Translation: Blockchain in Vernacular

What is Regenerative Finance (ReFi)?

Regenerative finance (ReFi) is an emerging form of finance that aims to address social, environmental and economic issues in the traditional financial system. Its sustainable characteristics address several major challenges, such as improving financial inclusion, protecting biodiversity, maintaining the environment, and mitigating climate change.

Key Takeaways:

  • Regenerative Finance (ReFi) addresses socio-economic and environmental issues through sustainable finance.

  • ReFi is based on core regenerative economics principles that emphasize balance, sustainable economic systems, fairness, and the achievement of holistic wealth.

  • The REFI project uses blockchain technology to provide transparency and efficiency.

  • Tokenizing real-world assets such as green bonds and carbon credits has promoted sustainable investment practices around the world.

  • Refi also advocates the principle of reducing waste and resource utilization proposed by the circular economy.

  • 碳信用代币化在促进再生金融 (ReFi) 生态系统中的投资活动采用方面发挥了关键作用。

Regenerative Finance (ReFi) aims to deliver positive environmental and social impacts while achieving financial profitability. ReFi actively participates in the process of rebuilding, restoring and enhancing natural systems for the benefit of future generations.

According to a report released by the Global Sustainable Investment Alliance (GSIA) in 2023, more than $30 trillion of investments fall into the category of sustainable assets. In addition, the sustainable asset management scale (AUM) in non-US markets has increased significantly by 20% compared to 2020.

The GSIA report shows that the demand for economies that follow the sustainable framework is strong. In this context, the emerging REI trend helps to establish a healthy connection between the principles of sustainable and the financial sector to achieve economic revenue.

Before we delve deeper into regenerative finance, we first need to understand the concept of regenerative economics.

 

1. What is regenerative economics?

Renewal economics, also known as regenerative capitalism, was first proposed by American economists, writers and investors John Fulleton.

Source: https://capitalInstitute.org/regENERATIVE- Capitalism/

The core idea of ​​Fullerton Regenerative Economics is to use the universal laws and patterns of the universe to build a healthy, stable and sustainable economic system.

Fullerton also proposed eight key principles that define regenerative capitalism, including the following:

Source: https://capitalInstitute.org/8-principles- regenerative-economy//

Living in harmony with the environment: Humans are connected to the world, and how we use resources affects the environment. To build a sustainable future, we should treat nature and others as we would like to be treated ourselves. A holistic view of wealth: Wealth is not just money, it also includes the well-being of society. Capital should include cultural, social and spiritual aspects to maintain healthy ecosystems. Innovate, adapt, respond: In order for businesses to thrive in a rapidly changing world, they must continuously innovate, adapt and respond to change. Empowered participation: Individuals play an important role in interconnected systems, and the power of the small determines the health of the whole. Respect for community and place: Communities are shaped by diverse traditions and histories. A healthy community should preserve its unique cultural heritage. Abundance at the edge: Creativity thrives at the edge of the system, generating new ideas through collaboration and driving regenerative growth. Strong circular flows: A healthy economy requires efficient systems to manage resources and waste, just as the human body maintains health. Homeostasis: Balance is key to regenerative systems, ensuring organizational resilience, efficiency and diversity, thereby supporting the well-being of the whole.

Integrating these principles into the existing economic framework will not only promote economic prosperity, but also have a positive impact on society and the environment, ensuring long-term prosperity and sustainability.

 

2、理解再生金融 (ReFi)

The main purpose of Regenerative Finance (ReFi) is to support and promote the growth and development of regenerative economics. ReFi can be seen as an evolved version of decentralized finance (DeFi), incorporating a practical framework based on regenerative principles.

Source: Sankrit

The ReFi project leverages the strengths of smart contracts, cryptocurrencies, DeFi applications, and other Web3 technologies to provide modern financial solutions with the potential to be regenerative, fair, and sustainable.

The REFI solution also plays a key role in digital measurement, reporting and verification (DMRV) that promotes environmental and social impact, such as ecological credit.

For example, the REFI project can simplify the transaction and tracking process of carbon credit, while ensuring transparency.

 

3. How does the Regeneration Finance Project work?

Regenerative finance provides funding support for the priority of sustainable and regenerative development. While Refi, REFI, while achieving profitability, ensure community empowerment and long -term vision.

ReFi also incorporates the principles of the circular economy, a production model that aims to eliminate pollution and waste through the regeneration of products. Here, products are repaired, reused, recycled and refurbished to extend their useful life, thereby minimizing waste.

