It all starts with carbon credits. A carbon credit represents a project’s planet-positive impact. Carbon credits are certified by standards bodies like Puro.earth and Gold Standard.
The Toucan Carbon Bridge is connected to registries run by respected standards bodies. That way, we can ensure that only credits from trusted sources are turned into tokens. These tokens are moved onto the Metaregistry which lives on energy-efficient blockchains — currently Polygon and Celo .
The Metaregistry is essentially a set of smart contracts. Polygon is an EVM-compatible blockchain running on an energy-efficient Proof of Stake consensus mechanism. Celo is an EVM-compatible blockchain running on an energy-efficient Proof of Stake consensus mechanism and achieves a carbon negative standard through offsetting carbon to account for the energy for transactions.
Smart contracts: A smart contract is a small computer program that can be triggered by pre-set actions or events. More about smart contracts
Once a carbon credit has been moved onto the Metaregistry — 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 climate impact took place, the issuer, etc. To offset your environmental impact, you can retire these TCO2 tokens, just like in a traditional registry. 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. In order to be deposited into a carbon pool, TCO2 tokens must have certain attributes . The result: All TCO2 tokens in each pool have some common traits. Once you deposit a TCO2 token into a pool, you’ll get a carbon pool 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.
Carbon pools help solve one of the big problems with carbon credits on the voluntary carbon market: it can difficult and time consuming to buy and sell carbon credits. By pooling together similar carbon credits and creating a fungible pool token for every deposited carbon credit, we unlock deep liquidity. These liquid carbon pool tokens can serve as green building blocks across Web3.