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It is also an appeal for policymakers to provide legislative direction and support for Web3 innovation in applications to incentivize positive environmental and social outcomes for all, not just the privileged. Conventional finance approaches are too myopic to fully address the systemicfailures we’re facing. The growing adoption of https://www.xcritical.com/ environmental, social andgovernance (ESG) factors in investing is a positive trend; but it’s mostly aboutreducing negative impacts. Even investment strategies aimed at achievingpositive net impact tend to focus on a narrow set of targets, and they oftenneglect to consider how outcomes are created and who benefits.
Using ReFi to address global modern challenges
Regenerative finance (ReFi) projects are blockchain projects that are developed so that the resources used over time are regenerated. Be aware that for ReFi and regenerative tokenomics to be truly regenerative, all aspects and dimensions (internal and external) need to be integrated. The principles and solution proposed here to develop and apply integral regenerative tokenomics at what is regenerative finance scale following the RCD framework is only viable if the internal dimensions of human regeneration are equally taken care of by all. Our challenge now is how to (re)design our systems such that the systemic behaviors of which we are part cease to bring forth this divisive polarization effect. To (re)design our human systems in such a way that we finally become evolutionary coherent and supercoherent with our planetary and cosmic systems.
Intelligent Money: Our Future Is Where We Do Not Think About Money, As Our Money Thinks For Us
Our economic system lacks the right incentives, and there’s no way to coordinate at the level needed in a globalized world. We have plenty of resources available to address inequalities, but they often end up in the wrong hands or they can’t be distributed to the right places due to simple friction points, like issues with transferring money. Additionally, a lack of transparency in our systems has made it easier for unprincipled actors to extract profits. Allowing people access to financial services and markets that they’ve been traditionally shut out of, which could improve their daily lives, represents one of the core tenets of ReFi. Communities across the globe could make use of DAOs (decentralised autonomous organisations) for community activism, finance and social projects. It is now a call to action, driven by the need to address the failure of traditional markets to account for the negative impact of carbon emissions and the inefficient allocation of resources.
- A new, five-year regenerative finance initiative called Funders forRegenerative Agriculture seeks to address thesechallenges by collaborating on systemic solutions that put people who stewardthe land first.
- Discover how ReFi revolutionizes finance, transforming it from extractive to restorative, and aligning economic systems with the Earth’s well-being.
- Furthermore, they deploy the Web3 and sustainability megatrends that fuse together, to create the Regenerative Finance model.
- At its most fundamental level, ReFi is the idea of appraising the value of natural resources—not based on the cash flows from their exploitation but rather on their preservation and regeneration.
- Allowing people access to financial services and markets that they’ve been traditionally shut out of, which could improve their daily lives, represents one of the core tenets of ReFi.
What is Regenerative Finance (ReFi)?
These technologies embody traits such as transparency, decentralisation, user control, resistance to censorship, accessibility, and interoperability, which are all critical for building open, fair, and democratised financial systems. If built with the right intention, these technologies can serve as a foundational pillar for systems that prioritise fairly distributed, sustainable, and equitable prosperity. ReFi, based on open code and secure ledgers, offers an alternative to traditional financial systems. These “ReFi rails” can be programmed to reward key actors equitably and redirect resources to those who need them most, while also providing public accountability. In regenerative practice, places are described as having a unique bio-cultural identity and potential.
What is Regenerative Finance (ReFi) and How Does it Work?
It builds on the principles of its predecessor and interweaves them with theories and approaches from regenerative economics. ReFi expands on some DeFi principles and replaces others to realize the idea of a regenerative and inclusive economic system. Many traits of ReFi are derived from DeFi, for example, that people have control over their funds, and that applications, services, and transactions are transparent and openly accessible.
In the view of these complex system thinkers, promoting the health of the underlying human network is vastly more important than increasing the volume of economic output (GDP growth) per se. To get a broader picture of the potential of regenerative finance, read our research report, Real World Assets for Real World Purposes. Its data storage structure reduces risk of fraud and foul play in regenerative projects and Impact Investments. RWAs allow the connection to the real world and add a layer of stability for value. Furthermore, they deploy the Web3 and sustainability megatrends that fuse together, to create the Regenerative Finance model. CoinCentral’s owners, writers, and/or guest post authors may or may not have a vested interest in any of the above projects and businesses.
Blockchain ReFi can be thought of as a valuation of natural assets on the blockchain. This article will open your eyes to the potential of ReFi, including impacts, potential growth, pitfalls, and real-world use cases. In addition to the ESG criteria, this concept also focuses on technologies such as blockchain, artificial intelligence (AI), and the Internet of Things (IoT). By using these technologies, the financial system could become more transparent, trustworthy, and efficient. ReFi aims to use crypto for good by harnessing the potential at the intersection of profit and purpose and introducing the idea that it pays to help the planet. These assets are liquid on marketplaces such as Opensea, Voice.com (the leading carbon-neutral NFT marketplace), Nifty Gateway, SushiSwap, and others.