来源：https://www.researchgate.net/figure/The-Circular-Economy-model-Source-Sustainable-Global-Resources-Ltd-Recycling-Council_fig1_333521645根据欧洲议会2023年5月发布的报告，欧盟每年产生超过22亿吨废物。议会敦促欧洲人通过减少废物产生和提高原材料使用效率来选择可持续的经济模式。

For example, French Industrial Bank issued the first digital green bonds in the form of security tokens in Ethereum in November 2023.

In the case of green bonds, investors will get investment to the tokens, and funds are used for sustainable projects.

Four elements in Web3 that contribute greatly to ReFi:

Tokenization: ReFi projects often create tokens that represent real-world assets or ecological outcomes (such as carbon credits, biodiversity credits, or renewable energy certificates). These tokens can be traded on decentralized exchanges, providing liquidity and incentives for investment in regenerative projects.

Smart Contracts: Smart contracts can automate processes such as verifying ecological impact, releasing funds after completing milestones, and transparently tracking project progress.

Decentralized Autonomous Organization (DAO): In ReFi, DAOs can manage funds, allocate resources, and ensure community participation in project selection and oversight.

Decentralized Finance (DeFi): ReFi projects often integrate with DeFi protocols to provide additional financial services such as lending and yield farming. This facilitates further mobilization of funds and sustainable investment opportunities.

 

4. Advantages of the REFI project

1) Environmental Benefits The ReFi project supports initiatives that promote ecosystem restoration practices, such as regenerative agriculture, water conservation, carbon offsets, and soil restoration. These efforts not only help restore natural habitats, but also promote a sustainable economy with zero or minimal waste.

The implementation of digital measurement, reporting and verification (dMRV) can help provide detailed data on forest cover, carbon mapping, renewable energy tracking, green bond verification, climate risk assessment, etc.

2) The tokenization of sustainable and green assets converts real assets such as green buildings and organic farms into digital tokens, making global investment more convenient. Investors do not need to pay high costs due to geographical location.

The appeal of fractional ownership in tokenization attracts retail investors as the minimum investment cost is reduced and greater participation provides liquidity to traders and investors.

3) Transparency and traceability The involvement of blockchain technology enhances the transparency of ReFi by verifying project activities in real time. Users can access the browser of a specific blockchain and analyze various activities including large transactions.

The traceability function of green products also increases the trust between consumers and producers, and helps to establish a healthy economic ecosystem.

 

5. Carbon Credit Tokenization: Unleashing the Potential of ReFi

The growing demand for tokenized carbon credits is a key example of how ReFi is transforming the traditional financial economy.

According to the report of July 2024 (Fortune Commercial Insight), the global carbon offset market's valuation in 2022 was US $ 938.75 billion. It is expected that the market size will reach approximately US $ 2550 billion by 2030, with a compound annual growth rate of 13.1%.

Carbon bridges or tokenizers help connect carbon credits with established registries such as Gold Standard or Verra and transfer them to a dedicated blockchain. After the bridging process, these carbon credits can be stored, transferred, sold or bought as needed.

For example, Toucan, which was founded in October 2021, tokenized more than 20 million tons of carbon credits within two months of its launch. In the three years since its founding, Toucan has helped cancel more than 298,000 carbon credits.

来源：https://toucan.earth/其他与碳信用相关的主要项目包括：

Nori: Founded in 2017, this project aims to reverse climate change by increasing carbon removal from the environment. As of 2024, Nori has paid more than $6.5 million to suppliers and removed more than 700,000 tons of carbon.

Klimadao: As a decentralized autonomous organization (DAO), Klimadao was launched in 2021. The main vision is to provide a public, neutral and transparent carbon credit market infrastructure.

Flowcarbon: This platform provides end-to-end services to help users and organizations simplify the carbon removal process. In 2024, Flowcarbon was named one of the top green technology companies in the United States by TIME magazine and Statista.

 

6. Other ReFi application scenarios

1) Conservation Financing ReFi projects create tokens or other digital assets that represent the value of natural ecosystems being protected or restored. These tokens can be traded or used to finance conservation projects.

Advantages

  • Valuation of Natural Capital: Refi helps quantitative and monetized biological diversity and the value of ecosystem services, and create a new economic incentive mechanism to support natural protection.

  • Sustainable Financing: Tokenization generates a continuous revenue stream for conservation projects, ensuring their long-term viability.

  • 社区参与：Web3 工具如 DAO 可以赋权地方社区，参与决策和保护项目的利益分享。

  • Impact measurement: The transparent tracking of the blockchain makes the transparent tracking of the protection results, enhance the accountability system, and promote investment.

