At the edge of the evolution of the Internet to Web3, a movement called ReFi has formed. It combines an alternative, open financial system with the ideas of a regenerative economy to bring about social, economic, and ecological change.
"The magic always happens on the fringes," states ReFi Zurich's website. The public discussion on blockchain and the environment usually focuses on the Bitcoin network's energy consumption. But at Switzerland's first ReFi meeting at the Blockchain Center of the University of Zurich, there is no arguing about the pros and cons of consensus mechanisms. A small dedicated community worldwide discusses projects, protocols, and solutions to tackle humanity's challenges.
Linking finance and the environment
ReFi refers to Regenerative Finance. The term was coined after Decentralized Finance (DeFi), an alternative, open financial system based on blockchain technology. DeFi promises to democratise economic goods and services in response to the traditional centralised financial system (CeFi). ReFi builds on DeFi and combines open-source technology with ideas on the Regenerative Economy by John Fullerton and Dr. Sally Goerner.
The ReFi movement has evolved outside the spotlight of the glitzy crypto world. It aims to shift the economic paradigm - moving away from emphasising money as an end to money as a means to an end. It seeks to create new systems to advance climate and nature conservation, counteract biodiversity loss, fight poverty and inequality, or promote education.
ReFi applies methods and principles of regeneration found in nature to socio-economic systems. The aim is to steer away from the existing degenerative economic system towards a holistic understanding of a complex system creating regenerative incentive mechanisms based on blockchain technology.
*My POAP (Proof of Attendance Protocol) of the event. *
More democracy, transparency, and liquidity
In the day's opening presentation, Rudolf Hilti of The HUS.institute explains why he sees the link between finance and the environment as a prerequisite for the fight against climate change. With the System Change Foundation, he provides a framework for discussions on sustainable development at the intersection of the environment, economy, and society.
As a village of the future that creates space for experiments in visions of the future and new models of society, Ralph Horat presents his project Next Generation Village. The Think & Do Tank connects virtual experience and practical experimentation. In his thesis, Horat develops the “outlines of an alternative economic order” and presents his ideas for a new model of civilisation in the white paper Cosmo-localism.
Many participants hope to use the tools of Web3 to stop greenwashing. Pere Guerra and his project Kakubi focus on CO₂ certificates. In addition to increasing transparency and liquidity, the participants in the panel on the "Evolution of On-Chain Carbon Markets" justify using blockchain technology primarily with democratising access to certificates. This is also where the Toucan protocol comes in, which provides the infrastructure for tokenising certificates. The team led by co-founder Julian Sommer aims to raise one trillion US dollars for climate projects by this means.
Overcoming tunnel vision
But ReFi is about much more than just carbon dioxide. Its goal is to overcome CO₂ tunnel vision and take a 360-degree perspective on tackling global challenges.
Jan Konietzko's "Carbon Tunnel Vision"
Innovations for environmental markets and the future of food are but two of many sustainability topics discussed at ReFi Zurich. Based on the slogan "Money by the people, for the people," the project Encointer merges the concept of a local currency with an unconditional basic income UBI. Gesa Feldhusen presents the pilot project with the digital currency LEU in Zurich, implemented on a Common Good Parachain on Kusama—other projects launched in Berlin or Kigali.
eDNA and NFTrees
Kristy Deiner, a professor at ETH Zurich, chills us with a musical interpretation of the DNA sequence of an environmental DNA sample. With her start-up, SimplexDNA, she combines Web3 and eDNA technology. According to Deiner, we still can't match seventy per cent of the eDNA data from a biodiversity sample today. But we can measure it. And infer from it what disappears in a given time frame.
Moving forward, Kristy Deiner will also provide data for the GainForest project, which combines smart contracts with satellite and drone imagery and data science to stop rainforest deforestation. "We must change from an offset to a removal mentality," says founder David Dao. Anyone financially supporting the selected projects will receive "NFTrees", where detailed measurement data is visualised and illustrates how a piece of forest develops over time.
Another step in the commercialisation of everyday life?
Critics argue that blockchains merely reproduce existing structures and the inequalities they entail. Could ReFi lead to the economisation of nature and environmental protection?
ReFi proponents argue that assigning a financial value to environmental services is not equivalent to privatisation or commercialisation. They consider these services to be public goods or community resources that traditional markets are not suited to manage.
Directing financial flows to the right places in a coordinated way
Hasn't the capitalist system appropriated nature long ago? Yet its destruction as an "externality" is not adequately accounted for in the final accounts. The economic "valuation" of services for its regeneration could, therefore, provide the basis for new institutions taking better account of these common goods.
To adequately address global challenges such as climate change, coordination of all actors across borders is needed. Due to its open, decentralised nature, ReFi promises to solve such coordination problems and to direct financial flows efficiently to the right places, taking into account the know-how of local actors. The corresponding economic incentive systems are still in their infancy, but they promise to significantly contribute to our planet's regeneration.