Open Marketplaces

Over the past year I’ve been poking my head into eco credit markets, and talking with local project developers about what they need to be able to dock with them.

Most recently I’ve been looking at https://hypercerts.xyz as a good solution for Bloom Network’s Regenerative Actions Protocol and how we bundle the impacts happening in Local Bloom hubs, to open more financial inputs going to the people doing the labor on the ground, so more people have time and adequate financial incentivization to participate in regenerative land practices. (For example, high yield agroforestry that restores forest, rather than cattle ranching that clearcuts it. Or to economically resist an oil drilling project that will inevitably harm the health of life around the area.)

In looking at the question of whether to develop marketplace buyers or verification first, I have this feedback from talking with local project developers over the past 13 years.

On Verification:

The time sensitivity of verification implementation probably has to do with who’s buying. Kyle Curry, a beekeeper and community builder with Nature’s Nectar in Zambia, said that the large carbon/ESG brokers require verification at the level of, say, Verra or Gold Standard, and they use established marketplaces and wouldn’t adopt new ones.

What I think would be the lightest weight move would be to add a field to the hypercert for “methodology” (Or, that could be included in the hyperlink the minter includes — a field would make it more easily machine readable/searchable). That would lift a little burden off the projects to find their own funding sources who trust that their data is solid. The link field in the hypercert would link to the data reports.

I’m trying to get people to add acceptance of community-validated, for a local or regional DAO verifier, for on-the-ground and smallscale projects that don’t yet have the capacity to use formal measurement methodologies. Because their knowledge is often more complete and comprehensive about what local market conditions need to be addressed, and there is a real danger of land grabs and displacement with this tech and its financial incentives. Community-validated would usually be less scientifically rigorous, but is an important part of the equation.

For example, to prevent clear-cutting of rainforest for cattle for quick money — you need to finance communications, network-building, education, leadership capacity for community dynamics, and demonstration sites. It’s a complex socio-cultural-economic approach, that is not a simple unit for a marketplace buyer to understand, and currently is only included as a brief line item of “social co-benefits” in most methodologies. This is the critical layer of work that needs to be funded, in addition to and alongside more industry-readable and simple to measure projects.

Buyers of community-validated would be 1) philanthropy-oriented or capacity-building focused — I’m trying to find those people now, meeting with a “broker” of sorts for that all weekend here. And 2) staking rewards directed to impact — Spirals Protocol (celo), Sunrise Stake (solana), Octant by Golem Network which is Ethereum-based.

On marketplace buyers:

I keep hearing from people that more marketplaces of eco credits are not what’s needed right now. And that what is needed are more open, non-silo’d ways of streaming value into the work happening on the ground led by local communities.

The other way of handling the buyer-validation-project matching UX could be to have buyers pay into a pool or specific project for what type of verification or impact they’re looking to make, rather than a discrete asset purchasing approach. The pools could distribute funds by any number of algo governance tools out these days, DAO Drops, Gitcoin, whatev. Since the hypercerts don’t inherently have much standardization of data collection and units of impact done.

A specific project example: if Bloom Network minted a yearly hypercert of the aggregated impact of all Local Bloom regen impact activities, multiple buyers could contribute into that. Rather than one purchasing the bundle. That makes more sense to me as a “not another marketplace” and as maximizing the value flows in a way that doesn’t mean the buyers have more power than the people doing the work who have more visibility on the local market dynamics of what they need to secure more labor or convert more producers from extractive to regenerative methods, to direct the flow of capital.

The problem here, that Kyle also pointed out, is what if impacts are counted twice and purchased twice, or six times? Several Local Bloom projects are utilizing for example Kolektivo or Orgo in addition to Bloom to record their impact activities. This is another reason I’m suggesting streaming rather than single purchase of a data object. I’m not a fan of the “projects doing the most impact get the most rewards approach” because it incentivizes large project holders and land grabs. I grew up on a small family farm during the period where it was “get big or get out”. If you don’t have safe-guards or mechanism design that takes into account the reasons to support small-scale projects doing strategic interventions and local market health work, you will recreate the same government subsidy problems we have today with incentivization design and social-environmental externalities.

I realize the streaming approach might require an additional smart contract, a different kind of object. But it would be more adept at adequately financing anything that is not the industrial approach of eco credits and the very high financial bar to entry for projects. A way for the pool to purchase the impact asset object could also work.

In general, my instinct is that more silo’d marketplaces are not what’s needed, and that we need better protocols and data visibility across methodologies in order to facilitate more and faster coordination and re-route the leadership from financiers or tech companies (top-down) to bottom-up led by the people on the ground who can move faster and understand local market and cultural conditions best.

Project mentioned in this article:

• Hypercerts by Protocol Labs
• Bloom Network
• Nature’s Nectar