When cryptos make a positive impact - The ReFi Movement

gm, people who care.

This week’s release is a bit different from DVRS’ usual case study.

We aim to shed light on a specific - still - niche movement of the Web3 ecosystem, which will hopefully grow more and more mainstream.

The biggest misconception we hear almost daily is that Web3 is about speculations, opportunists, and scams.

In this newsletter, we aim to prove it wrong.

In fact, Web3 can (and should) be used for higher purposes.

We are talking about addressing environmental, governmental, cultural, and social issues.

We know the theoretical benefits the blockchain can provide businesses and institutions, such as; increased trackability, transparency, data security, and scrutiny.

But how does it translate in real life, and most importantly, how can it impact the world positively?

We will focus on ReFi - a “Web3 for good” movement gaining momentum.

Various crypto protocols are increasingly laying the groundwork for corporations and individuals to meet sustainability objectives.

Let us dive right into some key ReFi concepts and initiatives.

When cryptos make a positive impact

WHAT

ReFi - which stands for?Regenerative?Finance - combines regenerative economics and decentralized finance.

Simply put, the ReFi movement aims to generate profits for investors through sustainable projects, leveraging cryptos and the blockchain.

On the one hand, ReFi advocates want to eliminate opaque, centralized intermediaries to democratize access to financial services.

On the other hand, they want to create shared value and further sustainable progress.

Stakeholders play an active role in the governance of most ReFi projects.

ReFi uses financial resources as instruments for healing natural environments, helping communities, and overcoming systemic problems.

For once, using blockchains allows for minimizing intermediaries, providing transparency and greater inclusivity.

ReFi also allows more secure and reliable data, which can be crucial in detecting frauds and double counting - in carbon markets, for instance.

It differs from the crypto market because real-world assets, like carbon, trees, or wind farms, generally back ReFi tokens.

ReFi’s more developed area is carbon credits, but initiatives are spreading fast, and the number of use cases is growing.

WHO

ReFi is, in essence, an inclusive ecosystem.

For now, from a B2C perspective, it is more accessible to Web3 enthusiasts and DeFi investors.

As to B2B players, it mainly resonates with climate activists, social organizations, and institutions.

Each project has its target market and customers - the end goal always being to involve as many people as possible in the interest of the greater good.

HOW

We see an increasing number of well-intentioned players that want to use blockchain for good.

We listed a few best-in-class examples:

• Toucan is bridging off-chain and on-chain carbon credits.
• Flowcarbon aims to scale the voluntary carbon market by helping climate project developers and corporations.
• KlimaDAO is fighting climate change by embedding the cost of carbon into a carbon-backed currency called KLIMA. More specifically, each KLIMA token is matched by one carbon tonne.
• Powerledger operates in the local energy market. Their solutions enable energy tracking and trading within embedded networks and microgrids, allowing households and businesses to sell energy generated from their solar panels to other energy consumers connected to the same electricity grid.
• Finally, Flexidao provides intelligent software solutions helping corporations gain transparency over their global renewable energy procurement.

WHY

Usually, big multinationals, corporations, and NGOs can only execute wide-scale projects for a positive societal impact.

That is, if and when they decide to act upon macro CSR objectives, often defined over a 10-year roadmap that no one holds them accountable for.

The end goal of ReFi is to use decentralized finance - cryptos to simplify - for the greater good.

ReFi's thesis is that all individual players can make a difference on one or several issues that matter to them.

Say I buy some $KLIMA tokens issued by KlimaDAO.

I’ll become de facto an investor in a project that aims to offset carbon emissions.

I can interact directly with a community of like-minded people whom I share values with.

I can even make proposals to suggest project improvements and have voting power over crucial decisions.

I can see the immediate impact of my contribution as it is tracked and accessible on chain.

In other words, I know exactly where my money goes and what it is democratically used for.

Thanks to the tokenization of real-world assets, people can play a pivotal financial and decisional role in projects that truly resonate with them.

Closing thoughts

ReFi casts a light of hope on the crypto space and proves that blockchain technology is agnostic.

It does not lean towards good or bad. The tech is what people make of it.

Although some players are genuinely pushing for a better, more sustainable, and fairer world, we can’t ignore that some companies will use it for greenwashing.

There is still a long road for sustainable on-chain initiatives to go mainstream.

One has to acknowledge that ReFi makes a positive impact; as of 2022, 25.4 million carbon credits have been brought on-chain, of which 825K have been bought.

It pales in comparison with the 1.08 billion off-chain credits issued overall - of which about half was bought.

Yet, it still makes a difference.

But what are we missing for it to become a real thing?

First, we need a better overall UX, less nerdy jargon, and to simplify as much as possible the underlying DeFi mechanisms, which are out of reach for most people outside the ecosystem, even for those who are more versed in traditional finance.

Then, the overall negative perception of the crypto space does not bode well with projects “for good”.

However, the sentiment shift could come from ReFi endeavors themselves.

Finally, institutional players should contribute and participate more actively in blockchain-related discussions.

From a brand standpoint, one can’t go wrong in trying innovative approaches for a good cause - provided that it brings actual value and some positive impact to the table.

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