• General

  • RFC: blockchain native carbon tokens - Coorest x KlimaDAO

Glad to see this proposal come through, and based what Coorest has achieved already in terms of adoption, dMRV, and partnerships - I think it could become one of the most popular assets bought through Provide ECO.

Listing CCO2 through KlimaDAO would make it much easier for CCO2 token to integrate Coorest to Provide ECO than if we were to ever do a one-off integration strictly with Coorest's smart contracts.

Establishing a straight line from Etherisc crop insurance to carbon offset production is a very savvy move by the way. It guarantees small holder farmers economic security to undergo the investment into producing carbon offsets while setting up a data pipeline to make the offsets really high quality. Really improves the end-to-end net zero and ESG goals in agricultural supply chain.

    This is very exciting to see – Coorest is using technology to advance the supply side of the VCM, and bringing this supply into the KlimaDAO ecosystem would be a growth catalyst.

    Would be keen to learn more about Coorest's future pipeline of projects, particularly in Southeast Asia.

    Do $CCO2 tokens currently exist in any liquidity pools / what have been the factors contributing to their price discovery?

      ryfleisch Yes agree. Provide ECO would be a very good combination for us. What they have built is key to corporate adoption for crypto native carbon assets. Coorest PoCC certificates can easily be generated on-chain removing double-claiming errors. The insurance product is a very important piece of the carbon puzzle in order to bring credibility to the entire carbon market. Especially if we can open it to all carbon projects.

        rittaaka We are currently onboarding a project from Asia (China). We have a collab with Farmsent (www.farmsent.io) and they focus on farmers in Indonesia that we can possibly onboard for CCO2 token generation. At this moment no LP has been set up for CCO2 tokens. They are now mainly sold OTC, Moonfarm and via our own fiat on-ramp through our main website (https://www.arbon.one/checkout/coorest-offset). For price discovery, we looked at the European market (EU ETS) and decided to follow that price but 30% lower. Our vision is to create one global price for carbon.

            Coorest Interesting, thanks!
            Keen to see how KlimaDAO infrastructure can aid in price discovery and enable scale-up of demand for the credits generated by Coorest projects.

                rittaaka To facilitate scaling and price discovery a liquidity pool on a DEX would be the next step in my opinion.

                  Coorest has created its own standard for climate projects and a single methodology.

                  Also Coorest has issued 10,000 NFTrees and about a million of CO2 tokens.

                  At the same time the registry of Coorest climate projects is not public (if it exists at all).

                  I don`t have understanding:

                  • which projects are registered or are in the process of registration
                  • of projects documentation
                  • of token`s quality.

                  The token price strategy is strange too (70% of of EU ETS AlLowance).
                  The average price of retired carbon credits in 2022 was $8.
                  To compensate the ton of CO2 using Coorest tokens companies or individuals need to pay 85 Euro.

                  I think it's too early to list Coorest tokens on the carbonmark.
                  This will not bring any profit to either side.
                  But it may undermine faith in the DVCM, carbonmark and KlimaDAO.

                  I made a brief overview of the Coorest project in my blog. If you're interested, you can take a look. It is for a Russian-speaking audience, use a translator https://carbonadvisor.org/vozniknovenie-novyh-standartov-vypuska-uglerodnyh-edinicz-na-primere-coorest

                    carbonadvisor
                    Hi,

                    All our projects that generate CO2 tokens can be found the in the CCS registry, as mentioned in the posts above.

                    Regarding the token price. We see the EU ETS as a leading indicator for carbon prices. Coorest is focused on offering a new carbon asset with higher quality guarantees. This also brings costs that we need to offset.
                    Cost that are reflected in the CO2 tokens price:

                    1. Monthly dMRV data to validate CO2 token minting (satellite data, analysis and Chainlink Oracle operations)
                    2. Free onboarding for farmers / green projects
                    3. Software development (funding for insurance product, R&D)
                    4. Additionality of carbon projects (All newly planted projects)

                    In our experience people and companies are willing to pay a higher price when buying smaller quantities (micro offsets) and get a higher level of transparency. For bigger amounts of offsets, green projects, and farmers can always be asked to sell at lower prices. Coorest isn't the custodian of the CCO2 tokens generated by these projects.

                        1. About NFTrees; batch 1 is going to produce fruits and sale of those fruits in food market are going to generate rewards, what are these rewards?
                          Is the sales monitored somehow? It just sounds so complex at this point.

