#DappCon22 : Day 2 - How Web3 Builders Can Unlock Climate Action At Scale, Raphaël Haupt

Transcript

full Hub is building coordination tools to address the biggest coordination failures of our time climate change he is founder and CEO of tucum protocol today he will talk about how with three Builders can unlock climate action at scale please let's welcome him on stage thank you okay you said green is forwards right let's see if that works hi my name is Rafael I'm one of the co-founders and CEO at 2camp um and I want to tell you in 20 minutes how um yeah web free builders can solve climate change I'm you know take everything with the grain of salt 20

minutes is obviously not enough to go into that complex of a topic but I'll try my best so starting with one of the most cliche graphs that we've seen I think um in the last 10 years probably this shows the global CO2 in greenhouse gas concentration over the last 800 plus thousand years and I think personally this is one of the like worst bull runs we've ever seen and that's why two can exist two can exist to help us address climate change and like you know in in the web 3 manner so let's look at the problem the problem obviously is complex so you know this is an oversimplified version of uh of the com of the problem but I think the core

problem really is that um our economy is based on extraction right so we essentially take low entropic fossil fuels and hydrocarbons we take them out of the soil turn them into energy and that Energy Fuels our economic engine right um some scientists have you know used the the image of the economy as a heat machine and I really think that's a good image because what we do is we turn these like low entropic hydrocarbons into high entropic greenhouse gases and they are a problem as we've seen you know on the slide before but also as we can experience you know with floods happening right now wildfires and everything you know I don't have to tell you I guess about the importance of that

problem so for a long time now there's the talk of transitioning to a sustainable economy so a sustainable economy you know the idea beer is whatever we take off out of the ground we put back and the emissions the greenhouse gases that we emit you know we draw them back down so going back to this slide we can see that you know this equilibrium state is not good enough because we actually have to bring this curve down right so sustainable is actually not good enough anymore we need to move to a regenerative economy so the regenerative economy is you know the idea is fairly simple is while the economic machine turns we draw

carbon out of the atmosphere and we put it back so we regenerate the Earth the soils and we put hydrocarbons back on the ground so that's the small challenge that we have ahead of us so big question obviously how do we transition from this extractive model to the regenerative model and you know like that's obviously there's no simple answer to this but it's going to take money unfortunately this is going to cost trillions of dollars and we need to move these trillions of dollars generally from what is the global North to the global South because in the global South is where we have the biggest mitigation potential and we have to actively scale carbon removal Technologies because carbon

removal is nowhere near where it needs to be in order to draw down gigatons of carbon today so the problem is that in order to move trillions of dollars to the global South we need a functioning Financial system which we currently don't have like anybody who tried to send Fiat money to Brazil for instance it's it's a pain and if you imagine sending them that money to you know a reforestation project somewhere in the Amazon rainforest it's beyond pain right and the next problem is we actually have very poor data on you know what makes a a good forestry project for instance and it's hard to measure and the baselines are off you know so we essentially need

to solve a lot of different problems at the same time and The Current financial system is not delivering this and really like you know governments are meeting every year the cop is happening now in like Egypt in a couple of months and they struggle to find Solutions because this is a really really hard problem and you know I personally believe that web3 is part of the solution right why so web3 you know because it's open it means that there's very few barriers to entry people can innovate I mean there's no space that is more you know vibrant and moving more quickly I think personally than the crypto space and that really gives me hope if we can channel that creative energy into this

like you know build their energy towards solving one of the biggest problems that we have which is climate change I personally believe you know we're running out of time so let's you know let's get building right so the other one is it's it's fully transparent so in that value chain from how do we move money from you know let's say here to a project in Brazil like there's a lot of you know intermediaries and it becomes quite opaque and you know there's corruption and so we need a system that can counter that so that we have effect effective climate action and you know composibility again I think you know supports this first point like composable by Nature means that it's we can iterate more quickly you know people can build building blocks and build

other people can build on top of it so there's a big problem I think that today crypto is still mostly based on extraction and it may not be a super popular thing to say here on that stage but I think that in you know in in many instances you know proof of work that's how it started it's not great for the environment um but also in in many ways like a lot of deeper protocols they they I would say copy existing systems and put them onto a blockchain and I don't think we are yet at that point where we have built a system that is really 10x better than the existing system and you know that might you know you might disagree with that but I think with you know you

cannot disagree with the fact that crypto still has this dirty this dirty look of an industry so I've been in web 3 and climate for the last four years and I'm still answering one question more than any other question and it's how can you be both an environmentalist and work number three it's not possible because web3 kills the environment right so I don't agree with that statement right but it's still a big big blocker for other people and for I would say the general Mass to enter in the crypto space so I think that if we can use web3 to solve this huge problem that this huge challenge that like the existing system fails to

address I think we can actually also unlock the next one billion users to to crypto so how do we transition from you know what we know is D5 you know just to name one Subspace of web3 to refi so refi standing for regenerative Finance I think the answer you know it needs to be building blocks of course so um I want to talk to you about a new building block car tokenized carbon credits as a new web3 primitive and then there's a new money Lego for everybody to build on and so quick quick you know quick walk into the world of carbon what is a carbon credit actually in the first place so

