Perspective Chapter: Cryptocurrencies Effectiveness for Nature

Abstract

The rise of cryptocurrencies based on Blockchain platforms have provided multiple solutions for social and nature projects supported by concerned investors with sustainable development initiatives. Speculation and unclear uses of a cryptocurrency plays a negative role for the projects they claim to support. A positive relationship between coin investors and supported projects must position the coin value on the scale of the community involvement among the coin and project issues, thus placing the project results above speculative moves. Coin nature and social based projects may include a decentralized autonomous organization (DAO), combined with a digital currency to contribute to social and nature improvements. This organization provides a framework for the engagement of investors, beneficiaries, and implementation partners, with results measured by reliable third parties. The potential funding from non fiduciary sources for sustainable development targets may be framed under the fundraising and financial solutions models, addressing the cryptocurrency volatility risks with responsible tokenomics in attention to transaction and regulatory issues. Overall, the more clear are the object and transaction issues of a nature conservation project supported by a currency, the more successful it will be in terms of nature and social improvements and the currency valuation for all parties involved.

1. Introduction

This is a study about cryptocurrencies and Blockchain (blockchain) platforms related to nature, having direct or indirect purposes to help the conservation or recovery of forest areas. The major liasons between cryptos and nature assets come in the forms of carbon credits, tree planting and nature restoration projects. Blockchain has created a new and innovative framework that provides a safe, efficient and transparent chain of transactions. Citizens wordwide daily trade digital currencies utilizing a chain of transactions registered on the web, with no central server, or proprietors, only provided by the Blockchain. Along with cryptocurrencies, blockchain has enabled the creation of a vast array of solutions for businesses and society because it provides effective uses for (1) funding sources and exchange of currency, (2) smart contracts, and (3) reporting key information for all parties involved directly and indirectly in any relationship.

Since the creation of Bitcoin [1] cryptocurrencies have been designed to be free from government and central monetary regulations¹. Most of cryptocurrencies following Bitcoin, have been launched with unclear or weak proposals, other than speculation, rapidly becoming unvalued assets, popularly referred as “shitcoins”, showing a repetive short valuaton life presenting a common “launch-peak-devaluation” pattern. Such massive devaluations have confirmed the absence of most cryptocurrencies’ roles as tradeable assets and exchange of currency.

A cryptocurrency is commonly referred as a digital currency or token. Generally, a digital currency is launched through an Initial Coin Offering (ICO) in the forms of tokens, attracting initial investor interests, mainly based on speculative targets, followed by exponential increase in quotations, just to slump to very low values thereafter causing investor to dump their coins to capitalize on short-term gains [2]. This typical “boom-collapse” standard is observable in some coins launched with nature conservation objectives and related purposes, thus raising questions about the effectiveness of their roles tied to their promised objectives of nature conservation. This study presents four parts, being:

• a summarized review of cryptocurrencies volatility and the energy consumption for their mining;

• an analysis of blockchains solutions in front of nature conservation, raising questions and proposals about the effectiveness of coins linked to nature conservation purposes, especially for forest conservation initiatives, with carbon credits;

• a brief presentation of models for cryptocurrencies and nature conservation effectiveness; and

• Conclusion.

The analysis of a sample of more than 30 coins/tokens and blockchains indicates that most of them have weak assurances of the real benefits they claim to provide to nature conservation. In some cases, the issue may fall to weak information about their indicators about their related nature objects. However, the general perception of this study is that information on the majority of tokens do not specify clear and measured results of their purposes. A specific consideration is made to tokens related to carbon credits, with a brief exposition of the size and complexities associated to climate change issues. Finally, the study addresses key points and ideas associated to coins and nature, aiming at providing a mutual gain for coin valuation and social benefits and nature conservation.

2. General cryptocurrencies overview

2.1 The rise of cryptocurrencies, volatility and setbacks

Since the creation of Bitcoin in 2008, the world has seen the booming rise of decentralized, trustable platforms supporting coins, tokens and all sorts of more than 20.000 digital currencies (altcoins) with a total market value of nearly U$ 3 trillion at the end of 2021. However, in the first months of 2022, post Covid 19 pandemic inflationary effects and the Russian-Ukrainian war induced a massive devaluation of cryptoassets, with their value falling to just $1.3 trillion in May, 2022. Such volatility supported long time opinions about the predominant wrong uses of most cryptocurrencies, rather for speculative purposes and illicit uses, such as money-laundering and “off taxes” transactions [3]. The 2022 devaluation suggested an overall crypto market value correction for most tradeable coins and the demise of value for the majority of coins (Figure 1) [4].