                        2.Are those satellite images visible for public?

                        1. How much cco2 tokens Coorest holds and how much would be listed on Carbonmark?
                          Thanks.

                          Nikodemos

                          Hi,

                          1. The rewards will be paid out in stablecoins. Batch 1 are all Fig trees and will be sold via another company that collects the figs and sells them to supermarkets. The sales are monitored by Coorest management. The land and assets related to Batch 1 are owned by Coorest.

                          2. We upload pictures of the projects in the CCS registry. We plan to improve the visibility of the datasets in our dMRV 2.0 that we are developing with Floodlight.

                          3. Coorest only holds 8% of the CCO2 token supply. NFTree holders and onboarded projects hold 92% of CCO2 token supply as we are decentralized on the project level. We can ask our green projects and farmers how much they want to list and at what price.

                            Coorest
                            Hi, Nick.

                            Thanks for the clarification.
                            I've studied your standard carefully because we are discussing the implementation of the similar scheme in my country.

                            I like the technical approach, The quality of carbon credits can be improved.

                            I would add:

                            • Transparency. There is no procedure for discussing climate projects with local communities, as implemented in VCS and GS. The registry of climate projects is in the form of tabs without the ability to search. The social and environmental effects of projects are not always included. The correlation of the climate project with the SDGs is not given.

                            • Tracking. It is necessary to determine the climate project that released the token. It makes sense to create Pools, like KlimaDAO or Flow carbon did

                            • Robust third party validation and verification. It makes sense to accreditate a third party and delegate the validation procedure to it. To make the project verification procedure understandable to a person without deep knowledge of blockchain

                            • No double counting. To develop an effective procedure to avoid it.

                            • Additionalityt. Planting orchards is profitable without selling carbon credits.

                            CCP is a good marker for quality https://icvcm.org/the-core-carbon-principles/

                            As for the price per token, an excellent marker is MCO2. It`s advantages are VCS and listing on the main crypto exchanges. https://coinmarketcap.com/currencies/moss-carbon-credit/

                            sincerely,
                            Dmitri

                                carbonadvisor

                                Hi Dimitri,

                                Transparency: In our onboarding procedure we engage with projects continuously. Each onboarded project is involved in its own local community, therefore, we discuss with multiple communities through our partners. We provide their social media details in the CCS for other people to follow the onboarded projects and communities.

                                Tracking: It's possible to track all the wallets of onboarded projects. Because all projects generate the same fungible CO2 token, it's not necessary to create project pools. The CCS criteria allows all projects to generate the same CCO2 token. This will make it easier to develop the natural disaster insurance product.

                                Third party validation is done through our satellite data partner. As they monitor all projects continuously. Our smart contract are developed in such a way that without their data projetcs can't claim their CCO2 tokens. Coorest doesn't control this.

                                Double counting is impossible in our system because the tokens only exist on-chain. Therefore, the minting and burning of the CCO2 tokens can be tracked without having to worry about bridges.

                                Additionality in the CCS looks at newly planted trees and not at the profitability of projects. We believe it's important to include yield-bearing trees in the standard because they provide income and food to local communities. Deforestation has often an economic root cause which we are trying to improve. Coorest thinks it's important that both environmental and economic impact go hand in hand. Therefore, farmers play an important role in our ecosystem. Want to so these farmers grow by earning more income enabling them to buy more land, plant more trees, hire more workers, and produce more food. The best weapon against deforestation, poaching, and pollution is growing local wealth.

                                We see that the market, mainly consumers in Europe, is becoming critical to carbon credits related to projects in South America / Amazon and forest preservation. Often these projects are opaque, untransparent and their impact questionable. We see that The Guardian article pointed made people/businesses very critical regarding kinds of projects. Coorest sees a shift to more transparent carbon offsets and people are willing to pay a premium for that. Example: https://www.sinkit.org/projects.

                                Coorest can guarantee the buyers of CCO2 tokens that their money is directly going to our onboarded projects and there is no possibility for double counting of these CCO2 tokens due to the implementation of the PoCC certificates.

                                Kind regards,
                                Nick

                                  First off, thanks for this RFC - it's great to see alternative standards like Coorest putting themselves forward to be considered for inclusion in KlimaDAO's infrastructure via the public governance process.