Toucan’s Carbon Bridge connects conventional carbon credit registries with an open, blockchain-based meta-registry, the Open Climate Registry. There needs to be a way to verify that only certified carbon credits are being moved on-chain, where they can then be traded or integrated into other blockchain-based applications. Additionally, ReFi projects often have a strong community of users and developers who are invested in the success of the project. By building on the theoretical foundation laid by previous generations, innovators in ReFi are working to create a regenerative economic system that prioritizes the well-being of all life and the planet. ReFi also overlaps with the decentralized science (DeSci) movement, which uses Ethereum as a platform to finance, create, review, credit, store, and disseminate scientific knowledge. DeSci tools could become useful for developing verifiable standards and practices for implementing and monitoring regenerative activities like planting trees, removing plastic from the ocean, or restoring a degraded ecosystem.
It creates verifiable social incentives for communities to benefit the society around them. Communities can create local currencies to ensure that economic activity can flow within their local community, and to promote values they care about. With carefully designed rules, funds are circulating to regenerate and fuel the local economy, and to help satisfy the needs of individuals, instead of being solely used as a tool to derive profit. Local currencies can support businesses, create jobs, and build resilience against external influences. By using local currencies, communities can also take control of their own economic destiny, and promote their unique culture and identity. SEEDS, for example, are seeking to build a regenerative economy in which participants earn citizenship by sharing and investing ‘Seeds’ (their currency) into regenerative projects around the world.
No-loss gambling games like PoolTogether and HaloFi are actively helping people save. ReFi projects also may be more centralized to help steer novel systems in the right direction, and their founders might be in close collaboration with actors outside of the Web3 world, such as policymakers, non-profit leaders and corporate executives. Blockchains offer a secure and public way to store and share information across a network of computers.
Regenerative Finance is supporting the efforts to create a sustainable economy, propelling interest, investment, and innovation. – It leverages Decentralized Finance (DeFi) and blockchain to counteract the impacts of industrialization and systemic financial imbalances. Carbon isn’t materially underpinning these organizations, but DAOs and other crypto-based collectives aggregate voice, influence, and marketing with basic blockchain-based infrastructure support.
Projects like Proof of Humanity, Circles and GoodDollar offer an unconditional UBI payment to all members trusted by other members of their respective communities. Digital technologies, and especially Web3 tools, show a lot of promise to help provide UBI to people around the world. This leads to minorities and marginalized groups turning to ReFi, and using it as a tool for innovation and growth, often at a faster pace than people from communities with more privileged access to resources. In ReFi, there are no gatekeepers telling minority developers, founders, or creators what to do; everyone can just build or contribute to whatever they see lacking or what’s serving the needs of communities and environments.
Beyond its guiding principles, regenerative finance is distinguished by its core values, including a steadfast commitment to transparency, accountability, and ethically sound decision-making. Although there is currently a strong emphasis on carbon markets in general and transitioning the VCM to the DCM in particular within the space, the term “ReFi” is not strictly limited to carbon. Other environmental assets beyond carbon credits can be developed and tokenized, which will mean other negative externalities can also be priced within the base layers of future economic systems. Moreover, the regenerative aspect of this economic model can be applied to other areas, such as the funding of public goods via quadratic funding platforms like Gitcoin(opens in a new tab).
One of the core instruments in doing that is redesigning money itself in a way that writes a new story for what it actually means to be an integral human being living on a shared planet. ReFi’s mission is therefore to systematize incentives to make regenerative places feasible. Addressing current crises profoundly means designing alternatives to our domination culture systems with regenerative ones that value caring and nature.
A new, five-year regenerative finance initiative called Funders forRegenerative Agriculture seeks to address thesechallenges by collaborating on systemic solutions that put people who stewardthe land first. Members commit to taking on more risk, commensurate with theurgency of the problems we face, and to watch for and avoid the negative impactsthat can flow from even the best-intentioned investments. Early uses of ReFi include designing novel ways to fund public goods (like open-source software) and tokenizing environmental assets (like carbon credits) so they could be used in DeFi applications (like DEXes).
ReFi provides incentives for financing, offering rewards to those fostering positive outcomes. Move-to-Earn models (part of a broader Impact-to-Earn ecosystem) are in their infancy, but we’ve seen several apps like StepN and Sweatcoin gain a foothold (I’m sorry) in the market. For example, someone can walk more and be rewarded with carbon tokens, reducing their carbon footprint in the process. The foundational layer that enables the whole ReFi system to run includes Layer 1s, Layer 2s, carbon suppliers, and infrastructure tools.