Figure 1.

Market capitalization of cryptos. Source: The economist.

Many years before the 2022 devaluation, numerous analyzes have covered this issue. Despite their astonishing price appreciation in recent years, cryptocurrencies have been subjected to accusations of pricing bubbles central to the trilemma that exists between regulatory oversight, the potential for illicit use through its anonymity within a young under-developed exchange system, and infrastructural breaches influenced by the growth of cybercriminality. Each influences the perception of the role of cryptocurrencies as a credible investment asset class and legitimate of value [5].

2.2 Energy consumption

Given the core subject about cryptocurrencies and nature, this study addresses basic environmental impacts, specifically about the energy consumption used in the mining of blocks associated to Bitcoin and altcoins transactions. Some cryptocurrencies require solving difficult cryptographic puzzles to adding transactions to a digital ledger—a blockchain—demanding verifications by algorithms. All those calculations consume energy. By May, 2022, Bitcoin currently consumed around 148 Terawatt Hours per year—0.55% of global electricity production, or roughly equivalent to the annual energy draw of countries like Malaysia or Sweden [6]. Bitcoin mining uses a proof-of-work (PoW) system. In brief, If a miner is successful, he can propose a new block of transactions to the blockchain, and receive a reward. Bitcoin mining uses a reasonable share of renewable (non fossil) energies, estimated to be between 40% and 64% at the end of 2022 [7].

Generally, all altcoins, mainly all listed in next session, are based on an alternative consensus process—proof of stake (PoS)—that presents much lower energy consumption for mining a block, comparing to PoW systems. Whereas PoW consumes 707 Kwh for a Bitcoin block mining, Ethereum, the second most popular coin (and Blockchain) requires about 64 Kwh; and secondary alternate coins consume less than 4 Kwh for mining a block. Ethereum started to move its consensus process to PoS in 2022, further reducing its block consumption to low units per Kwh as well.

Despite a positive drive to low mining energy needs, other issues such as regulations and taxations may impose a risk disincentivizing PoS coins, exactly because their ilicit uses and extreme volatilies. Given such uncertainties, these issues of energy and regulations present overall concerns for the energy balance of a cryptocurrencies for general and specific purposes, moreover, for nature conservation. Yet that “nature coins” transactions are mined through PoS systems, the underlying basis of transactions for these tokens are implicitly linked to Bitcoin, as the master cryptocurrency for exchange means, indirectly related to all coins, thus, offering questions about the “greeness” of any criptocurrency, for instance.

3. Blockchain solutions in front of nature conservation

This study assessed a sample of coins (tokens) and blockchains launched for nature conservation purposes. The choosen coins and blockchais include the ones with roles for fauna protection; fishery control; forest conservation initiatives, with and without social projects; tree planting; miscellaneous sustainability projects; and, a relevant share of forest and nature projects related to carbon sinks with carbon credits accounting. They are listed by their major roles and objectives in Table 1.

