Regenerative Finance 101: A Guide to Crypto’s ReFi Movement

As with any Web3 cryptocurrency project, regenerative finance projects can be used in scams. There are always risks when investing in alternative assets such as crypto; regenerative finance isn’t immune to these. ReFi is emerging as a key player in innovative climate finance, bridging cryptocurrency and climate action and aligning incentives to enable millions of people what is regenerative finance to take climate action.

What are the key traits of ReFi systems?

Traditional finance (TradFi) has generated enormous amounts of wealth and prosperity (at least for some) since the dawn of the Industrial Revolution. However, what https://www.xcritical.com/ is often left out of consideration is the less tangible and ancillary costs of all that generated wealth and societal development. A new financial movement has been growing over the past decade that takes into account living systems, communities, and the environment. After all, all wealth that exists only does so thanks to the Earth and its abundant resources. And with regenerative finance the anticipated regulations and social factors favor its growth.

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There are digital public goods, such as currency exchanges that aren’t owned or controlled by a company, and even a variety of metaverses and digital games where you can seamlessly move your assets from one virtual world to the other. A regenerative economic system actively works towards restoring and replenishing natural resources and ecosystems, instead of exploiting them for short-term gains. It prioritizes creating sustainable and equitable prosperity for all, while preserving the planet’s natural resources. Businesses and individuals are motivated and incentivized to act in the long-term interest of the planet and its inhabitants, rather than solely being focused on maximizing profit for themselves.

NFTs and tokens are the “Greenchips” driving capital and culture toward climate action.

Precisely these safeguards and identity checks make actors outside of Web3 more comfortable with using ReFi applications and services, which in turn helps speed up mass adoption, and makes ReFi more accessible and inclusive. As Web3 continues to evolve, we expect to see more innovative and impactful projects emerge, to bring the benefits of blockchain technology to the real world. Transitioning the VCM to the new blockchain-based digital carbon market (DCM) might be an opportunity to upgrade the existing technology for validating, transacting and consuming carbon credits. Blockchains allow for publicly verifiable data, access for a broad range of users, and more liquidity.

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• Communities can create local currencies to ensure that economic activity can flow within their local community, and to promote values they care about.
• They provide the logic behind the 10 principles of systemic, socio-economic health.
• Blockchain technology is a helpful tool in leveraging ReFi to its full potential.
• Imagine that—a way forward to simultaneously remedy the planet and advance the economy.

The company has partnered with the Federation of Southern Cooperatives, an organisation of Black farmers, to provide financial support and help these communities benefit from sustainable farming practices. One that uplifts rather than exploits local communities, has a compassionate view on the wellbeing of humanity as a whole, and keeps in clear view the moral and societal obligations we have to one another and the ecosystems that sustain us all. ReFi primarily seeks to achieve its aims by bypassing many of the narrow assumptions on what makes a healthy economy. This includes the obsessive focus on GDP as a metric for success; the idea that regulation is the only way to rein in market forces; or that shareholder profits should be the main focus of business activity. While the Rockefeller Foundation coined the term “impact investing” only as recently as 2007, San Francisco-based RSF has been working according to the field’s underlying principles since its founding in 1984.

Furthermore, they deploy the Web3 and sustainability megatrends that fuse together, to create the Regenerative Finance model. – It leverages Decentralized Finance (DeFi) and blockchain to counteract the impacts of industrialization and systemic financial imbalances. In short, Regenerative Finance tackles environmental, social, and economic challenges through inventive investment strategies.

Infrastructure tools are loosely defined as data products, protocols, and adjacent tooling that support carbon suppliers and core blockchains in distributing carbon to the application layer. Layer 1s are carbon-neutral or -negative proof-of-stake blockchains like Solana that are highly energy efficient. Once Ethereum shifts to POS, it can also be considered an L1 for the ReFi economy. In other words, these are all existing blockchain projects that don’t take enormous resources to run. 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.

This sort of economic model will actually benefit businesses given they will be taking advantage of materials in products by reusing them for new products rather than seeing them going to landfills. For example, a large majority of the 300M tons of plastic waste produced yearly by industry could instead be used, after some processing, for new products like clothing and building materials. Sustainability was the buzzword use for the early past of the 21st century as a way to address the problems, often environmental ones, facing society. However, this led to issues like greenwashing and deflection of corporate social responsibility to consumers for applying sustainable practices in their personal lives.

The notion on whether any of these things are ‘successful’ takes the broader view into account and this then changes the factors that feed into design and decision-making. As RSF we’ve begun focused work on addressing inequity with the Racial Justice Collaborative, which uses philanthropic money to support U.S.-based social enterprises with BIPOC owners and leaders. We’ve engaged external advisers with community wealth building and racial justice expertise to play a central role in funding decisions, which helps ensure accountability to the communities we’re trying to serve. It provides capital to community development financial institutions and other impact-focused lenders that support high-quality jobs and self-determination for low-income communities. At least 80% of these community borrowers are led by people of color and women, and they participate in Olamina’s governance and solution design.