I personally think the best way to think of a carbon credit is it's a package positive externality so what that means is if you're having a you know Carbon project that either removes or reduces emissions and you have a third party that verifies that this reduction or removal has actually taken place after that after the fact that project can can basically be granted carbon credits and each carbon credit represents one ton of carbon that has been removed or reduced right so there's a bunch of problems with carbon credits in 20 minutes is not enough to like go too deeply into that but essentially it's a

it's a pretty inefficient Market it's super opaque because like most of the trading happens over the counter there's no price Discovery because of that there's not really liquid markets um there's corruption and ultimately you know when the buyers of carbon credits like only like 50 of that money actually lands with the project so you know there's a lot of these project problems and so these credits are getting double counted on top of that so we personally believe that by bringing these you know positive externalities onto a public blockchain and creating this trail of record that you know allows for a transparent life cycle of that carbon credit because

carbon credits is just a bunch of data and PDFs and signatures so it's by Nature if you want actually a digital asset it lives today on databases of these carbon standards and what we say is you know there's a bunch of different carbon standards in the world they all use different databases they're not composable not interoperable so why not put them onto a block public blockchain and allow for these creditors to talk to each other and you know create a more efficient market so that's what Tucan does at least one of the things that toucan does so we have bridge over 22 million credits since we launched in October of last year and you know essentially it's a we take a credit from The Real World there's a process we tokenize it it comes out as an esp20 token on the other

side but it comes out as an early 20 token that has all the unique attributes of the carbon credit that it mirrors so you know it still represents a reforestation project from Peru from the year 2020 because you know these data points are important it's a bit like nfts I would say where it actually matters which attributes your nft has because the attributes of the nft will Define the value of the of the nft it's very similar with carbon credits so what you do in the next step once we have them on our like meta registry in toucan we have so-called carbon tools and anyone can launch a carbon pool and the carbon pool basically is a set

of rules um that Define carbon credits that can be put together in the same pool so if you know nftx it's it's very similar where you basically you create kind of commoditized versions of carbon credits that share similar attributes so the logo that you see here on the right is the nature carbon ton and as the name suggests it's a carbon credit reference token so that's how we call these pool tokens that only allows for nature-based carbon credits so if you have an hiv's carbon credit you can deposit it into the pool and you can mint a carbon reference token an NCT right and now this entity is you know traded on dexes and it has a market price that is

visible at all times you know you can always buy and you can always sell very trivial things but it's actually not that trivial in the carbon Market okay the end of a life cycle of a carbon credit and then I'm done with this slide is the retirement and essentially you know in crypto speak the retirement is you just burn the token so when you burn the token you can now claim the underlying positive externality for yourself and you know when you when when you you know you might have come here by plane so if you took the plane here you know that there's a carbon footprint associated with that and you might choose to go and buy some of these carbon credits burn them and then claim that you have you know now a carbon neutral flight so this

offsetting use case is really like the most prominent use case of carbon credits to date I personally don't think it's the most fascinating and interesting one I think there's so much more that we can do with positive externalities and we need to find new use cases than just hey I'm doing something bad and I'm matching it with something good and now I can call myself neutral because like neutral is not good enough anymore right so that's the basis on which you know we built token is like we need to essentially go beyond that offsetting use case and what we do with tweaking for instance we whenever we take a fee in our system 50 of that fee we actually use to burn carbon credits so toucan is you know a planet positive protocol so the more traffic there is on

Toucan the the better for the planet right and I'm standing here because I believe that there's a lot of projects in web3 who could who could do the same thing or who could create new use cases with these package positive actionalities that drive Finance to projects that need it and so that we can accelerate the development of new climate projects so that's all a bit abstract I guess and so I want to get a bit more specific and talk about the different use cases for tokenized carbon credits and um you know you can you can see a couple here um I go I go through them one by one so one of the most I think fascinating use cases of token as carbon is carbon as a

collateral and you know the idea is if you can back your stable coins or your other cryptocurrencies with with carbon and there's you know cello has pledged that 40 of their Reserve that backs their stable coins will be allocated to Natural Capital currencies of which carbon credits you know is the most known one the biggest group um make a dial has is you know embarked in this on this journey towards clean money um and so it's really fascinating because it means that we can really trigger something like a gold rush if we start backing money with the things that we actually care as a society like I think it's one of the most fascinating Concepts

