We’ve just started to be more public about Watr Protocol and its ecosystem of key partners — including the web3 powerhouse Parity Technologies — covered by TechCrunch and Coin Market Cap amongst others. It feels like an equally good time to share a little more about our why and to give our purpose more color.
We call Watr the ‘digital commons for ethical commodities’.
We want people to remember and relate to it as being mutually owned and used; like the commons and shared spaces of a physical community.
This time though, serving as the common digital venue and infrastructure which ultimately empower us to exercise choice in what our consumption finances: in far away geographies and distant communities who are connected to us through vast global supply chains that export prosperity.
At Watr, we believe it’s time to do better business — to ensure prosperity isn’t simply exported while eluding resource owning communities and scarring their ecology.
We are not the first to believe this. There is a growing consensus amongst my former colleagues and current friends in the resource majors that achieving this alignment in earnest is not only the right thing to do but also critical for sustained value creation, profit and growth. As a result, and with only a few exceptions, energy, mining, agriculture, shipping and trading majors are all working hard to be the standard bearers for a new class of ethical commodities.
Aligning ‘good’ with ‘profit’ is increasingly business critical for resource industries because consumers have become more active in understanding the whole of what we enable through our consumption. More and more financiers are refusing to finance commodities of unknown origin and supply chain practices. Like blood diamonds before them, we have started to care about what we consume. When we buy a MacBook or an iPhone: where is the aluminum, lithium ion, etc… coming from? How about the cobalt and copper for my Tesla? The electricity I charge it with? If I go left into a Shell gas station vs right into a Chevron one, is there a different footprint? And importantly, do I care? Would I pay a cent more? Would I change electricity providers to avoid coal generated power? Would I make a u-turn to buy petrol from a responsible producer or do I not mind?
‘From where, with what means and at what non-financial cost’ has been lost in layers of opacity because many did not care or know to care. Since not many cared about this sort of accountability , not many invested in the requisite transparency to service it. Where it was mandated by governments, local impact was a cost item; a corporate social responsibility investment simply to be allowed to operate in certain geographies.It was not a differentiator or value driver. That has fundamentally changed through the years and an elevated movement of growing awareness with organics, fair trade, blood diamonds, climate crises, and most recently mass self sanctioning of governments that wage injustice becoming part of the social and economic fabric of how many live and consume today.
We have entered a new era of collective social and environmental consciousness with demand and urgency for better ways of interacting and understanding the activity our consumption finances. There is an urgent need for a new class of premium and transparent commodities that align business with good. Ethical financing has also emerged as a powerful tool amplifying this rising tide while global consuming powerhouses like Apple, Tesla, Nestle, etc… are setting clear governance boundaries for what they will and what they will not engage with and buy. Commodities are no longer all the same. There are many grades and sliding scales of ethicability and corresponding demand.
Crisis Into Opportunity
As in all important opportunities for transformation, timing is everything — and this moment is marked by a series of socio-political dynamics that expedite transformation and make new profit models inevitable.
Global trauma, Covid, war, climate and collapsing food systems have highlighted the vulnerable nature of access to essential resources and the supply chains that connect global supply with demand. While the global stock market has softened significantly, energy and commodities in contrast (e.g. XLE) are achieving record profits as a manifestation of this scarcity and the crucial nature of these giants.
Consumers and financiers’ demands for transparency and ESG performance have been amplified with even greater focus on the “G”: Governance and provenance are now increasingly topical and a selection criteria for goods and services, alongside the environmental and social footprint of the same. Pricing ESG into commodity and resource supply chains is increasingly an urgent necessity whose solution lies in DeFi business models and blockchain.
Price spikes and supply chain strains have exacerbated the already stretched financing capacity for commodities to well above its previous $1.7 trillion dollar gap. Accessing efficient and verified (KYC-d) liquidity is incredibly urgent and of high-value for commodities — across supply chains to keep our global economy churning.
At the same time, the voluntary carbon market as a means of financing climate action, and a key enabler for achieving net zero, needs to expand exponentially to meet the commitments made by giants of industry in offsetting their emissions. There is emerging potential to harness genuine retail participation alongside this enterprise demand. Decentralized models and tokenized carbon credit platforms are competing to usher in an era of Carbon as an asset class, its digital representation and even as a non-sovereign community currency.
However, much of this is advancing in fragmented silos, isolated from the global demand centers for these assets. There are brilliant d’app teams working on pieces of the puzzle but they are fragmented and solo — where instead a holistic system warrants being designed and curated. One that is fit for purpose in addressing one of the greatest crises of our time. Without real assets, commodities or supply chains to service, no on-chain ecosystem is able to meaningfully address the voluntary carbon market. On Watr, we see these as deeply intertwined with co-creation built into every step of design and implementation.
