How a Carbon Pool Works

A carbon pool groups similar tokenized credits (TCO2 tokens) to enhance market efficiency and liquidity. Here are the key aspects of how pools work:

• Filtering Criteria: Each carbon pool has specific filtering criteria—rules that define the attributes TCO2s must have to be eligible for the pool.

• Pool Tokens: Each carbon pool issues its own fungible pool token (i.e., all tokens from a single pool are identical).

• 1:1 Creation: For every TCO2 token deposited into a pool, a corresponding pool token is created on a 1:1 basis.

  • While this 1:1 exchange rate is standard for Toucan pools, such as the CHAR carbon pool, some Toucan partners may choose to deviate from this exchange rate.

• Redemption: Carbon pool tokens can be redeemed for TCO2 tokens held in the pool—think of them as vouchers that provide access to the underlying credits.

By designing pools in this way, we:

• Preserve Market Diversity: All differentiating attributes of carbon credits are maintained at the TCO2 level.

• Create Liquidity: At the carbon pool token level, we create a deeply liquid, fungible token.

• Provide Access: Holders of carbon pool tokens have access to any of the carbon credits held within the pool.

Because carbon pool tokens are fungible, liquid markets can easily be established for them on exchanges. This allows users to buy and sell carbon pool tokens with ease while still retaining access to the underlying TCO2s.