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June, 21

    Fading Fad Or Real Deal – How Long Can Allure Crypto Remain

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    While crypto and blockchain technology enjoys mainstream adoption, and policymakers look to succumb to its nuanced prowess in the global economy, its ecological impact, considered its dark underside, now has a new rival that could potentially help reverse its environmental effects, but could it work? 

    In an era where consumers and governments are demanding more climate-conscious actions, and corporations are casting sustainable practices, to some extent at least, blockchain technology and Web 3.0 software could become the regenerative answer.

    With global attention focused on several technological innovations, including Web 3.0, regenerative finance or ReFi could be a new way of taking into account the negative externalities caused by the crypto and blockchain industry.

    And some experts are hopeful that ReFi can be more than an environmental movement, looking to use it as a tool to address social inequality and widespread financial instability. 

    The question on everyone’s mind however is whether regenerative finance will be just another fad, or could it actually become a plausible solution to piece everything back together.

    Why ReFi all of the sudden? 

    Regenerative finance has been around since the 2008 financial crisis. Yet, it was only in 2015, after a paper titled Regenerative Capitalism, by economist and philosopher, John Fullerton that the movement started seeing more widespread attention from different pockets of the economy. 

    Fullerton however described regenerative economics as the theoretical design that enables communities to utilize current resources to restore and regenerate what has been lost. Through these efforts, economies, including different segments of the global economy, could further conserve what remains, while ensuring long-term financial prosperity.

    At its core, regenerative finance would require markets to fix the issues those same markets have created. 

    At the time of Fullerton’s paper, cryptocurrencies, and blockchain technology were still riding in the backseat, and Web 3.0 was still but a pipeline dream. 

    Now, with the iteration of new internet and software developments, regenerative finance meets at the intersection between climate action and Web 3.0 capabilities, a new economic paradigm that could harness the power of blockchain to reverse the industry’s ecological effects. 

    In a time where new-age technology such as crypto mining emits three times more carbon dioxide than the largest U.S. coal power plant, regenerative finance might be the cleaner and more advanced alternative that could adequately distribute investment dollars, investor sentiment, and government legislation, helping to even out the playing field. 

    How would it work? 

    ReFi in the scope of blockchain technology and Web 3.0 software capabilities can mobilize capital that can fund climate action projects and research currently supported by private shareholders and government entities.

    Perhaps the more striking interest here falls on the back of decentralized Web 3.0 software. With the technology already at our disposal, and already present in the digital economy; Web 3.0 could use local actors, community research, and knowledge to coordinate resources in the avenues that require regenerative expansion. 

    Another bucket that could potentially see further growth is the use of tokens and non-fungible tokens (NFT) to establish a decentralized carbon trading system. Having more transparency could minimize abuse and could tokenize carbon credits. These tokens can become available on a public ledger, further encouraging responsible offsetting strategies. 

    Corporations and companies that are still stuck in a multipolar trap of the business-as-usual cycle can now effectively align their carbon and sustainability strategies with government legislation. 

    In September 2022, The White House Office of Science and Technology Policy (OSTP) published a report on the Climate and Energy Implications of Crypto-Assets in the United States. This outlines the fundamental efforts of the Biden administration to address climate actions and invest in more sustainable financial innovation. 

    Bringing to the forefront blockchain technology, digital assets, and Web 3.0 software, companies will be able to monitor and align their efforts with the research being done by climate institutions and the OSTP. 

    Regenerative finance could mean that material adoption of supply chain processes will be more efficient, as predictive models can be shared across the blockchain, helping to provide more transparent understanding and utilization. 

    Instead of now relying on top-level intervention, which typically uses outdated infrastructure to understand environmental impacts and put climate actions to work, sufficient information and data metrics could now be allocated to areas that require the assistance the most. 

    A company representative from Mooning, a global performance marketing, and Web3 agency, said the persona of crypto, blockchain, and Web 3.0 technology is not accurately reflected in our current applications. 

    “There is an underlying caricature that has become too well-known in the current state of the economic, social, and environmental crisis plaguing the industry. We already have a dynamic set of technologies that could help build projects, direct operating infrastructure, and deliver actionable real-world results.”

    Despite the growing popularity, ReFi projects however come at a time when sufficient funding isn’t being directed toward these efforts. 

    When there is a crypto bear market or winter, such as what we’ve seen in the last few months, then it becomes increasingly difficult to direct innovation into the streams that require them the most, which in this case is environmental and climate action. 

    A concept already in use 

    The lagging understanding and direction of capital resources have for some time left the development of regenerative finance stagnant. Yet, in the coming years, we could see faster growth, as more companies are utilizing public ledgers published on the blockchain and demand for tokenized carbon offsetting increases. 

    There are however several projects already in the works, that have managed to garner local and indigenous knowledge to develop technological applications to help reverse environmental impact. 

    The impact-driven and Amazon Rainforest-inspired NFT collection AEternals, in collaboration with Rainforest Partnership, utilizes Ethereum blockchain technology to establish an ecosystem whereby 55% of all proceeds from AEternal NFTs are directly donated to Rainforest Partnership. This further helps to mobilize dedication to the conservation and protection of the Amazon Rainforest and climate action. 

    ReSeed is another example of emerging technology in the blockchain ecosystem that creates a platform for more than 8,723 small farm partners. Working with local communities globally, farmers are compensated for decreasing their carbon offset, as ReSeed sells carbon protection credits. In total, ReSeed’s farm partners manage more than two million metric tons of carbon stock. 

    Then there is Eco Labs, an NFT project and platform founded by several artists that help ordinary individuals to restructure their relationship with the environment and technology. Its recent achievements include the Phoney Plants collection, the first-ever carbon-negative NFT, which was inspired by a real-world traveling art exhibition. Several of their collections focus on providing a better and more intuitive understanding and connection with the environment, and how technology can help regenerate our ecology. 

    A coalition of sustainable crypto and blockchain platforms is building momentum to help regenerate our human capabilities and efforts to form more innovative developments that could help fund and mobilize resources for the improvement of sustainable strategies. 

    Going forward

    While we may have the technology and software at our disposal, we’ve reached a point where we now need to utilize it in a way to regenerate, re-imagine and restructure our economic impact on the environment. 

    Although ReFi is a relatively new concept, it presents countless opportunities, if used sufficiently, and with the proper financial support. 

    There is however an attitude of skepticism, and it would require a proper adjustment of how we utilize and understand blockchain technology, and what it can be used for other than its traditional purpose. 

    Perhaps ReFi will become yet another blockchain and crypto trend that will see its demise in the coming decades, but with consumer and government demand for more appropriate climate action, perhaps this is the perfect timing for regenerative finance to make its mark on the digital economy.

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