Building a Regenerative Economy: How Web3 Creates Ideal Conditions for Prosperity

Transcript

so the last talk was very inspiring and now we'll be traveling from one great subject to the next so next we're going to hear about regenerative economies and i would like to welcome the stage james farrell the founder of the toucan protocol welcome james tucan is an ethically [Music] hi i'm going to say a few words about your project it is ethically driven project and you will be talking about bringing carbon markets to the d5 marketplace and empowering both individuals and businesses to contribute towards a cleaner planet is that correct that's it exactly fantastic okay everyone enjoy and good luck indeed thank you anya

hello everybody yes i'm james farrell i am a cto and co-founder of token protocol where we're bridging the gap between carbon markets and web3 so today we're going to talk about regenerative economies we're going to talk about how web3 can help create the conditions for prosperity as a part of this we're going to discuss refi regenerative economics what are the properties of regenerative economies and then we're going to take a look through the lens of carbon markets which is a regenerative economy that we've been building a toucan protocol over the last 10 months we're going to talk about the lessons

we've learned and the insights we've gained and especially focus on how web3 has unlocked latent innovation and why we believe it's going to unlock even more because we feel the lack this is a photo i took from my taxi on the way here this morning so first of all what is refi refi is a financial system that regenerates the planet and society rather than only extracting value from it so in more traditional financial systems we see that any value that's captured is often either exiting the system or compoundingly used to create to create exponential growth and in the case of refi systems part of the value is then redirected

back into the economy or into the system itself and also partly into society or into the into our environment itself so our traditional systems we have financial systems which sit on top of economies on top of society and on top of the environment and what we really want to do is transition to a place where the financial system itself is in service of the economy in service of society and in service of the environment so we're talking about moving from

an extractive way of being going beyond neutral and going even further to a place of regeneration so what are regenerative economies these are economies that have embedded regenerative elements within them such that the more active they are the more regeneration actually takes place we want to replace zero-sum games between profit and planets and enable them to exist side by side so an example of this is a toucan protocol we have various places where we collect fees and up to 75 percent of these fees go towards buying carbon offsets and re and offsetting essentially so in theory

the more activity that takes place the more carbon is sucked out of the air so what are the characteristics of a regenerative economy they're long-term sustainable they support long-term health and society as a whole they're healthily interconnected we're seeing economic financial health as inseparable as huma with human beings society and environmental health they respect diversity they value richness integrity and fairness and they seek excellence through constructive collaboration and competition they're continuously evolving they respond to the gamut of human needs they adapt they change under circumstances and they evolve to higher

and higher levels of effectiveness so this all sounds great but how do we do this are we the first people to think like this or are there other people who came before that can help us there's been a great body of work done about donald economics by kate rawhirth and this offers a vision of what it would mean for humanity to thrive in the 21st century it explores the relationship between society lifting up those to a point of acceptable existence while at the same time staying within the planetary boundaries it's a mindset and a way of thinking needed to get us there highly recommended to check out we also have the triple bottom line

which is now over 30 years old it was created by john fullerton it's a kind of accounting framework for sustainable business strategy companies should measure success not only of their financial bottom line but also society and their effect and impact on society and the environment itself b corps came out of this which is very positive however john fullerton himself has now taken the stance that we need more and we need to take the next step one second so john fullerton is a very busy guy he's very smart obviously and he's done some work on what he calls regenerative capitalism

and while exploring this i came across these principles for regenerative inside of this we have these ideas of right relationship the relationship between the economy and the environment and society holistic view viewing not only capital as financial wealth but also environmental spiritual and societal it's innovative adaptive and responsive honors community culture and place empowers participation and this idea of edge effect abundance which we're going to go into a little bit later it encourages a robust circuitry flow so that value can flow within these economies effectively without blockage and it seeks balance so where are we today we have three main

ways of financing we have for-profit companies which is what we know most of then we have non-profits on the other side so thinking about philanthropy and such things and then we have a kind of mix in between the two of those more like mission-driven organizations so one way i'm looking at this now is through the market-based way as we have a toucan how can we use markets in refi to create impact to generate positive measurable social and environmental impact so let's talk about the voluntary carbon markets this is a market-based approach that started up in the 1990s there are assets that are created called carbon credits that are essentially they're created through a process of

asserting that carbon has either been taken out of the air or there's been an avoidance of carbon put into the air it allows carbon emitters to offset their emissions by purchasing these carbon credits and it it's a growing market it's growing very quickly right now so the process is quite long and convoluted it takes many years to create these assets three years and beyond you can think planting trees people going there hugging trees and then doing mathematical equations to assert that something has happened and then verifying and validating that and giving it a stamp of approval creating these assets called carbon credits which are measured in tons so carbon markets are growing very quickly

in 2021 the volume was around 1 billion dollars and that's expected to grow 100x by 2030 and yeah there's a target price for carbon of 147 by 2030 in order to actually meet the goals that are needed for us to survive so the voluntary carbon market is very far from perfect it's opaque deals happen otc behind the counter and there's a massive information asymmetry no one knows what price anybody paid for any of these assets and this leads to market failures the market is incredibly inefficient and a lot of the value is then therefore captured through commerce in the middle through buying and selling of these

assets there's no price discovery which makes it difficult for projects to estimate the cost or the value that they're going to produce when creating these credits which makes it more difficult for them to get finance there's massive barriers to entry it's very centralized and it's not really able to scale effectively so our journey through web3 briefly has been in the last 10 months we created a bridge that allowed these assets to come on chain in the first six months we bridged something like four percent of the entire voluntary carbon market this is something like over 25 million tons of carbon and we got the attention of the carbon world so for us it's been

