Carbon Pools
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The carbon markets are incredibly diverse, with thousands of projects from across different jurisdictions, methodologies and vintages. Project-specific tokenized carbon tonnes such as TCO2 or C3T tokens can functionally represent any of these carbon credits. Standardizing these markets can enable the development of liquidity and more efficient markets, and this is the role of on-chain carbon pools.
Carbon Pools bundle multiple project-specific tokenized carbon tonnes into more liquid carbon index tokens, enabling price discovery for different classes of carbon assets.
Each TCO2 or C3T can be locked into the carbon pools in exchange for an ERC-20 token such as BCT, UBO, NCT or NBO. BCT and the tokenized carbon tokens within the pools are therefore carbon index tokens, based on various credits from multiple projects.
Each Carbon Pool has its own gating criteria — such as methodology or vintage date — which determines if the project-specific tokenized carbon tonne is eligible. Carbon Pool tokens such as BCT or NBO can be spent to redeem carbon tokens from within their respective carbon pools at a 1:1 rate. Typically, Carbon Pools charge a selective redemption fee to allow you to select a specific carbon token to redeem from the pool.
Carbon Pools provide a number of benefits to the digital carbon market, enhancing project-specific tokenized carbon credits:
Quality Assurance through Gating: Rigorous selection criteria ensure projects meet stringent quality standards for emissions reduction, methodology, and social impact, guaranteeing participants they are supporting verified, high-impact initiatives. Carbon pools make it easy for market participants to evaluate the relative quality of carbon credits compared to carbon pool tokens.
Diversification through Variety: Carbon pools group diverse projects across sectors and geographies, offering participants exposure to a wider range of environmental solutions, reducing risk and maximizing impact.
Simplified Access, Amplified Action: Pools aggregate multiple projects into single tokenized units (e.g., Base Carbon Tonnes), removing complexities and offering streamlined entry points for individuals and smaller entities, democratizing access and driving broader participation in climate action.
Standardization Fuels Liquidity: Carbon pools achieve uniformity through established standards, allowing for the creation of fungible tokens (e.g., BCTs) representing verified emissions reductions. This standardization facilitates the formation of a single liquidity pool, where fractionalized token ownership enables easier buying, selling, and trading. This increased liquidity benefits all participants, offering flexibility and efficiency in the carbon offset market.
NCT (Nature-Based Carbon Tonne) is a Toucan Protocol carbon pool, which accepts TCO2 from nature-based methodologies with a minimum vintage of 2012 or later.
Universal Basic Offsets (UBO), is the widest criteria carbon token, accepting most VCS and GS methodologies for credits issued from 2014 onwards.
Natured Based Offset (NBO), is an Nature-based offset index accepting all VCS and GS methodologies characterized as NCS, including REDD+, IFM, and those with VCS or GS certification utilizing CDM-based forestry methodologies such as AR-AM0014. Vintage of 2014 onwards.
Base Carbon Tonne (BCT) BCT is a carbon pool governed by KlimaDAO, which accepts any TCO2, independent of project type verified by Verra that has vintage later than 2008. BCT was developed for the launch of KlimaDAO, and as of is managed and owned by KlimaDAO.
Toucan Carbon Pools accept and issue their respective ERC-20 pool tokens.
C3 Carbon Pools accept and issue their respective ERC-20 pool tokens.