Name	Coin/Token	Blockchain	Major Purpose/objective	Website
Cecil Alliance	X		Fauna	https://www.cecilalliance.com/
Faunachain	X		Fauna	https://faunachain.io/
Reforestum	X		Fauna	https://www.cecilalliance.com/
Fishcoin	X		Fishery	https://fishcoin.co/
Ecofolio	X		Forest	https://www.ekofolio.com/
MCO2—Moss Earth	X		Forest Carbon Credits	https://nft.moss.earth/
ZCO2	X		Forest Carbon Credits	https://savethegreen.world/brasil/zco2-token
Amazonas Coin	X		Forest Carbon, Social	https://amazonascoin.com.br/
Gainforest	X		Forest Carbon, Social	https://www.gainforest.app/
Invert	X		Forest Carbon, Social	https://letsinvert.io/
KlimaDAO	X		Forest Carbon, Social	https://www.klimadao.finance/
Treedefi	X		Forest Carbon, Social	https://treedefi.com/
SOS Amazonia	X		Forest, Social	https://tokensosamazonia.com
Tupan	X		Forest, Social	https://www.tupan.io/
Wildchain	X		Nature, Fauna	https://wildchain.io
Coin Merit		X	Carbon	https://www.single.earth/
Regen Tokens		X	Carbon	https://www.regen.network/
Adaptation Ledger		X	Climate projects	https://www.adaptationledger.com
Carbonfuture		X	Climate projects	https://www.carbonfuture.earth/
DAO IPCI		X	Climate projects	https://ipci.io/
Nori		X	Climate projects	https://nori.com/
Earthledger		X	Sustainability Projects	https://earthledger.one
Opensc		X	Sustainability Projects	https://opensc.org/
Plastic Bank		X	Sustainability Projects	https://plasticbank.com/
Poseidon		X	Sustainability Projects	https://poseidon.eco/
Cardano 1 Million Trees		X	Tree Planting	https://cardanofoundation.org/en
Forestcoin		X	Tree Planting	https://forestcoin.earth/
Global Mangrove Trust		X	Tree Planting	https://globalmangrove.org/
Landlife		X	Tree Planting	https://landlifecompany.com/
Seeds		X	Tree Planting	https://joinseeds.earth/
Teratree		X	Tree Planting	https://www.teratree.com/
Treecoin		X	Tree Planting	https://treecycle.ch/
Plantgrowsave		X	Tree Planting	https://plantgrowsave.org/

Table 1.

Blockchains and tokens assessed.

The sample of coins and blockchains analyzed offered relevant findings about their tokenomics² and roles in providing solutions related to sustainability issues. Their objectives (or promises) are widely diversed, such as purposes for fundraising, investment businesses, digital market platforms, carbon offsetting services, forest conservation, and animals monitoring. The general impression of the group of coins analyzed is that they present clear tokenomics, thus providing basic transparency to investors, however, they show a massive general devaluation pattern from its ICO to present time. In this pattern, the “boom-collapase” pattern is clearly observable with astonishing appreciations in the first months after its launch, sometimes with itermediary peaks and lows, then, followed by a massive depreciation, in many cases to values well under their initial price offering. In some cases, they show an eventual boost of appreciation in the course of their depreciation, due to massive sell-offs and other causes [8]. Such volatity supports the rather inappropriate role of these currencies to serve as store of value, means of exchange and registry, thus narrowing their use mainly for speculative moves. Rest aside their roles to provide funds for nature related projects. In this case, the analysis of information provided in the coins’ websites (Table 1) provide a range of information suchs as the number of planted trees, metric tons of carbon storage, hectares of protected forests, animals monitored, and the like. In some cases, no information whatsoever is provided, or only vague information about “projects to be supported”, under partnerships to come, and else.

The general perception of a weak object achievement by most coins related to nature is also seen from the distance between their positive market attractiveness to their effectiveness for the conservation of a piece of nature, moreover, when local populations are included, thus inducing the analysis of social and lifequality improvements. These information is not observed in any project related to forests, being, either with carbon credit metrics or not. Nevertheless, nature conservation projects, especially in tropical forests, are generally the result of indigenous and/or local populations efforts to protect the forest, thus, being the human presence, part of the solution, and included in the conservation efforts with a combination of social, environmental, and economic results for a responsible project for nature. Blockchains and coins related to nature tend to overview all social roles and indicators related to nature conservation. Their essential offer tends to be resumed to viable tokenomics.

The related distant relationship between cryptos and their nature objects is also well observed in games and NFTs³ for animals, images and other nature related objects. The gaming market has grown exponentially in the second decade of the twenty-first century. Estimates are that already 3 billion people are addicted to games, moving an industry of above U$170 billion in 2020 to reach an expected value of U$ 315 billion by 2026, doubling in size. The industry is no longer restricted to a niche, since it has become a global sector with economic dynamics that go way beyond the game’s limits [9]. Some digital currencies and tokens include games as a mean to attract and retain investors to buy and stake the coin, with additional rewards coming from games, many of them related to nature objects. In this case, it is clearly observable the profile of gamers playing to win rewards with nature and fauna icons, however, with a distant relationship and effective support to effective nature objects. The “play-to-earn” mode uses nature and animals as a market attractiveness to engage players in the game, but the flows of funds to effective nature conservation projects resulting from games are to be further observed.