Example: The Toucan protocol Toucan protocol allows carbon credit to receive Polygon blockchain from the traditional registered agency bridge.

This has created a more liquid and transparent market for carbon credit, making it easier for individuals and organizations to offset carbon emissions.

2) Renewable Energy The ReFi project promotes the financing and development of renewable energy projects through tokenization and decentralized finance (DeFi) protocols.

Advantages

  • Democratic investment: tokens allow small -scale investors to participate in renewable energy projects and reduce dependence on traditional financial institutions.

  • Reduce cost: The DEFI platform can provide a more efficient and lower financing options than traditional banks.

  • Community ownership: DAO can realize the ownership and governance of the community in renewable energy projects and promote energy democracy.

  • Transparency and traceability: Blockchain can track the production and consumption of renewable energy, ensuring transparency and accountability.

Example: Energy Web TokennerGy Web Token is the native currency of the blockchain Energy Web Chain designed for the energy field.

It supports decentralized applications (dApps) such as peer-to-peer energy trading and grid management, driving the development of renewable energy projects.

3) Community Development Refi projects through decentralized governance and financial mechanisms empower the community, allowing the community to control their own development.

Advantages

  • Local empowerment: Community-led projects are more likely to address the specific needs and priorities of the community.

  • 金融包容性：ReFi 能为边缘化社区提供获取资本和金融服务的途径，促进经济发展。

  • Transparency and Accountability: Blockchain-based governance ensures transparency and accountability in decision-making and resource allocation.

  • 协作与创新：ReFi 鼓励社区、投资者和其他利益相关者之间的协作，促进创新和可持续发展。

示例：Regen NetworkRegen Network 是一个基于区块链的平台，支持生态资产的创建和交换。

Community can use Regen Network to develop and manage projects that promote sustainable land use and ecological recovery.

 

7. Important measures of REFI

In addition to carbon credit, other remarkable renewable finance (REFI) measures include:

1) Blue Carbon ReFi plays a vital role in the blue carbon sector, which aims to protect coastal and marine ecosystems through carbon removal. The State Oceanic Administration reports that coastal wetlands and mangroves have ten times the carbon storage capacity of mature tropical forests.

Source: https://www.clumate.gov/news-features/understanding-climate/understanding-black-carbon. According to the World Bank, maintaining a healthy marine ecosystem is crucial to the increasingly serious climate change. Important measures for strong REFI ecosystems.

Notable Project: The Ocean Foundation Founded in 2003, The Ocean Foundation is dedicated to reversing the trend of global ocean degradation. The foundation focuses on protecting coastal ecosystems and oceans through its community foundation services, blue carbon offsets, and other conservation initiatives.

In the past two decades, the Ocean Foundation raised about $ 98 million for marine education, species protection, habitat conservation, and key capacity building.

2) Basic income (UBI) National Basic Revenue (UBI) plans to regularly provide fixed amounts of income to promote economic stability.

Community-centric DeFi projects can introduce UBI programs to build a regenerative economy within their ecosystems and empower community members. UBI can not only eliminate poverty, but also use the money left over after people meet their basic living needs for potential Web3 services, including transactions.

It is worthy of attention: Gooddollargooddollar is a practical example of implementing the basic income of the whole people (UBI). Although the platform has a small scale.

Users can claim GoodDollar UBI by simply signing up for free using Google, Facebook, or a mobile phone number. Registered users will receive GoodDollar ($G) tokens every day, which they can use to interact with supported dApps such as GoodWallet, GoodDapp, and Uniswap.

3) Local Currency In remote areas where financial institutions are scarce, the creation of local currencies plays an important role in achieving financial inclusion. In such conditions, local currencies help promote economic activities within the community.

Local currency supports low -cost daily transactions, and also provides support for small enterprises.

Projects to watch: Celo Foundation Celo launched cREAL, a stablecoin pegged to the Brazilian local currency, in 2022, which is listed on three Brazilian crypto exchanges. According to Rene Reinsberg, chairman and co-founder of the Celo Foundation, the launch of cREAL is based on the growth of cryptocurrency usage in Brazil.

The introduction of CREAL helps users in accordance with their needs, and participate in the centralized finance (CEFI) and decentralized finance (CEFI) according to their needs without frequent time -consuming token exchanges.

 

8. Conclusion

Regenerative Finance (ReFi) is a relatively new concept in the DeFi space with huge potential to drive the development of green investments while incentivizing communities and creating economic prosperity for the entire Web3 ecosystem.

With the continuous improvement of people's awareness of the importance of environmental protection, more Refi -based projects will appear in the future.

This article is for information reference only and should not be considered as investment advice.