March 21, 2023
One of the most exciting developments in the Web3 space in recent years has been the emergence of the Digital Carbon Market (DCM). This is the segment of the Voluntary Carbon Market (VCM) that is transitioning from the analog, opaque systems of the past to transparent, public blockchain networks.
The DCM leverages the technology stack that has been made available by public blockchains (such as those powered by Ethereum) to bring greater levels of efficiency, transparency, and accessibility to the VCM. The DCM’s attributes directly address failures that have reduced the market’s overall ability to scale up and fulfill its role in reducing the gap between our current trajectory of carbon emissions and where we need to be by mid-century to avoid the most severe impacts of global warming.
KlimaDAO launched in October 2021, with a vision to accelerate the delivery of climate finance globally by leveraging Web3 technologies for the carbon markets. From launch, KlimaDAO has had a clear focus on addressing issues associated with opacity, fragmented liquidity, and inaccessibility. It leveraged a core piece of Web3 infrastructure called “Automated Market Makers” to achieve this, quickly amassing tens of millions of carbon credits within its ecosystem and facilitating a market for them that has significant amounts of usable liquidity.
KlimaDAO has since launched a number of technologies that enable the utilization of this vast liquidity. Its Carbon Dashboard enables live market data to be accessed and analyzed by market participants, while its Retirement Aggregator allows the offsetting of carbon credits on the blockchain – with immutable proofs written into the block – in seconds.
Digital carbon credits – the “on-chain” representation of carbon credits contained within the KlimaDAO ecosystem – are composable and interoperable, and can be used to power applications, enable new use cases, and foster innovation within the market.
Carbonmark is the next step in the evolution of the DCM infrastructure – below we introduce in more detail the benefits of the DCM and the role that Carbonmark will play.
There are a number of specific benefits the DCM offers its users, which can help reduce supply chain lead times across the market and increase the operational efficiency of everyone active within the carbon markets.
Smart contracts can be used to trigger purchases and retirements based on certain criteria being realized – for example, to offset a supply chain’s emissions based on available off-chain data or to automatically offset emissions associated with activity on a Web3 platform.
Digital carbon can be explored by project and by geography, so users can see exactly what is being transacted within the market. Market data is readable, so users have an informed perspective on what is happening across the value chain.
Digital carbon can be pooled together in the DCM to allow liquidity to be built up over time and reallocated efficiently based on market conditions – this liquidity can be accessed by market participants at any given moment.
In addition, novel fundraising mechanisms that leverage Web3 technologies can be used to fund high-impact carbon projects that may otherwise struggle to attract project financing.
Digital carbon is directly accessible and transactions are almost instantaneous. This makes redemption or retirement of digital carbon easy and facilitates both choice and speed with readily accessible pricing information.
Despite the progress made, and the adoption the DCM is already seeing, there remain a number of barriers associated with participating in the market that must be removed for the DCM to leave its mark. These barriers are both technical and organizational, and Carbonmark is designed to help remove them.
Web3 technologies remain somewhat raw, with user interfaces that lag behind the best examples in Web2. In some cases, there are no UIs developed to interact with the smart contracts, which reduce their utility for the market.
Carbonmark’s website has been built from the ground up with its users in mind. Highly searchable projects, the retirement tool embedded as core infrastructure, and user profiles ensure a best-in-class user experience in the DCM.
Getting set-up on Mainnets can be challenging enough, and when interactions with more efficient Layer 2 blockchains (such as Polygon) are needed, further knowledge is required. When users are able to get set up, they may not know how to securely manage their private keys, or if they do they may not have the appetite to do so, particularly within a corporation.
Through our partnerships, Carbonmark has solutions for users to remove challenges around the custody of crypto assets and key management. Get in touch to discuss available solutions.
Although conceptually the benefits of the DCM are well understood, how to practically interact with it and accrue the benefits is less obvious.
Our team is here for you. Our Solutions Team will be executing enablement sessions to work through the Carbonmark platform with you, figure out your unique needs, and ensure you are able to achieve what you need in the DCM.
In many cases, the tooling that can open up adoption and participation, as well as drive value through the system, has simply not existed before.
Carbonmark abstracts away the technicalities of Automated Market Makers and smart contracts, meaning users can reap the benefits of them without having to have deep technical knowledge around how to interact with them.
Carbonmark is the Universal Carbon Marketplace, built for you.
With no fees at launch and an intuitive and easy-to-use interface powered by KlimaDAO’s supply of millions of carbon credits, the DCM can begin to realize its full potential. Critically, it can begin to fulfill its role in closing the emissions gap.
Carbonmark has a dedicated team to help you understand and use this powerful technology. Reach out today to learn more.
The information provided in this blog post pertaining to KlimaDAO (“KlimaDAO”), its crypto-assets, business assets, strategy, and operations, is for general informational purposes only and is not a formal offer to sell or a solicitation of an offer to buy any securities, options, futures, or other derivatives related to securities in any jurisdiction and its content is not prescribed by securities laws. Information contained in this blog post should not be relied upon as advice to buy or sell or hold such securities or as an offer to sell such securities. This blog post does not take into account nor does it provide any tax, legal or investment advice or opinion regarding the specific investment objectives or financial situation of any person. KlimaDAO and its agents, advisors, directors, officers, employees and shareholders make no representation or warranties, expressed or implied, as to the accuracy of such information and KlimaDAO expressly disclaims any and all liability that may be based on such information or errors or omissions thereof. KlimaDAO reserves the right to amend or replace the information contained herein, in part or entirely, at any time, and undertakes no obligation to provide the recipient with access to the amended information or to notify the recipient thereof. The information contained in this blog post supersedes any prior blog post or conversation concerning the same, similar or related information. Any information, representations or statements not contained herein shall not be relied upon for any purpose. Neither KlimaDAO nor any of its representatives shall have any liability whatsoever, under contract, tort, trust or otherwise, to you or any person resulting from the use of the information in this blog post by you or any of your representatives or for omissions from the information in this blog post. Additionally, KlimaDAO undertakes no obligation to comment on the expectations of, or statements made by, third parties in respect of the matters discussed in this blog post.