It uses place-based tokenomics that foster their thriving capacities within a collective thrivability pattern. It uses all eight manifestations of capital and eight principles of a regenerative economy — while every other level of the economic system design is restored and transformed according to global dynamics. This kind of economics, framed in an energy flow and networks perspective, requires a balance of efficiency and resilience be maintained within a particular “window of vitality”.

And a new generation prioritizing environmental and community well-being enters the workforce. Early adopters have the advantage of shaping the system’s future, and greater diversity among them enhances its resilience. Blockchain is not a universal fix; even if suitable for a project, it can’t address underlying flaws. This makes investments that were once limited to a select few more accessible and democratized.

The societal systems we have collectively developed in the industrial age cannot be fixed using simple solutions. It is all connected to our modern civilization having its very foundation built upon a financial system that takes more than can be replenished. However, blockchain and Tokenization of RWAs add simplicity and data security to the concept because wealth distribution is one of the intrinsic values of DeFi (Decentralized Finance). Universal basic income, or UBI, is a system where everyone is given a set amount of money on a regular basis. It’s conditionless and available to anyone, regardless of their background, education, nationality, or income. UBI can function as a safety net for people, and it is supposed to ensure that everyone has a basic standard of living and can cover basic needs.

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. This can be challenging, as we’re building up a completely new system that has no precedent — but we’re optimistic that we can thread the needle.

Instead, ReFi aims to solve environmental, communal, or social problems by creating regenerative cycles. These systems create value for participants while simultaneously benefiting ecosystems and communities. An emerging idea is a digital carbon market, where the voluntary carbon market is replaced using blockchain networks. The idea is to bring more transparency, availability, and even liquidity to the carbon credit market. Users can log into a chosen web app, connect a digital wallet, and deposit crypto onto the platform to use regenerative finance and can choose from a list of supported crypto to borrow against the collateral deposited when the funds are deposited. Regenerative finance is ultimately designed to create a more balanced, nondestructive economy that incentivizes social and environmental good.

As a result, forests, oceans, and other natural resources can be valued according to the amount of carbon they capture. For example, the higher the price per ton of carbon, the more attractive it becomes to get into the business of planting new forests (and deriving income from carbon credits) instead of cutting down the trees for timber. Regenerative Finance, or ReFi, is an experiment to create financial incentives to draw down carbon emissions, “regenerate” the environment and ultimately reverse climate change. The goal of ReFi is to create an economy that thrives off mitigating climate change, reversing some of the effects of carbon emissions, and pursuing social change. ReFi projects use raised capital to attempt to provide a positive financial impact on the world.

The goal of Regenerative Finance is to shift away from the “extractive economy.” In other words, the current system – where finite resources are extracted, and only the privileged few reap the profits. The more projects engage in moving away from the depletion of resources, the higher the benefit to everyone. It is a bottom-up and local-to-global vision that honours the natural characteristics of each place and bioregional ecosystem. It is nested in evolutionary systems and bio-cultural uniqueness — ecology, biology, geology and culture — that is a place’s foundational essence, soul and identity. 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. A story that encapsulates the values of caring, mutuality and human flourishing.

The key question we now turn to is how do these activities get financed and leverage investment markets to accelerate adoption, beyond the carbon and eco-credits being purchased by companies already committed to net zero and being Earth positive? Massive adoption and scaling is required to realise the exponential decarbonisation roadmap, particularly by 2030. As ReFi continues to evolve, we can expect to see more and more innovative and impactful projects emerge and bring the benefits of blockchain technology to the real world. Because ReFi is so strongly focused on regenerating the planet and helping people, its community welcomes a more pragmatic and flexible approach to some Web3 principles and allows for trade-offs, if necessary. ReFi users also often value safety over experimental services with potentially high returns, and prefer knowing who they’re dealing with over prizing anonymity. For example, ReFi projects may implement KYC measures and screen users, instead of being completely permissive and open.

On Oct. 24, a Lumen/CenturyLink employee reported to St. Paul Police that someone had tampered with a manhole cover and snatched underground wires, causing an estimated $50,000 in damages. The wire theft from the 1700 block of Minnehaha Avenue East by Flandrau Street — west of the White Bear and Minnehaha intersection — has had repercussions far beyond the work site. Since then, more than 600 homes near the Eastview neighborhood north of Harding High School have been without landline telephone service. Wire theft on St. Paul’s East Side has left hundreds of homes without access to their landline phone service for nearly two weeks.