The Caraga Campaign: A Blockchain — Powered Solution to Scale Reforestation
RootProject and GPSS have developed a model to create a high rate of return for donors/investors to the campaign by using cryptocurrencies tied to bonds to leverage the 7–10-year growth term of trees against the volatility of crypto assets.
Forests stabilize climate, regulate the water cycle, benefit food production, mitigate climate change, and increase prosperity for developing communities. In short, forests are critical to life on earth, yet today forests are more endangered than ever and the cumulative effects of deforestation are devastating. Solutions are urgently needed to drive reforestation on a large scale, but the question is how do we create economic incentives to drive this tremendous benefit? RootProject and Global Partnership for Sustainable Solutions (GPSS) have such a solution.
Community Environmental Conservation Funds (CECFs) are the leading approach to economic incentives for reforestation, and are a market mechanism to fund large scale reforestation sustainably. With a CECF model, we can assure long-term sustainability through a bond held by the local people, contingent on continued protection of the forest.
Benefits: CECFs link the preservation of forests with the economic prosperity of society. Because CECFs engage a local population and authorities to monitor the forest’s health, as well as integrate invaluable local knowledge, values, and governance into preservation efforts.
The Problem: CECF programs have been geared traditionally to philanthropic donors because the credits do not provide investors with returns, hence CECF programs can’t scale or sustain themselves.
The Solution: Turn donors into investors — specifically, create a high rate of return by using cryptocurrencies tied to bonds to leverage the 7–10-year growth term of trees against the volatility of crypto assets. Enter ROOT tokens.
Financial Details: ROOT tokens are the first crypto asset designed by economists for scalable impact projects. To drive reforestation, RootProject and GPSS have developed a model along the following lines:
- 33% of funds raised are put into ROOT tokens;
- At or above 200% of the ROOT token purchase price at any time during the 7–10-year term, ROOT tokens are liquidated into USD;
- After liquidation, the original token purchase amount is pledged to a bond in USD; and
- The investor receives a return of nearly 100% on the reinvested portion of investment.
Financial Benefits: (i) The “donor” is transformed into an investor, potentially making exceptional risk-adjusted returns, while helping the planet and developing communities. (ii) Because the overall supply of the crypto asset is small, the purchase of the token creates additional scarcity and raises the value of the crypto asset over time.
Implementation Details: To assure returns and reduce risk, the ROOT token model allocates two-thirds of the raised funds raised to purchase equity in GPSS’ sustainable development plan which directly benefits the indigenous people, offering job creation, education, health needs and hands-on project implementation.
Transparency on the Blockchain: The use of ROOT tokens includes smart contracts to monitor reforestation and sustainability. Investors may check verified data on a public ledger without any intermediation by GPSS or other groups.
The Potential: By changing the existing donor driven CECF model to a high return investor driven model, RootProject and GPSS are creating a new financial investment capable of scaling both high returns and significant impact. With this model, Blockchain enabled crypto assets are being introduced in a responsible manner to create a new class of highly effective impact investments.Forests stabilize climate, regulate the water cycle, benefit food production, mitigate climate change, and increase prosperity for developing communities. In short, forests are critical to life on earth, yet today forests are more endangered than ever and the cumulative effects of deforestation are devastating. Solutions are urgently needed to drive reforestation on a large scale, but the question is how do we create economic incentives to drive this tremendous benefit? RootProject and Global Partnership for Sustainable Solutions (GPSS) have such a solution.
If you’re interested in learning more, or starting a conversation with Gina, Nick or the GPSS team, send us a note at gina@rootproject.co
About RootProject
By applying blockchain technology to crowdfunding, RootProject makes it easier to fund the things we care about most. This means that we leverage the power of smart contracts to collect zero fees on the crowdfunding campaigns that RootProject supports. Instead of collecting a typical crowdfunding fee, a percentage of funds raised purchases ROOTS tokens on the open market, thus driving the price up. We call this the currency-as-fee model. By locking our ROOTS tokens away for just a year or two, we are able to return all funds to our partner organizations and partner projects so all of your contribution is going directly to the nonprofit organization and not to administrative fees.
About Global Partnership for Sustainable Solutions
GPSS is an international development corporation that brings socially and environmentally responsible companies, institutions, and investors together into emerging markets for scalable, sustainable, shared value development. GPSS bring the world’s best practices, technologies, and innovations to developing regions to optimize economic impact linked with positive social, environmental, and governance benefits. GPSS works holistically with the local people in developing regions to create new models for sustainable development in which the local people are economic partners benefiting with global investors and businesses in the creation of new industries and markets.
