The Toucan Protocol
A high level overview of the Toucan Protocol
It all starts with carbon credits. These represent a project’s planet-positive impact and are issued by standards bodies like Verra and Gold Standard.
The Toucan Carbon Bridge is connected to respected standards bodies. That way, we can ensure that only credits from trusted sources are turned into tokens. These tokens are moved onto the Toucan Meta-Registry, which lives on energy-efficient blockchains (currently Polygon).
Once a carbon credit has been moved onto the Toucan Meta-Registry — we call this being tokenized — it becomes a TCO2 carbon token. TCO2 tokens have all the carbon credit data attached: information like the project, the year the carbon impact took place, the issuer, etc. To offset your environmental impact, you can retire these TCO2 tokens using the Toucan Retirement Module. Retiring a carbon token permanently takes it out of circulation - this is when the planet-positive action happens!
TCO2 tokens can also be deposited into our carbon pools. You can think of each carbon pool as a special type of account with its own set of acceptance criteria. Only TCO2 tokens with certain attributes can be deposited into each carbon pool. The result: All TCO2 tokens in each pool have some common traits. Once you deposit a TCO2 token into a pool, you get a carbon reference token — an interchangeable (fungible) ERC-20 token which is backed by one tokenized carbon credit.
Fungibility: If something is fungible, it can easily be replaced by something that fulfills an identical function. Dollar bills are a good example: each one can be replaced with another, as they all have the same functionality. Learn more about fungibility.
Our second pool — the Nature Carbon Pool — only accepts carbon tokens linked to nature-based-projects and creates NCT reference tokens. We’re working with experts and stakeholders in the carbon and crypto spaces to design other types of carbon reference pools that cater to different people and organizations looking to do something good for the planet.
Carbon pools help solve one of the big problems with carbon credits on the voluntary carbon market: a lack of liquidity. By pooling together similar carbon credits and creating a fungible reference token for every deposited carbon credit, we unlock deep liquidity. These liquid carbon reference tokens can serve as green building blocks across web3.
Below, you can see a diagram of our infrastructure. Don’t think of it as a technical diagram - it simply shows the different parts of Toucan and how they interact!