Purging NFTs: Carbon Credit Offsets for NFT Markets
Details about our recent project with NYU’s Computer Science graduate program
Background
The proof-of-work mechanism used to verify NFT transactions is commonly perceived as an environmentally damaging process because it consumes large amounts of energy from nodes around the world in order to solve the cryptographic puzzle central to blockchain.
Recently, we paired with students from New York University’s Computer Science graduate program to develop a capstone project devoted to making blockchain transactions greener. The project focused on building a more eco-conscious NFT marketplace by using a carbon credit system where buyers or collectors must purchase carbon credits (in the form of tokens) to offset the environmental impact of an NFT in its lifetime. The carbon credit can be imagined as a type of certification badge affixed atop the NFT to indicate its carbon neutrality. When the NFT is transferred to a new owner, the buyer or seller must view its carbon impact — which is based on energy usage — and add additional credits in order to maintain carbon neutrality. By mobilizing this certification process, we hoped to generate a decentralized marketplace where carbon-neutral NFTs are not only preferred but considered the standard.
Below, we’ve compiled information about the project and the results.
The Project
The main objective of the project was to create a data science-oriented service that evaluated the carbon emissions percentages of NFT transactions as they were traded by using a data processing pipeline. The students created a system called NFT Purge that contained three main steps to make an NFT emissions offset transaction:
- Search: Users must search an NFT to learn its accumulated CO2e load. CO2e represents “Carbon dioxide equivalent,” a term that describes different greenhouse gasses in a common unit.
- Approve: Users then click “Approve” to accept the BCT amount for the CO2e load. A Base Carbon Tonne is a fungible carbon token backed by a 1:1 verifiable link to carbon credits in a supported registry.
- Offset: Users click “Offset” to carry out the BCT transaction and purge the CO2e load.
The search feature followed a simple workflow that began by calculating the CO2e data on a BigQuery platform. From there, the data was exported to the database and queried on the front-end so that users could discern the CO2e information. Below, we’ve included a diagram that shows precisely how this works.
The approval and offset features followed a similar pattern. Guided by an assortment of smart contracts, the offset feature interacted with a wallet on strict measures, giving the carbon-neutral badge to transactions that met certain criteria. Essentially, the smart contract recorded the offset amount for each individual NFT. This data was then transferred to a site built by the NYU students that contained a database for total CO2e percentages and limits. At the site, the NFT transactional data was compared to the values stored in the database. If the transactions met the criteria, they were given a carbon-neutral badge. Below is a screenshot of the NFT Purge site.
Here’s a breakdown of the approve and offset functionalities.
The Results
The NFT Purge system developed by the NYU students was proved to be a feasible system, and its assortment of smart contracts were deemed effective at curbing carbon emissions during NFT transactions.
The project also proposed three tenets that could be used in the future by dApps looking to incorporate the NFT Purge system or develop their own carbon credit process.
- Green label: attach a label to the NFT, like an organic food label
- Marketplace process: offset the carbon emission and then trade
- ETH feature: embed the carbon credit system within Ethereum underlying protocols
Overall, the project not only discovered new systems of blockchain commerce, but also found new ways to curb the carbon footprint that such transactions infamously incur.
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