ReFi Deep Dive: Flowcarbon
In the latest episode of the ReFi Podcast, your hosts John and Simar sit down with Dana and and Phil from Flowcarbon, a highly-discussed and anticipated entry to the ReFi ecosystem of on-chain carbon.
Listen to the episode on Podfollow, Anchor FM or directly on YouTube, and read on for more!
TL;DR
Flowcarbon is a web3 startup aiming to accelerate the restoration of our planet’s environment and ecosystems by tokenizing nature-based carbon credits. The project plans to launch as a two-way bridge, on the Celo blockchain, allowing credits to be readily passed on- and off-chain.
Flowcarbon’s proposed token Goddess Nature Token (GNT), will focus on nature-based credits broadly falling under the Agriculture, Forestry and Other Land Use (AFOLU) umbrella. While the project recently delayed their intended June, 2022 launch due to market conditions, they are actively seeking partners to bridge tokens from a rolling 5-year vintage, compliant with relevant standards from Verra, Gold Standard, Climate Action Reserve or American Carbon Standard registries.
Former WeWork CEO Adam Neumann was revealed as a co-founder in May, 2022, bringing the venture both significant early stage funding as well as an outsized dose of skepticism in mainstream media coverage.
The Challenge
Climate change poses an existential threat to humanity. Anthropogenic greenhouse gas (GHG) emissions have risen rapidly over the past 150 years, and are driving global warming, alongside a whole suite of cascading, inter-connected ecological disruptions including biodiversity loss, ocean acidification, soil erosion, glacier and sea ice loss etc.
At the root of these crises, our historic and prevalent economic systems have and continue to incentivize the destruction of natural systems, and pollution of our atmosphere via greenhouse gas (GHG) emissions.
In the absence of a radical transformation of our economic systems and collective priorities, putting a price on carbon, and properly valuing the services provided by nature, can serve to introduce our environment to our economy - where there has otherwise been an historic disconnect.
Flowcarbon’s Solution
Recognizing the role natural solutions can play in solving the climate crisis, Flowcarbon is focused on accelerating adoption of nature-based carbon credits. Carbon credits are a mechanism by which projects that provably reduce GHG emissions or actively withdraw carbon from the atmosphere can become financially incentivized.
Flowcarbon proposes a two-way bridge to bring nature-based carbon credits on-chain to back their Goddess Nature Token (GNT) token. Given recent concerns by Verra, tied to their freezing of bridging activity, this additional fluidity of GNT should allow universal price discovery via two-way arbitrage and position Flowcarbon well to be compliant with at least some of the conditions Verra seems likely to impose prior to resuming bridging activity. As of the time of publication of this blog post, Verra has launched a public consultation that is expected to run through November 1st, 2022.
Similar to other carbon bridges Toucan, MOSS or C3, this approach positions Flowcarbon to capitalize on the macro trends expected for global carbon markets by industry observers like McKinsey.
GNT
Flowcarbon proposes a two-way bridge to bring nature-based carbon credits on-chain to back their Goddess Nature Token (GNT) token. Given recent concerns by Verra, tied to their freezing of bridging activity since May, 2022, this additional fluidity of GNT should allow universal price discovery via two-way arbitrage and position Flowcarbon well to be compliant with at least some of the conditions Verra seems likely to impose prior to resuming bridging activity.
Flowcarbon underscores this ‘live, unretired’ nature of the bridging process they intend to use for GNT, ensuring the underlying carbon credits remain relevant and accessible to both on- and off-chain markets. In principle, this transferability would allow two-way arbitrage between markets, and support efficient price discovery.
GNT will focus on recent a rolling 5-year window of carbon credit vintages, and all credits bridged to GNT will be nature-based. While various methodologies exist for nature-based carbon credit certification, these projects typically include reforestation, nature restoration and conservation where nature’s ability to draw carbon out of the atmosphere is leveraged, rather than renewable energy or other credits which rely on a reduction in anthropogenic GHGs tied to energy production or consultation, or drawing carbon out of the atmosphere with human technologies.
Direct Project Investment
Starting in September, 2022, Flowcarbon began to facilitate direct investment into carbon projects with a fundraising round for the Corazón Verde Del Chaco Project (Verra VCS 2611), located in Paraguay within the Gran Chaco Fores.
This investment round launched on the Centrifuge platform, was oversubscribed and raised over 865,000 DAI via the sale of senior and junior tier tokens (labelled DROP and TIN, respectively) that provide a range of expected yield-based returns to investors. Looking ahead, Flowcarbon hopes to continue to facilitate these types of investments to address critical funding shortages for impactful projects.
Flowcarbon Founders, Funders & Partners
In May, 2022 Flowcarbon announced that they had secured a total of $70 million USD in Series A funding to date. This was comprised of $32 million in venture capital, led by silicon valley venture capital firm Andreessen Horowitz, in addition to $38 million raised via their GNT token pre-sale earlier in the year.
It was during the media attention that the Andreessen Horowitz funding garnered that it first become public that former WeWork founder and CEO Adam Neumann and his wife Rebekah were co-founders of Flowcarbon. The organization does not list the Neumanns in as part of their core team, and it remains unclear what role the Neumanns might play in the day-to-day or strategic operations of Flowcarbon, or what level of investment the couple have made in the startup.
As part of the token pre-sale, Celo blockchain agreed to purchase $10M of the GNT token once it is available, in a move to offset their own residual emissions. In addition to a similar partnership that saw Celo commit to holding 0.5% of their treasury in MOSS’ MCO2 token, this move comes as Celo looks to position itself as a leading home for the burgeoning regenerative finance (ReFi) movement.