Revolutionizing Natural Capital Assets: A Conversation with Patrick Rawson, Co-founder of Curve Labs and Ecofrontiers

In my conversation with Pat Rawson , I delve into how blockchain is reshaping environmental sustainability. He's applying Web3 at Ecofrontiers to connect digital finance with ecological impact. Learn how their natural capital assets mapping are influencing investment and supporting real environmental progress.

Ecofrontiers is a research and advocacy program led by Curve Labs to provide theoretical frameworks and technical knowledge for accounting and representing natural capital crypto-assets. (Crypto green assets make it possible to give a value to nature, like a forest, and trade it like a stock. This way, people can invest in the environment, fund its protection, and get rewarded for conservation efforts, all in a transparent and accessible way.)

For clarity and better comprehension, the answers presented in this article have been re-structured and made more accessible for educational purposes.Additional explanations that have been added are in italics. Below is the full, unedited interview.

A conversation with Pat Rawson, co-founder of Curve labs and Ecofrontiers

Could you share with us your background and why does Web3 stands for you as a transformative technology?

• Patrick is a researcher focusing on the expansive financial systems and the pressing climate and environmental crises of our times. He is attuned to the 'great acceleration'—a rapid global transformation across various sectors—and the necessity of understanding these dynamics for future navigation. Beyond his research, he co-founded Curve Labs , where the team pioneers in blending blockchain technology with governance structures, and Ecofrontiers , which champions the creation of green crypto assets to foster sustainable ecological practices.
• He sees Web3 as a transformative technology notably for the following reasons : - The maturation of #DAOs : Patrick has been a keen observer of the DAO landscape, witnessing the maturation of these entities as they evolve from conceptual frameworks to operational powerhouses within the blockchain ecosystem. A prime example is MakerDAO , which oversees the DAI stablecoin and is maintained by a robust set of smart contracts on the Ethereum blockchain. It stands as a testament to the shift towards transparent, community-led governance structures in the digital finance realm (MakerDAO features an open governance system, where MKR token holders have the power to propose and vote on changes to the system.)- Web3 as an enabler for natural capital assets & regenerative finance : In the realm of natural capital, Rawson identifies Web3 as a driving force behind significant growth and innovation. Projects like KlimaDAO have embraced decentralized finance to incentivize the tokenization and trading of carbon credits, effectively linking digital assets to tangible environmental benefits. These initiatives reflect the essence of regenerative finance, where the blockchain isn't just a ledger but a tool for ecological restoration. Platforms such as Powerledger exemplify this progression. By facilitating direct, peer-to-peer energy trading, Power Ledger encapsulates the "permissionless" ethos of blockchain, promoting economic and environmental resilience adaptable to community needs.

Could you introduce us to Eco Frontiers and explain your mission, particularly focusing on why leveraging Web3 technology is crucial for your objectives?

Ecofrontiers is a research and advocacy program led by Curve Labs to provide theoretical frameworks and technical knowledge for accounting and representing natural capital crypto-assets. They have a twofold mission:

• Expanding Investment Opportunities: EcoFrontiers aims to enrich the spectrum and quality of eco-friendly crypto assets. Expanding the quantity by introducing more green assets into the market.Improving the quality? by ensuring these assets have a tangible, positive environmental impact.
• Influencing Societal Leaders: Eco Frontiers is keen on engaging decision-makers to reshape the current narrative around cryptocurrency. Patrick expresses a need to convey to societal influencers that "crypto doesn't have to have the framing that it's receiving today," advocating for a recognition of crypto's potential beyond its negative stereotypes.

Eco Frontiers envisions a systemic integration of crypto to foster a sustainable management of natural capital and?improve how natural capital is managed and invested. Patrick emphasizes the transformative potential of crypto in fostering innovative investment strategies in biodiversity and renewable energy sectors.

• Crypto offers a democratized finance model, operating on public consensus rather than centralized control: shifting from institutional to distributed validation (like Proof of Work or Stake) ensuring secure, democratic governance of each transaction. This represents a fundamental shift away from central authority and towards a more democratic form of governance.
• Green crypto assets are defined as digital assets that promote environmental sustainability. They leverage blockchain technology to incentivize positive environmental actions and support eco-friendly projects.
• Natural capital refers to the world’s stock of natural resources. By leveraging blockchain, Eco Frontiers seeks to create systems that can more accurately track and trade these resources, ensuring that the environmental cost of business is accounted for. This can incentivize sustainable practices and support the financing of projects that have a positive ecological impact.

