How Regenerative Finance can demystify climate challenges by leveraging Topl Blockchain

Regenerative Finance (ReFi) is a tool to solve problems in holistic approach and using State Of The Art Technology, such as climate change. Under this methodolgy, a positive impact is no longer a by-product of return on capital. Instead, the goal becomes positive change with financial return circulating amongst the community. It supports a shift from an economy that is extractive to one that is regenerative.

Leveraging blockchain technology ReFi is quickly evolving into a decentralized collective of individuals shifting how we value and monetize natural capital. Before we jump further in it is worthwhile understanding where ReFi evolved from and a few terms in this space.

Regenerative Finance builds upon many of the principles of DeFi (Decentralized Finance). It is a quickly developing community that leverages innovative peer-to-peer financial tools and services to support regenerative projects. These regenerative projects and climate solutions include carbon removal, biodiversity management, ecosystem protection or waste removal.

At the heart of ReFi today sits carbon markets. These opaque markets are underpinned by carbon credits — a form of token that represents 1MT CO2 (equivalent). Today, carbon credits are traded between

1. Producers such as environmental developers who secure the land and resources to create carbon sinks e.g. a forest
2. Customers such as large multinational corporations who need to offset their emissions.

Carbon credits are typically transacted via a labyrinth of intermediaries including brokers, traders and/or consultants.

One of the major problems of carbon markets is the potential for fraud or double-counting of credits. By building ReFi on the blockchain a new form of transparency is introduced that would eliminate the possibility of the same credit being counted twice. On-chain carbon credits are traceable and immutable meaning that no two people are able to claim the same credit twice. Burning (or retiring) on-chain credits ensures that they cannot be used again. One company enabling carbon on-chain is Topl Blockchain

Regenerative Finance (ReFi) combines financial models with sustainability and social impact. ReFi seeks to align investments with ecological restoration and community well-being, emphasizing investments in renewable energy, regenerative agriculture, and social enterprises. It aims to generate financial returns while fostering positive change and a sustainable and inclusive economy.

TOPL BLOCKCHAIN Workflow of Carbon Credits in Climate Action Projects

Smart contracts can be classified into three distinct types based on their functions: financial or transactional contracts primarily serve as digital agreements that execute financial transactions based on predefined conditions, as most prominently applied in Decentralized Finance (DeFi). Governance contracts codify rules of organization and decentralized decision-making processes, such as voting and consensus mechanisms. Lastly, application logic contracts refer to smart contracts that contain the essential business rules and logic that govern the behavior and operations of decentralized applications (dApps). These contracts automate various processes within the dApp ecosystem, ensuring the trustless execution of transactions and interactions.

Topl is a blockchain protocol that is designed to support ReFi (regenerative finance) applications. It is a carbon-negative blockchain that uses a Proof-of-Stake consensus mechanism, which is more energy-efficient than Proof-of-Work. Topl also has a number of features that make it well-suited for ReFi applications, including:

Smart contracts can be classified into three distinct types based on their functions: financial or transactional contracts primarily serve as digital agreements that execute financial transactions based on predefined conditions, as most prominently applied in Decentralized Finance (DeFi). Governance contracts codify rules of organization and decentralized decision-making processes, such as voting and consensus mechanisms. Lastly, application logic contracts refer to smart contracts that contain the essential business rules and logic that govern the behavior and operations of decentralized applications (dApps). These contracts automate various processes within the dApp ecosystem, ensuring the trustless execution of transactions and interactions.

• Tokenization of environmental assets: Topl allows for the tokenization of environmental assets, such as carbon credits and water rights. This makes it possible to trade these assets on a decentralized exchange, which can help to increase their liquidity and value.
• Transparency: Topl is a transparent blockchain, which means that all transactions are recorded on the public ledger. This makes it easy to track the ownership and movement of environmental assets, which can help to prevent fraud and ensure that these assets are used in a sustainable way.
• Scalability: Topl is a scalable blockchain, which means that it can handle a large number of transactions without compromising its performance. This is important for ReFi applications, which often require a high volume of transactions.

