Last year we announced the Carbon Opportunities Fund, a partnership between the IFC, Cultivo, and Chia Network, raising private capital to source, tokenize and sell high-quality, verified carbon credits. And today, we’re thrilled to be announcing the first transactions and retirements using the Chia blockchain and the Climate Action Data Trust.
On April 28, 2023, the first auditable and verifiable carbon offset was registered into the Climate Action Data Trust and published on the Chia Blockchain by EcoRegistry in Colombia from a carbon project that the Carbon Opportunities Fund (COF) had acquired. At the fund’s request, EcoRegistry tokenized 10,000 tons of carbon on the Chia blockchain in block 3,582,007 by minting a Chia Asset Token, representing the transaction, directly into the COF’s wallet. The COF made arrangements with Melonn to purchase 500 tokenized carbon offset tons and accepted payment off-chain. COF sent 500 tons of tokenized carbon to Melonn’s Chia wallet in block 3,587,105. Melonn then successfully retired 500 tons of carbon in block 3,587,052. Retirement can be seen on-chain as the spend of the carbon Chia Asset Token that creates no child coins. EcoRegistry subsequently marked 500 units as retired (found at the bottom left of the Carbon Credits tab) in its registry and in the Climate Action Data Trust. This was done using a project-specific CAT whose asset identity is bff40a4f913f8b25e8d708b95e83ba0b43321ef483b74251ce5b8a29d3244d17. At that time the COF had 9,500 tons of Programa de Compensación de Emisiones Cipreses de Colombia S.A. remaining to sell. After selling 600 tons to Sumitomo Corporation in two transactions in block 3813819 and 3813836 on June 16th, the available carbon on chain as of this post can be found here.
Now Melonn can prove to their auditors, their customers, or anyone that they purchased a valid and unique carbon offset which can go from the buyer showing the block for both acquisition and retirement and proving they control the keys that were used to retire the specific tonnage of carbon. That then links back to the status being updated directly in the CAD Trust. Those tons, for that project and that time period can not be double created or double retired thanks to the power of the CAD Trust and the market enabling transparent capabilities of the Chia Blockchain.
And we’re just getting started. The COF will continue to acquire and sell high-quality carbon offsets delivered on the Chia blockchain.
In the next batches we hope to use Offer files to sell tokenized Carbon in a trustless manner to the ultimate buyer. This avoids having to use SWIFT for buyers located in the US or Europe to pay projects and project funders who are often in the global south. Instead of “maybe today” and “maybe all the funds will be there or will it be $20 short?” buyer and seller know immediately that the transaction is in flight and will be initially settled in under a minute and fully settled in about two and half minutes without needing any third party or requiring that the buyer or seller trust the other party.
A little further down the line, we hope to enable direct on-chain auctions for high-quality carbon offsets sourced and sold by the COF. As these are higher quality than average, we expect them to demand higher prices. There really is no better way to find that price than an on-chain public auction that is trustless and decentralized. Once that clearing price is found, we’re excited to see secondary markets using Decentralized Exchanges (DEXs) and Chia Offers to immediately spring up to buy, sell, and retire these offsets.
In addition to ensuring a high quality truly additional carbon offsets and providing transparency, there are two ultimate goals here to bring efficiency to the carbon markets:
- The first is to create baskets of carbon projects that fit into the major carbon varieties and are tested for higher standards to allow projects to trade in project-specific tokenizations for a widely listed and deeply liquid set of carbon tokens in categories: natural sequestration, natural offset, technical sequestration, and technical offset. Buyers will be able to review which projects they’re likely to retire by sampling a few projects in, say, the natural sequestration carbon pool. Assuming those meet the higher standards as expected, the buyer can acquire as many tons as the market can bear and then retire them with peace of mind that they are getting unique and properly vetted carbon offsets that will now be fully and transparently auditable by anyone to confirm that these offsets are unique and meet the underlying standards. Shortly after retirement, each of the actual underlying projects and tonnages will be updated in the CAD Trust so a buyer’s constituents can verify every ton and every project in the CAD Trust that was retired in the buyer’s retirement block.
- The second is to enable projects to “go direct” to these markets, thus being able to get a greater portion of the value created. This is possible, both because of the power of the Chia blockchain to make obtaining, custodying, selling and retiring credits easy, but also because finding a global price of these high quality carbon offsets that trade 24×7 will unlock a very large amount of private capital and lending that has been on the sidelines because the price and the markets have traditionally been opaque. This way more of the value of the offset gets directly into the hands of the people on the ground making these projects happen.