Thanks for reading our rather long posts
We will prepare the list of the needed event emission estimation parameters and post them here next week.
Regarding the NCT token: In short, one NCT token represents 1 tonne of carbon dioxide removed from or not emitted into the atmosphere. As they represent removed or mitigated C02 these tokens can be used to offset ones own carbon emissions. NCT tokens are part of Toucan Protocol’s smart contract infrastructure. The tokens originate from the main off-chain carbon credit registry (the Verra Registry, in which approximately 75% of the world’s carbon credits are created and tracked) and are moved on-chain (to Polygon) via the Toucan Bridge.
To go into more detail (to the best of our understanding): In the traditional (off-chain) voluntary carbon market, a carbon offset project has to go through a rigourous measurement, verification and reporting (MRV) process in order to qualify for entry to carbon certificate registries (and create new carbon certificates). This process incurs quite some overhead which only makes it worthwhile for larger projects to complete. The certificates that get issued are specific to a project and year (vintage) and in this sense are non-funglible; some carbon offset projects are perceived as more desirable or credible than others (e.g. certificates issued due to emission reduction from a newly installed factory scrubber compared to certificates from emission mitigation from a forestry preservation project that can demonstrate that it supports biodiversity and the local community).
One disadvantage of the existing off-chain system, is that not everyone can easily trade certificates as no global, liquid market exists and only verified (Verra) registry account holders can own or retire carbon certificates; it is a closed system which involves an application process and fee.
These carbon certificates can now be bridged by the owner of the certificate in the originating off-chain registry using Toucan infrastructure (if your certificate fulfills certain requirements) to the bridger’s on-chain account. Once on-chain, the non-fungibility of these certificates is respected. However, in order to create a healthy on-chain market with adequate liquidity for these certificates, Toucan has created “pools” where certificates of similar types are pooled together and can be traded against each other (and thus become fungible). One of these pools, NCT (Nature Carbon Tonne), is dedicated to nature-based carbon offset projects, such as forestry preservation projects. The original certificate bridger can then swap their non-fungibile carbon certificate tokens for NCT as they need and, if they wish, choose to sell their NCT at market price on Sushiswap. Toucan’s documentation goes into more detail for the bridging and pooling of certificates.
This infrastructure has enabled the first liquid and fungible carbon certificate market that allows end users to buy small and relatively large quantities of certificates alike at approximately 3 to 10 lower prices than in the traditional off-chain carbon markets. We think this demonstrates how effective blockchain has been in “removing the middlemen” and brings large benefits for the end user and will in time lead to more value accruing to the originating carbon offset projects.
When an end-user comes to the point of actually offsetting their emissions, they must retire carbon certificates from a concrete carbon offset project of their choice. In our case, this will involve purchasing NCT, redeeming the NCT pool token for tokens from a specific carbon offset project (that the community will choose via Snapshot vote) and afterwards “retiring” them (i.e., sending them to the null address). You can find a transaction containing the swap, redemption and retirement actions here; in this example, the Verra Project with ID 1052 and Vintage 2012 was chosen as the carbon offset project and you can verify that TCO2-VCS-1052-2012 tokens were retired by sending them to the null address.
We propose to choose the NCT pool tokens as it has strict requirements that ensure that only high quality forest preservation and nature-based projects may be part of the pool. The pool contains about 30 projects from which we can choose to retire carbon certificates from as part of the governance decision at the end of Devcon 6. The NCT pool also has enough on-chain liquidity: 232,000 NCT liquidity on sushiswap and a total supply of approximately 1.85 million NCT. This should insure that we can offset Devcon 6 without having a huge impact on the token price.
haurog and danceratopz