a hell of a journey and we're very grateful but we're only getting started here so why web 3. i'm going to talk abstract a little bit here so essentially we have polluters at the top and we have carbon projects at the bottom polluters are paying money down to the carbon projects to create impacts which is going back up to the polluters but in the middle we have value capture it's incredibly inefficient as i said we estimate 60 to 80 percent of the value is extracted by middle people you can think retailers you can think traders brokers project discovery is difficult for polluters who want to pay and the verification of impact is very difficult

and inefficient for carbon projects themselves and these are all things that can be improved with web3 and web3 is enabling access to markets so before if you wanted to access the market you needed to be a cool person uh you needed to have thousands of dollars and when i say cool person i mean that's the standard registries who are the gatekeepers to this markets needed to approve of you kycu and then you need to pay these thousands of dollars to get access this is no longer the case anybody can buy and hold these assets on chain now we have price discovery for the first time inside of amms and financing itself is way more efficient and easy to come by we've increased market efficiency we have boosted transparency everyone can see exactly who paid what for any of

these assets we are transforming and enabling middle people so it's not that we think they need to disappear there is a role for them but we have a way forward whereby they can work far more efficiently and an example of this is that they no longer need to buy and hold these carbon credit assets in order to buy and sell them because these assets exist inside of differentiated commodity pools on the toucan protocol so we have enabled incentive alignment there's a lot more coming with this we all know about that tokenomics enables us superpowers like that we're going to be looking into the future more at how decentralized governance will take place and it's been massive innovation as a result of these assets coming on chain so back to the principles we mentioned

earlier this energy effect abundance is an idea that came from john fullerton and it's an observation if you think in the case of salt marshes where rivers reach the sea where these systems overlap at the edges this is where incredible diversity and exciting things can happen think of cities like london and new york where you have all different types of people and different types of cultures and the kinds of ideas and innovations that occur there yeah i'm going to read this because i love it creativity and abundance flowers synergistically at the edges of systems where the bonds holding the dominant pattern are at their weakest it's at these edges that the opportunities for innovation and cross-fertilization are the greatest from these principles we also have the

other principle that we that we highlighted there is empowered participation i spoke about that earlier we not only have empowered participation for projects who can now sell directly to end customers and we no longer we also have end customers who can now connect directly to projects and this overlapping edge or the collapsing of all the other overlapping edges of all of the middle people also is really enabling innovation it's enabling builders and innovators to build on top of these markets okay i think i double clicked there that i triple clicked double clicked so our approach at toucan i mean we've

always asked ourselves the question what is the biggest single lever that we can pull in order to have the biggest impacts and for us the answer was simple we want to build building blocks that enable other people to build if we can build d5 primitives that can interconnect and work and interoperate then we can enable builders and we can enable organizations to build their own ideas to scale this and to work with skin in the game we've been developing an ecosystem of regenerative innovation and i'm very happy to say we have over 100 teams currently building on tooken our plans going forward into the future we're looking to cooperate and collaborate with as many protocols as possible

we're looking at building an off-chain data layer that can be shared and used by many other protocols in the space around projects project data and schemas that is it so yeah let's build it all together i love how manu said this yesterday i mean we're all working on the same puzzle right like we should cooperate as much as possible and really be as effective as we could possibly be in order to move this forward so thank you very much um for your time for being here for coming uh thank you barcelona and yes very humble [Applause] i believe we have about three minutes

for questions what are the biggest challenges that you've faced so far um i would say our biggest challenge is the fact that we sit because we bridge these two worlds between web 3 and off-chain world um you know a lot of things are a lot simpler on chain and when you do this crossover you begin to get a lot of complication we find ourselves facing uh you know a whole system of incumbents that's been around for decades many of whom have been working extremely hard and have

are extremely knowledgeable and know what they're doing um however market acceptance is something we're working on all the time and this is very complicated because the voluntary carbon market has two main standards uh the vera standard and the gold standard there is around 75 percent of the market and that's where we focus first and in order to really move this forward we need uh we need full integration and agreement with them in order to do so we have a permissionless bridge that allowed us to bootstrap this so that anybody could go out and buy these carbon credits and bring them across the bridge on chain um however in order to take the next steps we really need to um yeah to cooperate with them so we've been working very openly with them

we're making progress on that but the cycle time that it takes in order to complete that loop with organizations like that is very big and i would say another issue that we face is around regulation and um and and just compliance really so the typical stuff i'm curious um have you thought about making these carbon credits non-transferable so as to not um create a secondary market or arbitrage opportunity for these people who are buying carbon credits have we we've definitely thought about it for sure

yeah i mean there's a lot there's a lot to be said for that right at the end of the day if people are trading and making profit between these carbon credit assets then it's not really effectively achieving the goal right and i mean the idea of using a market is to to find like the most efficient way of getting there and clearly it's failed to do so right i mean if we're on chain then it's going to be a lot better at that for sure ultimately we just want direct connection between the the the demand and supply side like this right however we do see exciting possibilities as is done by manu and the team at doing good whereby we have royalties and things like this so that trading in and of itself can have benefits sent directly to the projects so we're looking at that

we're looking at a lot of options i mean for us we're mostly building infrastructure and we're enabling other people to think about these things also james um it's really amazing thank you what uh what are you most excited about for the next six months and also how can people get involved and build on on your protocol uh come to our discord uh we have an ecosystem plan we have funding for projects that are building on toucan and we're most excited about this i mean the fact that there's a hundred teams building on tucum is very humbling and incredible so yeah that's it we're out of time thank you very much everybody