REFi Architecture

The REFi architecture in Topl Blockchain consists of the following components:

• Topl Protocol: The Topl Protocol is the underlying blockchain infrastructure that powers the REFi platform. It is a permissionless, decentralized blockchain that is designed to be scalable, secure, and interoperable.
• REFi Smart Contracts: The REFi Smart Contracts are the core of the REFi platform. They are responsible for managing the lending and borrowing of assets, as well as the calculation of interest rates.
• REFi Oracles: The REFi Oracles are responsible for providing real-world data to the REFi Smart Contracts. This data includes information about asset prices, interest rates, and creditworthiness.
• REFi Wallets: The REFi Wallets are used to store REFi tokens and other assets. They also allow users to interact with the REFi Smart Contracts.

Diagram of REFi Architecture

The following diagram illustrates the REFi architecture evolves

The diagram shows how the different components of the REFi architecture interact with each other. The Topl Protocol forms the foundation of the architecture, and the REFi Smart Contracts are the core of the platform. The REFi Oracles provide real-world data to the REFi Smart Contracts, and the REFi Wallets are used to store assets and interact with the Smart Contracts.

The following is a brief overview of the different components of the REFi architecture:

• Topl Protocol: The Topl Protocol is the underlying blockchain infrastructure that powers the REFi platform. It is a permissionless, decentralized blockchain that is designed to be scalable, secure, and interoperable.
• REFi Smart Contracts: The REFi Smart Contracts are the core of the REFi platform. They are responsible for managing the lending and borrowing of assets, as well as the calculation of interest rates.
• REFi Oracles: The REFi Oracles are responsible for providing real-world data to the REFi Smart Contracts. This data includes information about asset prices, interest rates, and creditworthiness.
• REFi Wallets: The REFi Wallets are used to store REFi tokens and other assets. They also allow users to interact with the REFi Smart Contracts.

The REFi architecture is designed to be secure, scalable, and interoperable. The Topl Protocol is a secure blockchain, so users can be confident that their assets are safe. The REFi Smart Contracts are transparent, so users can see how their assets are being managed. The REFi architecture is also interoperable with other blockchains, so it can be used to connect different financial ecosystems.

The REFi architecture is a promising platform for creating a more inclusive and sustainable financial system. It offers a number of benefits, including scalability, security, interoperability, and transparency. The REFi architecture has the potential to revolutionize the way we borrow and lend money.

Topl is still a relatively new blockchain, but it has the potential to play a significant role in the development of ReFi. It is well-suited for this purpose because of its carbon-negative nature, its transparency, and its scalability.

Here are some examples of ReFi projects that are being developed on Topl:

• Watershed: Watershed is a project that is using Topl to tokenize water rights. Watershed aims to make water rights more accessible and transparent, and to help to ensure that water is used in a sustainable way.
• TreesForLife: TreesForLife is a project that is using Topl to plant trees. TreesForLife allows users to donate to tree-planting projects, and to track the progress of these projects on the Topl blockchain.

These are just a few examples of the ReFi projects that are being developed on Topl. As ReFi continues to grow, Topl is likely to play an increasingly important role in this space.

Benefits of REFi Architecture

The REFi architecture in Topl Blockchain offers a number of benefits, including:

• Scalability: The Topl Protocol is designed to be scalable, so it can support a large number of users and transactions.
• Security: The Topl Protocol is a secure blockchain, so users can be confident that their assets are safe.
• Interoperable: The Topl Protocol is interoperable with other blockchains, so it can be used to connect different financial ecosystems.
• Transparent: The REFi Smart Contracts are transparent, so users can see how their assets are being managed.

Conclusion

On a final note REFi architecture in Topl Blockchain is a secure, scalable, and interoperable platform that can be used to create a more inclusive and sustainable financial system.