                                  carbonadvisor raises some important concerns about pricing, but in my view this is part of the appeal of Carbonmark's fixed pricing model as a complement to the liquid pools e.g. BCT. Would love to see multiple listings on Carbonmark for different amounts of CCO2 at different price points to get some price discovery going.

                                  I'm curious to learn more about a few areas:
                                  1. Can you share more details or any references about how the Floodlight oracle works? Where does the underlying data that the oracle nodes are reading come from? How many oracle nodes are there? Is it relying on a single modality of visual satellite data from a single source, or do you plan to corroborate the observed sequestration with multiple data streams?

                                  2. Could you share any information about future methodologies Coorest may develop? Have you determined whether those additional methodologies will be issued under the same CCO2 fungible token, or under a separate token per methodology?

                                  In particular, the current design of CCO2 is more similar to the MCO2 token (which represents a weighted basket of half a dozen roughly comparable Verra REDD projects) - as opposed to the selectable pool design of e.g. Toucan's NCT or C3's UBO.

                                  3. Longer term, do you have any thoughts on the trade-off between using a single weighted basket token vs. a selectable pool of projects?

                                  For context, in my view, there is an unavoidable compromise between liquidity and fungibility. That said, the project-vintage token approach combined with selectable pooling seems a more flexible system that can be adapted more easily over time compared with a single fungible token like CCO2 is at the moment.

                                  4. Could you share any information about the size of the project pipeline? How much supply do you expect to be issued over the next, say, one year? 3 years?

                                      MarcusAurelius

                                      Thanks for thought about the necessity of token specification.
                                      Tokens CO2 will have low value without defining the type of climate project, vintage .

                                      It is necessary to release carbon tokens to the DVCM very carefully.
                                      Companies like Particula are preparing ratings.
                                      Project will be over if it receives several negative ratings.

                                          carbonadvisor

                                          At Coorest we believe in Carbon Standard criteria (additionally), fungibility, on-chain MRV and traceability. We now companies like Particula are trying to set ratings for the market. We are in contact with them and discussed ratings. Crypto native carbon assets will be able to create complete standards for ratings through the use of dMRV and smart contract for minting and retirement of CO2 tokens. All project types are defined in the CCS registry because they adhere to the same CCS criteria we are able to have a fungible token. This is very important for follow-up products like natural disaster insurance for these projects.

                                              MarcusAurelius

                                              1. Floodlight aggregates satellite data, in this case, biomass data is used as an indicator for CO2 absorption. Every month Floodlight put the outcome of their analysis on-chain because smart contracts can't digest this raw data. Each project has a project ID, Coorest smart contract makes an Oracle once a month. The outcome of the Orcal call determines if a project can claim CCO2 tokens. If biomass data shows negative, indicating the trees are lost, the minting of CCO2 tokens is locked. The raw data and the algo for analyzing the data happens at the side of Floodlight. Right now, this is the only Oracle for now. We are developing dMRV 2.0 at this moment to add more data and display more collected satellite data and store that on-chain.

                                              2.We are focused on setting new standards for dMRV and crypto-native carbon assets. at this moment we use satellite data because it's the most scalable tech for dMRV. Over time we will ad on-ground and in-the-ground sensor data to our dMRV to enrich data collection through the triangulation of data sources. Coorest will stick with nature / tree planting projects for the foreseeable future. Other methodologies can only be issued under the same CCO2 token if these projects can comply with the dMRV data collection criteria we have for now. For blue carbon projects for example we will need a new token bCCO2 for example.

                                              1. For the long-term we believe fungibility is key to success. It helps us to set up: 1. Insurance product 2. Sales channels are sourced from the same pool of CCO2 tokens 3.No competition between projects for selling their CCO2 tokens through our sales channels. 4. Fund all onboarded projects at the same time through our sales channels.

                                              2. We have multiple projects of different sizes in the pipeline. This year we will onboard between 100 and 800 hectares. Within 3 years we will have onboarded a minimum of 10.000 hectares. But this is hard to predict because we are getting resources in place to enhance our onboarding capacity.

