Solid World takes a step towards financialization of carbon credits on the blockchain with the opening of the first forward carbon assets pool on automated market maker Polygon, the company said today in a press release.
In the liquidity pool, projects can essentially pre-sell future carbon credits at a price determined by an automated market maker, said Solid World CEO Stenver Jerkku.
A breed of blockchain startups like Solid World looking to provide financial and technical tools to mitigate climate change impacts has grown bigger in the last few months. Enterpreuners hope that blockchain can bring transparency and boost funding for climate-positive projects.
The Solid World pool will focus on mangrove restoration carbon projects, which look to develop ecosystems of small trees and shrubs growing in coastal brackish waters. Mangroves can store up to four times as much carbon as other tropical forests, according to the WWF, and also protect coastlines from storms and sea level rise.
Liquidity pools serve a similar function in crypto markets as market makers in traditional finance. Users pool their money to enable the buying and selling of assets. Forward contracts specify the purchase or sale of an asset at a later point in time, often tied to parameters like price.
Such contracts are often used in hedging strategies, but in the Solid World case they can bring certainty to carbon credit projects with long horizons. The liquidity pool will bring key funding to the mangrove projects “while providing structured inventory to distributors seeking to sell high-quality carbon credits,” the press release said.
The Solid World pool will score carbon credits on a risk framework powered by artificial intelligence, which takes into account climate, legal, political and economic vectors in assessing the risks associated with financing carbon projects.
Edited by Stephen Alpher.
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Climate Finance Firm Solid World recently announced the launch of their new forward carbon liquidity pools on the Polygon protocol to help companies manage their risk exposure to carbon emissions.
The program is designed to give organizations a way to respond to the realities of the global carbon market and help them interact in a more sophisticated way with new emissions regulations. These pools will enable companies to purchase carbon credits in advance of their compliance periods to ensure that their emissions targets are in line with global standards.
The Solid World Forward Carbon Liquidity Pool provides key advantages to organizations that participate in it. Companies can specify the amount of volume they want to cover and the price they are willing to pay in order to ensure their compliance ahead of time. The pool also protects them from the potential risks of carbon price volatility. Additionally, the inclusion of the Polygon protocol ensures that the transactions are trustless, transparent, and immutable.
In a bid to make the program even more attractive, the company has also introduced a Carbon Hedging Tool that allows companies to hedge their carbon liabilities with one another across different industries. This allows them to find the right balance between their carbon credit purchases and their emission targets.
Solid World is currently partnered with some of the largest emissions trading platforms in the world, giving them access to thousands of carbon credits. The firm also provides comprehensive advisory services so companies can navigate the complex regulatory environment.
The introduction of the Solid World Forward Carbon Liquidity Pools on Polygon is an important step forward for the global carbon market, offering organizations more efficient and transparent means to manage their emissions. This move is expected to accelerate the transition towards a more sustainable and competitive carbon market.