Introduction
Prior to launch, this document is to be considered as a living document that will become more specific and evolve over time as key partners provide feedback and market signals become clearer. Many of the specific details provided in this whitepaper may undergo changes to reach the best possible fit for the market. Any detail in this document should not be interpreted as a promise to do exactly this - it merely reflects the intentions of the project.
The carbon market is currently held back from realizing its transformative effects on the world. While carbon credits make climate-positive projects into viable businesses, the timelines to receive credits for their activities can be multiple years. This makes forward-selling credits a necessity to pay for operations. Even great carbon projects struggle to finance their expansion. The incentives don't line up for the market - since forward deals are relatively illiquid, institutions find them less attractive. Carbon projects are left in a bad negotiating position, unable to get the resources they need for maximum scaling.
Solid World DAO is building the infrastructure that will help scale the carbon market into a planetary powerhouse. Our mission is to build core infrastructure to make forward carbon markets as liquid as possible - unlocking the value of forward deals for carbon projects and the institutions that buy them.
Most credits that will decarbonize the planet have not been issued yet. By creating a highly liquid infrastructure for the forward carbon markets - we will accelerate the flow of capital towards projects that can deliver large-scale, trustworthy, and real outcomes. This is how we will help stop climate change.
The voluntary carbon markets allow people to make businesses out of saving the planet. At Solid World DAO, we have a strong conviction that this market has a big role to play in the next chapter of our planet - of our climate-positive civilization. This being said - the current status quo has critical issues, which we aim to solve:
- 1.It's hard to finance new carbon projects
- It can take years to get revenue for credits because these credits are not generated until long after the climate-positive activity has taken place. For nature-based credits, the type that has the most scaling potential, it can take up to 5 years for credits to be issued.
- The projects that require financing the most are the projects that are the most financially additional. Financial additionality is a core component of carbon project quality. If the incentive of credits (and then money) from the project didn't initiate the activity - it is complicated to claim that this credit really caused any real-world impact.
- 2.Quality carbon credits are not a commodity
- Currently, there is no price and volume transparency in general in the pre-purchasing market, so projects do not know what they are worth. This is a bad situation to negotiate from. We want the terms to be clear.
- This problem is even more exacerbated by lower quality projects flooding futures markets. While these projects might be acceptable for some organizations, we aim to curate a class of highly trustworthy projects which any company would be happy to use for offsetting.
- 3.Forward deals are illiquid assets
- Carbon traders are disincentivized in locking capital into pre-purchase agreements, as there are fundamentally unproductive assets on their balance sheets. We believe this slows down the pace of scaling in the voluntary carbon markets. The structures are heavily under-financialized.
- Trading pre-purchase agreements is a legally complicated maneuver that is hard to organize, making it difficult to manage inventory in changing market conditions.
Our objective is to solve these problems by providing core infrastructure:
- World-class De-risking. Anything that enters our infrastructure will have to pass world-class due diligence, delivery risk assessment, appropriate de-risking, and governance approval. This guarantees that assets in the Solid World ecosystem can be traded with confidence.
- Tokenized Agreements. We create tokenized agreements with strong legal backing. Once the underlying credits are certified - we provide delivery options - which include on-chain registries like Toucan or Flow. We provide the ability for interested parties to receive certified credits in their original off-chain registry if required - facilitating market activity around the world.
- Liquid Infrastructure. Our designs for forward commodity trading make all forward deals immediately liquid, guaranteeing there is always a buyer and a seller at market rates. Major categories of quality forward credits will have transparent spot prices.
- Collaborating & Building the Future. The infrastructure Solid World DAO is creating unlocks the forward carbon market's ability to interact with the myriad innovations that have been created by decentralized finance (DeFi). A low-hanging example of this is a loan facility collateralized by specific carbon credits held by traders. This will allow traders to accumulate even larger amounts of forward inventory while being able to exit their positions at any time.
Solid World DAO requires a highly specific combination of world-class experts in order to pull off. Lucky for us - we have all of them. Our core contributors represent deep expertise in carbon markets, risk assessment, blockchain development, tech startups, and more. They have built leading companies in web2 and web3, worked in world-class carbon credit rating agencies, and successfully exited startups.
We have a growing network of industry partners across the traditional carbon markets, the burgeoning space of regenerative finance (ReFi), and asset management companies. We boast strong partnerships with organizations like SCB, Toucan, Flow Carbon, Ethica, and Draft VC. We are constantly on the hunt for more strategic partners that want the same thing we do - an end to climate change and a future for our children.
Our pipeline for interested carbon projects is deep, boasting a volume of millions of credits per year. It can not be overstated how transformational carbon projects feel Solid World DAO's infrastructure can be for them. They have been struggling for decades and there is finally a light at the end of the tunnel.
Last modified 5mo ago