                                                  I would like to make an additional point regarding ratings. At Coorest we think rating will be determined by the following criteria:

                                                  1. dMRV: which data sources / how is the data used / frequency of data heartbeats / where is the data stored
                                                  2. additionality: New planted trees / newly deployed carbon capture initiatives
                                                  3. transparency: who is controlling what / where does the money go from selling carbon assets
                                                  4. decentralization: How is the issuance and retirement of carbon assets controlled (decentralized vs centralised)

                                                  For these reasons, we chose to go, crypto native, because it allows us to have a different architecture design compared to non-crypto native carbon assets. Everything that deals with bridging off-chain to on-chain will have centralized bottlenecks preventing fully utilizing dMRV, transparency, and decentralization.

                                                    Coorest
                                                    Nick, only the market will show the demand for Coorest tokens.

                                                    These tokens will compete with:

                                                    • one-bridge tokens such as BCT, NCT
                                                    • two-bridge tokens which were usued before Verra and Gold Standard adopt rules of tokenization
                                                    • tokens which will be usued after Verra and Gold Standard adopt rules of tokenization. Such Protocols as Toucan and Flowcarbon are ready to play by the new rules.
                                                    • tokens which will be usued after creating international rules for DVCM (IETA councel group on digital climate markets)

                                                    I gave you some tips from my studying of carbon market and ways of tokenization.
                                                    You can use them or not.

                                                        Thanks for the proposal @Coorest

                                                        One thing I have not seen directly answered is the amount of supply that will be available for retirements? Are we talking 10s of tonnes, 100s of tonnes, 1,000s of tonnes (or more) in the next year and beyond?

                                                        I see a couple of my concerns have been raised above from @carbonadvisor (thanks for the inputs here, Dmitri).

                                                        Re third-party verification and validation, understood that your satellite data partner monitors and enables the issuance of the CCO2 tokens. Making this process understandable to a broader audience would certainly help increase confidence in the solution and demonstrate to the market how this tech can help validate the robustness of supply within the VCM. As well as increase confidence and demand for CCO2 itself. Are there any resources you already have here to help communicate this approach, and its results, to the market?

                                                        I am not totally convinced (or perhaps I don't fully understand) the approach you are taking by using EUAs to benchmark prices. The EU ETS pricing mechanism is obviously different to that of voluntary credits. However, as Marcus points out, I do think Carbonmark can play a role in validating (or not) this approach.

                                                        @carbonadvisor raises a fair challenge around risks to the broader Digital Carbon Market if carbon credits onboarded into it are not up to the standards expected within the market. A personal opinion I hold here is that through the infrastructure KlimaDAO has built for the demand-side of the market, it can and should play a role in enabling and collaborating with novel approaches within the VCM's supply-side. Carbonmark offers a route to do this without immediately relying on our own LP capabilities. Listing CCO2 on Carbonmark can therefore be seen as providing a service to Coorest that can help them grow and validate their product, before a deeper partnership in future.

                                                        This therefore seems to be an appealing collaboration to pursue, which gets to the very reason KlimaDAO has built open-source, community-owned tech -- through decentralized governance the DAO can use opportunities like this to consider the role it wants to play in the market:

                                                        • Should it simply provide a route to market for the most established and utilized carbon credits (which is arguably what it does today);
                                                        • should it create a platform to support and accelerate leading innovators within the market (of which I perceive Coorest to be);
                                                        • or should KlimaDAO not gatekeep at all and, through demand, let the "market decide" what is good and what is not?

                                                        ...This is perhaps more of a philosophical discussion point. But, to be very blunt if Carbonmark allows CCO2s to be listed, and there is no demand, KlimaDAO doesn't take much risk here (at least from a financial sense). Conversely, if its a success and CCO2s secure further validation and demand through this collab (e.g. via Provide Eco mentioned by @ryfleisch ) KlimaDAO stands to provide legitimate value to Coorest and the market more generally. Further, success here can open up routes for a deeper collaboration, whether that is bonding, forward funding as with SCB and Aither, etc.

                                                        Whether Carbonmark supports Coorest or not, I am sure they will come up against scrutiny because that is how the VCM regulates itself. Coorest are clearly serious, have extensive documentation and are gaining traction to bring them to where they are today. In addition, with the data-led approach they appear to be well-placed to deal with scrutiny by using objective data.

                                                        To summarize, from what I have read so far, I am generally "for" an experiment here with listing CCO2s on Carbonmark to help the validation of both Coorest and KlimaDAO's approach in the market.

                                                        Obviously there's more work to be done (not least understanding supply profiles, Coorest's own ambitions, etc...) before having a serious conversation around KlimaDAO bonding CCO2s, or other collaborations.