These realities of the commodity markets are concurrent with emerging decentralized finance technologies that today connect a trillion or so dollars of on-chain liquidity. This liquidity, and the venture capital behind it, are also starting to seek more substantive and meaningful paths to leverage their resources. Web3 and tech are in search of increasingly more substantive outlets than gaming and speculation — especially in light of the current bear market on wall street and on-chain. Real world assets and enterprise-retail integrations are key value drivers for web3’s growth and its next iteration.
Watr was created to connect these worlds; to bring decentralized business models, capital and its leading developers to innovate and build for real world assets alongside giants of industry, commodities and trade. We address the KYC-AML and compliance requirements of industry while sustaining web3’s openness and focus on data sovereignty. That has been the Foundation’s mission since inception in ’21. It so happens that market dynamics brought urgency and expedited market uptake.
With some of the brightest minds in Web3 and commodities, we are building the bespoke and public blockchain Layer 1 to house the end-to-end of a new class of ethical commodities. We leverage KYC-d DeFi liquidity in partnership with teams like TrueFi to finance them. We have convened and are growing our coalitions for tokenized trade and exchangeability of ethical metals, agriculture, energy and carbon so that the market can buy, sell and trade these new classes of commodities on-chain through bespoke smart contracts — for physical delivery.
We come from commodities as well as some of the world’s first and largest digital startup ecosystems. Our board and advisors are founders and pioneers from commodities, capital, web3 and sustainability. With that braintrust and our relationships, we are also carefully curating the strategic d’app ecosystem and digital ventures that are required to bring this vision to life. One step at a time.
Watr begins in Africa — a heartland of opportunity and immense potential for impact. Because like other global citizens with deep roots in commodities, we have experienced the wonder, the magic and the rising tide of talent on the continent while being painfully aware of the jarring distance between resource wealth and local prosperity. It’s time to do better.
For example, today the Watr Foundation and its partners are financing digitized agriculture and metals aggregators and exporters from Nigeria. The Foundation provides seed investment and liquidity (expanding into specially curated on-chain liquidity pools implemented with our strategic partner TrueFi) for crop and commodities financing. It then leverages its partners’ unique data on the area served and digital supply chains to minimize HSSE risk AND avoid the food waste that plagues farmers and small producers across the continent.
There is a strong business case and meaningful role for DeFi liquidity and technology in supporting food and resource security from Africa. In the field of agriculture, there is the added opportunity for technology and capital to decrease the ‘yield gap’, meeting global standards and helping fuel food security. We are committed and working hard — alongside local and international partners — to be a part of that solution.
Other partnerships see us combining DeFi liquidity with digital identity to provide financing and identity solutions to the last mile: farmers, small & medium business owners, supply chain operators and logistics companies. Whilst a very complicated challenge, we have unique access to partners with physical retail sites across the continent and access to unique data about borrowers. DeFi was made for the last mile. At Watr, we are fortunate enough to have the physical and digital partners required to bring this outcome to life without taking disproportionate risk.
And finally — we see the voluntary carbon market as a powerful tool to deploy in healing the environmental scars that resource wealth has left on the continent. Carbon credits are a means of financing environmental preservation and repair. To ensure ecological prosperity is localized, the Foundation is focused on Africa for generation and sourcing of carbon credits and climate action. Through partnerships with world-class carbon and technology teams, we are advising on, curating and onboarding marketplaces to bring greater accessibility, transparency and price discovery to the voluntary carbon market. Today’s on-chain carbon ecosystem is fragmented and excludes the largest demand centers for the VCM. We work with our environmental products partners like FlowCarbon to ensure their products are co-created with, and are amplified by demand from the largest consumers of voluntary carbon today: industry and commodities.
A personal note to end with. I’m Persian-American. When I chose a career with an energy super major, my mom was heartbroken. She told me stories of her visits to the Persian Gulf and seaside resorts when she was young and the scars of signs that said: expatriates only. In her youth, the Anglo-Iranian oil company not only owned some 90% of the profits generated by Iranian oil, it also had rights to all the best of her home country. It had permission to exclude her and those born to the land from accessing it. Decades of social, political, ecological and economic trauma and two revolutions later, the memory and scars of misappropriated resource wealth is vivid and passed on to her children. I also tell the story to my small human.
Today, though, the right technological tools coincide with an elevated collective consciousness and meaningful pressure on the bottom line to do better: to bring alignment between our values and our consumption. The story I tell my son is a much more empowered one with the ability for each of us to choose what our consumption finances in geographies far away and in lives of little girls and boys connected to us through the supply chains that fuel our lifestyle.
This is our mission — our why and what — at Watr. Join us in building a future to live in.