many ReFi projects, like Toucan, are taking additional steps to keep users safe, and they are ensuring that processes are executed in a fully compliant way, for example by collaborating closely with relevant financial authorities or industry bodies. DeFi is especially relevant for those who have little or no access to banking services. It helps further financial inclusion for everyone, as entry barriers are reduced. Now, advancements in computing including blockchains and smart contracts mean we have the technology that allows us to realize the visions of these thinkers, and to expand on their work. There is a new wave of innovative projects being built on blockchains that are attempting to disrupt incumbents in this sector.

One of the core instruments in doing that is redesigning money itself in a way that writes a new story for what it actually means to be an integral human being living on a shared planet. ReFi’s mission is therefore to systematize incentives to make regenerative places feasible. Addressing current crises profoundly means designing alternatives to our domination culture systems with regenerative ones that value caring and nature.

Beyond its guiding principles, regenerative finance is distinguished by its core values, including a steadfast commitment to transparency, accountability, and ethically sound decision-making. Although there is currently a strong emphasis on carbon markets in general and transitioning the VCM to the DCM in particular within the space, the term “ReFi” is not strictly limited to carbon. Other environmental assets beyond carbon credits can be developed and tokenized, which will mean other negative externalities can also be priced within the base layers of future economic systems. Moreover, the regenerative aspect of this economic model can be applied to other areas, such as the funding of public goods via quadratic funding platforms like Gitcoin(opens in a new tab).

By placing a price on carbon, the Protocol presented a unique environmental commodity on an international scale. Imagine that—a way forward to simultaneously remedy the planet and advance the economy. Once a local resource has been depleted, civilizations start to look elsewhere to replenish those resources, often by expanding their empires through trade or, worse yet, military force. We have two dichotomies to examine humanity’s relationship with the environment’s finite resources—Man vs. Man and Nature vs. Man.

Toucan’s Carbon Bridge connects conventional carbon credit registries with an open, blockchain-based meta-registry, the Open Climate Registry. There needs to be a way to verify that only certified carbon credits are being moved on-chain, where they can then be traded or integrated into other blockchain-based applications. Additionally, ReFi projects often have a strong community of users and developers who are invested in the success of the project. By building on the theoretical foundation laid by previous generations, innovators in ReFi are working to create a regenerative economic system that prioritizes the well-being of all life and the planet. ReFi also overlaps with the decentralized science (DeSci) movement, which uses Ethereum as a platform to finance, create, review, credit, store, and disseminate scientific knowledge. DeSci tools could become useful for developing verifiable standards and practices for implementing and monitoring regenerative activities like planting trees, removing plastic from the ocean, or restoring a degraded ecosystem.

The tragedy of the commons refers to the concept of overconsumption of public goods, such as clean air or fresh water. As individuals can freely make use of public goods, these items face the risk of being overused and eventually depleted. ReFi seeks to solve this problem by using a decentralised and trustless blockchain to record individuals’ involvement in funding or overusing public goods.