I haven’t fully thought through the idea, but was opening up the idea for discussion.
I was reading about synthetic assets pegged to Bitcoin hash power and wondered could that be linked together with some kind of asset tied to carbon output and create a crypto Carbon Credits program since proof of work is getting a lot of hate for power consumption?
Carbon credits are making an asset related to a companies greenhouse gas emissions, so being a derived asset I thought synthetics might be able to do something similar.
It’s possible to create a synthetic iAsset pegged to Bitcoin hash power. It’s also possible to create an iAsset pegged to a publicly available statistic for carbon output.
Can you elaborate more on how a Carbon Credits program would work?
how would a synthetic carbon credit do any good? Unless it is ingerantly tied to actual carbon credits? Hypothetically something might be able to be developed with Veritree? I’m sure they are creating carbon credits out of the planting.
Synthetic carbon credits would only be useful if it was being used officially as the medium for a national carbon program. So I am imagining this in a scenario where Indigo and Cardano are being used by nation states.
I was curious if this was even technologically possible with synthetics and defiroose’s comment says that it should be possible.
The Green Assets Wallet – first blockchain for green bond impact data - SEI check this out for a blockchain implementation of green bonds. As people above mention, the only real way to have a proper carbon credits iAsset is to have massive stakeholder approval/use. Otherwise, it’s just a pegged asset with no utility, and thus little value.
An iAsset can be pegged to a price and that in of itself is valuable since it allows you to make trades based on what you think the future will bring. An iAsset however would need adoption beyond trading for it to work as a carbon credit.
There is a Cardano project called Cardashift that has a “Decentralised Carbon Market” on their road map. Maybe iAssets like the one you are describing would be traded on a platform like that?
As the iAsset can be pegged with real-world asset, I want to remind that there is the price of certified Carbon emission reduction available, and even can be traded. How about pegging with the price?
I like your thinking on this. It wouldn’t likely be beneficial in the traditional sense that entities are only allocated a certain amount. And if Nation States were to implement something like this Bitcoin miners would just relocate as they did from China.
On the other hand if the credits could be something earned say for hash time generated using renewable energy this could be an incentive. Maybe miners earn credits for sustainable mining and can then sell or redeem them in a way that inspires other miners to move to renewables.
Further to @LandMark comment. Please consider EU ETS as part of the synthetic portfolio. This is Carbon Permits traded on the compliance market which is regulated and the most mature Carbon market to date. This is a market not accessible for retailers and synthetic would be the only way to get exposure to it. As demand grow we could look to expand to other regulated Carbon market like Australia, New Zealand, California etc. But as of now, EU ETS seemed to be the most documented and sensible move to do. Most crypto projects focus on the voluntary market but compliance is a totally different asset class currently traded on commodity exchanges or otc only.
I am really curious to see how is the actual data collected, since I am unware of an decentralized source to do that and how could a centralized one could be trusted ?!
The creation of an iAsset should be only related to decentralized assets or we are facing the risk of destabilizing the protocol. No one here I believe is looking to gamble I know because it is not a casino protocol
Just to add something I missed mentioning: my opinion remains however I do believe that in time the inclusion of iEUR ;iRUB ; iYuan and so on should be considered as it offers hedge options thus enriches the protocol, in spite of their centralized nature those could be seen as hedge possibilities. I am not a finance or hedge specialist, that is my opinion only.