How does your repository of natural capital assets demonstrate the transformative potential of Web3?

Rebirth vs Birth assets

• Patrick describes 'rebirth assets' as traditional assets that have been given a new life through blockchain technology. Assets like real estate, art, or commodities, when tokenized, not only gain increased liquidity but also become aligned with sustainability practices. The blockchain's inherent transparency aids in ensuring that these assets are managed and traded in environmentally responsible ways.
• He categorizes 'birth assets' as assets that are inherently created on the blockchain with an environmental purpose from inception. These assets directly fund, support, or represent sustainable practices. For example, carbon credit tokens represent a reduction in greenhouse gases, while renewable energy certificates and tokens supporting reforestation projects are all 'born' with green credentials.

Use cases

Parametric insurance blockchain enabled: A type of insurance that agrees to make a payment upon the occurrence of a triggering event, rather than compensating for the actual loss incurred. It's based on parameters that are objectively measurable and directly related to the loss of value.

• Blockchain and smart contracts allowing automation, transparency & efficiency. Blockchain can be utilized to establish smart contracts that automatically execute when predefined conditions are met. The use of blockchain ensures transparency and efficiency in the execution of these contracts, as the conditions are verified and executed in a decentralized manner.
• How are these technologies concretly relevant? These technologies can set up weather-based triggers: In cases of environmental events, specific conditions—such as reaching a predetermined level of rainfall or hitting a temperature cap—can automatically activate a smart contract to execute a payout. Why using smart contract in this case? Because it provides rapid payouts. In the case of post environmental incidents, it offers quick financial support to those affected by adverse environmental conditions.
• Let’s set an example through environmental triggers. An example of a parametric trigger might be a hurricane reaching a certain wind speed, which is verified by satellite data, triggering an automatic insurance payout to policyholders in the affected area.The smart contract on the blockchain is set up to execute when the trusted data source confirms the wind speed has met the threshold. This process eliminates the delay and dispute in traditional systems.

Green digital collectibles in gaming : Patrick delves into the world of gaming to illustrate how in-game collectibles can have real-world environmental impact. He talks about collectibles that might represent an actual tree planted or a contribution to renewable energy, turning in-game achievements into tangible eco-friendly results.

• Their connection to real-world ecology:These green digital collectibles are not just in-game tokens but are tied to real-life environmental actions. For instance, a digital collectible that a player earns or trades in the game could correspond to the planting of a tree in the real world. This direct connection encourages gamers to participate in ecological endeavors indirectly through their gaming activities.
• Their integration with traditional conservation efforts: Such gaming collectibles can be integrated with existing conservation efforts. By partnering with environmental organizations and initiatives, game developers can ensure that the digital assets gamers acquire are contributing to legitimate and impactful ecological projects.
• Tracking and verification: Blockchain enables the implementation of tracking and verification. The provenance of these green collectibles can be transparently traced, ensuring that each digital asset corresponds to a verifiable environmental action, like the allocation of funds to a solar panel installation or conservation program.
• Engagement and awareness across diverse demographics: He sees these gaming mechanisms as tools for increasing environmental awareness among a demographic that may not be reached through traditional environmental campaigns. The interactivity and reward systems inherent in gaming can engage a younger, tech-savvy audience in sustainability practices.

How is Web3 technology enhancing financial inclusion and fostering local empowerment in communities with limited traditional banking access?

• Financial Inclusivity in developing areas: Blockchain technology can be a game-changer in regions where traditional banking is scarce or non-existent. It allows for the inclusion of unbanked populations by providing access to green crypto assets through basic mobile technology. A practical example could be a blockchain platform that allows users in a rural area to receive, store, and trade green tokens using only a simple smartphone. These tokens could represent a share in a local renewable energy project or a tree-planting initiative.
• Local resource management: By tokenizing natural resources, local residents can gain a financial stake in the management and preservation of their environment. For instance, a community could issue tokens that represent a claim on future profits from a community-managed solar power plant. Token holders, therefore, have a direct financial incentive to maintain and protect this renewable energy source.
• Education as a catalyst: Patrick emphasizes that for such initiatives to succeed, education is crucial. Communities must be informed about how Web3 technology works to ensure they can fully engage with and benefit from it. An educational program might involve local workshops that teach residents how to use cryptocurrency wallets, participate in token economies, and understand the environmental impact of their digital activities.