the next one is borrowing and lending right so why does that matter um on the supply side if you're a carbon project to date what you do is you know you might plant a bunch of trees and then they grow and every year you can kind of harvest your carbon credits let's say you've harvested like 100 000 carbon credits in the year of 2021 what you do now typically in the market is you find somebody you find a broker to buy them off you and generally you're not getting the best conditions um from that broker and now what you can actually do but you can bring them on chain and you can use them as collateral to get a loan and with that loan you cannot Finance your activity is for 2022. so it allows projects to go long on carbon

right and historically going along on carbon was not that bad of an idea which is also why on the demand side you know a lot of companies have made pledges to become carbon neutral by the year 20x and um you know everybody knows that there's an increased demand for these carbon credits and there's actually a supply shortage and so a lot of companies and and funds are buying up current credits now hedging you know so the problem is carbon credits today are not really like a productive asset so but bringing them on chain and by using it you know in borrowing a lending you can actually now earn yield on your carbon something quite trivial but really powerful um another thing is you know just as an

example that spirals is a protocol that is uh on on cello we're live on polygon and on cello right now a bit moving into into the Multiverse and spirals uses yields so yields from staking rewards to buy carbon credits right and I think that's just one example of you know there's so many different protocols in in web3 that uses or generates yield in some form and redirecting a portion of that yield towards buying up carbon credits I think it's a really fascinating thing another one is the metaverse right so um I really like this use case so it's you know we're planting trees in the metaphors and these trees make sure that they sequester carbon in the real world

I've tried to explain that to my grandmother last Christmas uh didn't really work um but you know how fascinating is this that we can now you know walk around in this you know virtual space and we can see you know we can create these other forms of incentives for people to do something good you know and um the next one here like green game fire like like celestials is building an nft standard and it embeds these carbon tokens not like naturally into the nft standard which is really interesting because then it allows others to build build like positive Planet positive objects into their games and this kind of stuff so you know maybe a bit more nerdy but I think you know this is this is really really interesting

um nfts of course uh you know Green ft's um there's been a bunch of them over the last couple of months um either using you know the proceeds of the nft sales you know donating to to carbon projects or creating nfts that perpetually offset themselves you know I think there's some really interesting things going on there but you know again I think that there's we're just at the beginning we're just at the beginning of seeing what we can actually do what you know what people come up with and I think you know nfps are obviously very easy to understand and like good way to to experiment with these kind of New Primitives and the last one I'm bringing this up because I I was I had not thought about this use case myself we were on a call

with with Shopify and Shopify um talked about this concept of tokengated Commerce right this idea that based on the tokens that you hold in your wallet or the nfts you would have a different shopping experience meaning that you might get better prices or Worse um and you know access to deals so it really turns you know Carbon and you know Carbon or like planned positive behavior that reflects as tokens on chain into some kind of badge into some kind of status that you can that you can pour that you can bring with you and I really think that using the doing you know doing something good and making this a state assemble is a really powerful way for us

to address this to address this problem as well cool so that was that was a lot how can you actually you know take action so if that was too fast we have a developer program um so if you go to developer.tukan.earth you can find you know example use cases the code the SDK and you know the documentation so you know if you if you're intrigued by building with carbon you should definitely check it out there's also a grants program that we run and so if you haven't you know a cool idea that you want to try out and you're like looking for for a bit of cash to get it going you know please please

apply to our grants program um thirdly obviously we're hiring so if you want to work on the two most exciting things which is web3 and climate and the intersection of it um you should definitely you know reach out either to me or some people we have a booth over there and then lastly we are having an event on Thursday called regenerate so that was interesting to you or if you want to you know get to know us or dig a little deep deeper and you know start a conversation um it's going to be on Thursday in full node and there's you know panels workshops there's a workshop on how to offset the merge um now that ethereum is moving away from

proof of work which is you know amazing so um yeah that's that's what I want to leave you with and um highly looking forward for questions [Music] I think we we are very tight we have time for one very short concise to the point question thank you Paul hi hi oh I'm on um great talk I'm totally sold um one question that you probably get a lot um how do you guys uh vet the um the carbon credit programs that you

choose to integrate with yeah um it's a really really good question so took in his infrastructure so um right now we actually only integrate with one carbon standard which is Vera Vera is the biggest carbon standard they have like 75 of market share so it's a pretty easy and obvious First Choice um but um we have this tension uh where you know at one side your infrastructure and at the other side you're like we're we're in a space where we cannot accept everything so we are not a standard we don't you know vet projects themselves so we only integrate with other standards that have that reputation so Stanley you know there's

luckily there's some I would call them industry groups that um you need to be a part of as a standard or you know there's kind of how do I describe that like you know if you want to become a good standard you apply to becoming part of that Industry Group and you know there's some some audits going on there so right now we only integrate with the kind of with these standards that that have that kind of stamp of approval um but yeah I think that's a it's a really good question because like governance of these systems is obviously always challenging and um you know how much if your infrastructure is like how open are you business like how how restrictive and you know I don't have too much time so excellent thank

you only one question yeah thank you very much cheers [Applause]