IBC-Compatible Ecological Tokens
High-quality nature-based digital carbon for the Interchain economy, unlocking Web3 regenerative finance and catalyzing solutions to the climate crisis.
Fungible, IBC-compatible (InterBlockchain Communication Protocol) carbon tokens are coming to Regen Ledger! The official release of Regen Ledger v3.0 is out and the governance proposal to upgrade Regen Mainnet has been submitted.
RND has developed a framework for fungible, IBC-compatible ecological tokens. These basket tokens are backed by nature-based carbon credits that have verifiable ecological, social, and economic benefits issued onto the Regen Ledger blockchain. Basket tokens can be used as a carbon offset and retired on-chain by reversing a basket token and retiring it in the on-chain registry on Regen Ledger. Basket tokens can also be used as a decentralized finance collateral asset, meeting the demand of an rapidly expanding market for DAO treasuries, carbon trading, and NFT marketplaces.
What’s the vision behind our Basket Tokens?
Given the severity and urgency of the climate crisis, digital carbon innovation is enabling new demand sources for regenerative agriculture and land conversation projects that underpin regenerative finance, colloquially known as ReFi. Bringing carbon on-chain and architecting the green lego infrastructure of the ReFi ecosystem is central to ensuring market efficiencies serve the communities of practice that drive real-world climate impact.
Basket tokens bring the first digital carbon to the Interchain economy. Basket tokens are fully fungible with other tokens from the same basket, and tracked in the Bank Module, which allows these assets to be made visible in wallets like Keplr, and transferable via IBC to other chains in the Cosmos ecosystem.
When bringing ecocredits to market, for example offering them for sale on a decentralized exchange or to a potential buyer, there are a few key issues that need to be overcome:
- A buyer may seek to purchase more ecocredits than are available in any single batch
- A buyer may seek to purchase a large number of ecocredits without selecting which specific batches these ecocredits are sourced from
- An ecocredit owner or seller may want to place their ecocredits into a liquidity pool, which requires very high volumes of ecocredits to be locked in liquidity (ie. more credits than may be issued from a single ecocredit batch)
Ecocredit baskets are intended to solve these problems by aggregating heterogeneous ecocredits together. Baskets enable ecocredits from different batches to be deposited into a basket in exchange for redeemable vouchers, known as “basket tokens.” Any basket token is fully fungible with any other basket token from the same basket. Every basket token is redeemable for an underlying ecocredit that was placed in the given basket.
Basket tokens may increase the marketability of ecocredits in a number of ways:
- Provide market signals by curating acceptable methodology and registry standards
- Enable easy retail and corporate purchases at larger volumes
- Enable greater composability in cryptocurrency/blockchain use cases, such as in DeFi for use as collateral
- Easily interoperable with existing carbon token standards that are emerging in other cryptocurrency/blockchain projects
Baskets Module Overview
With the upgrade to Regen Ledger v3.0, the ecocredit module includes basket functionality, enabling the aggregation of heterogeneous ecosystem service credits into baskets. Ecocredits from different credit classes and batches that meet defined criteria can be deposited within a basket in exchange for basket tokens. For more information about the full functionality of basket tokens, see the basket specification.
Regen Ledger v3.0 includes a scoped-down, minimum-viable basket implementation with the intention of bringing IBC-compliant carbon credits to the Interchain. Let’s take a look at the main data structures within the Basket Module. The MVP version of baskets proposed in Regen Ledger v3.0 allows for:
Establishing Basket Criteria
“BasketCriteria” is a set of attributes that an ecocredit must have in order to be added to the basket. The “BasketCriteria” MVP is restricted to only allow for a list of credit classes and a recency filter, represented either as a fixed minimum batch start date, or a rolling recency window. For example, perhaps a batch start date must be within the last 6 months. Fields such as name, exponent, picking, and auto-retire options are set at instantiation and cannot be changed at a later date.
Curating Basket Criteria & Creating a Basket
The Regen wallet address that creates the basket is referred to as the basket’s curator. After instantiation, basket criteria can be updated by the basket creator. Basket creation requires a fixed fee, payable as 1000 REGEN, that goes to the Community Spend Pool.
Depositing Ecocredits into a Basket
Once instantiated, baskets allow holders of eligible ecocredits to deposit those ecocredits and in return receive a redeemable 1:1 voucher. These vouchers are known as basket tokens. Basket token holders may hold these tokens or sell them on the Osmosis exchange, an automated-market market (AMM) blockchain in the Cosmos ecosystem.
Redeeming Ecocredits from a Basket
A basket token holder may redeem their basket tokens in exchange for an equal amount of ecocredits in the basket one for one. The MVP allows for “TakeFromBasket”, for example taking an equivalent number of ecocredits from the basket. All calls of “Take” will always retrieve the oldest credits first by batch start date, ensuring the basket flushes out old ecocredits over time. This mechanism mitigates a basket’s aging, ensuring a healthy cycle of ecocredits, and facilitating freshness to the basket.
An ecocredit holder has the ability to retire, transfer, or hold their ecocredits. Once ecocredits are retrieved from a given basket they may be retired by the account receiving them for offsetting carbon emissions.
We are pursuing another release of the ecocredits module this spring, which allows for the release of the Regen Marketplace, an order-book decentralized exchange for the listing and exchange of ecological assets. Sellers can define, manage, mint, and sell digital carbon in the on-chain registry system. Buyers can purchase, retire, transfer, and bundle digital carbon on the blockchain. Launching late spring, the Regen Marketplace will showcase a customized portfolio of high-quality ecological assets, carbon removal and emissions reductions, from multiple carbon credit registries, including Verra, City Forest Credits, and Regen Registry.
We are also scoping out bridging solutions, enabling the ability to transfer ecocredits across multiple blockchains and bridging carbon on-chain from existing carbon registries.
If you would like to experiment with the basket module the latest version will be available on our stable test network REDWOOD and experimental test network HAMBACH.
The baskets module enables the creation of fungible, IBC-compatible tokenized ecological assets. This Regen Network infrastructure ensures the origination of high-quality nature-based digital carbon in the Interchain economy, unlocking web3 regenerative finance and catalyzing solutions to the climate crisis.