3.1 Blockchain and the commodification of nature

As observed, the coins and blockchain solutions for nature tends to be over appreciated and the reality of their nature related purpose, only measured by figures—stored in a blockchain—not really indicative of the complexity of a forest or natural resource situation, combining social and environmental issues. This issue is supported by a study entitled “Smart, Commodified and Encoded: Blockchain Technology for Environmental Sustainability and Nature Conservation” [10], providing complementary assessments to this issue.

This study framed a group of 27 blockchain technologies for conservation and environmental policy, part of them, here also analyzed (Table 1). The study reveals that a an outstanding characteristic of blockchain initiatives is “that their technical savvy, financial wizardry, and ingenious entrepreneurship are not always matched by a sophisticated understanding of the issues they support. This lack of understanding produces framings which then require blockchain-based interventions”. They argue that the studied coins and blockchains represent more of “blockchain solution” than an effective solution for their related objects. Another perspective to frame this situation would be placing an intermediary activity, such as administration and finance above the effective purpose of a given project. For instance, the forest conservation activities and all issues related to nature and people involved. Blockchains for nature are likely to provide finance solutions to the forest without effective forest management and people attention. Such situatuon is also related to the issue of the “commodification of nature”, which introduce a simplistic vision of nature related projects placing important technical interdependencies within the environment and the relational character of environmental goods, and it “twists the perception of the environment from systems preservation to items use or transformation” [11].

3.2 Carbon credits and cryptos

Worldwide climate emergency actions to meet the 1.5°C target for global warming, according to the Paris Agreement and following UNO conferences of the parties, imposes severe reductions on fossil based energies and carbon sequestration, and future release avoidances. Carbon markets fulfill a relevant part of these actions towards a global greenhouse gases (GHG) reduction. Carbon credits, purchased voluntarily, enable organizations to compensate or neutralize not yet eliminated emissions by financing the avoidance/reduction of emissions from other sources, or the removal of greenhouse gases from the atmosphere and thus meaningfully contribute to the transition to a global balance of low carbon emissions. The projects generating these carbon credits can be broadly grouped into two categories: (1) GHG avoidance/reduction projects, such as renewable energy or avoided deforestation; and (2) GHG removal/sequestration projects, such as reforestation or technology-based removal [12]. The international carbon market facilitates the exchange of carbon credits. Prices have risen from nearly U$11 per ton in 2018 to U$63, as of May, 2022, or U$26, for the California market. The World Bank has estimated that the price needs to be closer to U$106 per ton by 2030, in order to meet the 1.5°C target. The value of traded global markets for carbon dioxide (CO2) permits grew by 164% to a record U$ 805 billion in 2021. The rise has been followed by voluntary carbon markets, where companies, for instance, trade carbon credits generated from projects to reduce emissions, presently exceeded U$1 billion. These are voluntary, not necessarily compliance-based, markets for carbon credits, expected to reach U$50 billion in volume, by 2030 [13].

Crytocurrencies and Blockchain transaction platforms have rapidly taken the trading and transactions registry opportunities of voluntary carbon markets. This study assessed a sample of coins and blockchains linked to carbon credits, generated by standing forests, tree planting, fossil fuel substitution and many others. Generally, the issue of carbon credits assurance retired in the voluntary market is issued by independent standards (e.g., VCS, Gold Standard, ACR, CAR). If a Coin project linked to a forest conservation concern does not have such assurance, the carbon credit may not be trustable, becoming liable to double accounting effects, where a same object may be “credited” two times from different concerns.

The ideal logic between a cryptocurrency tied to carbon credits should aim at measuring the carbon balance of its object. Take a forest carbon project, for instance. It is observable the concerns of some forest tokens projects informing the issuance of carbon credits from qualfied environmental projects, for instance, in the Amazon Forest (projects that emit, certify and sell credits) and that avoid or capture CO2 emissions to the atmosphere. These credits are traded in a digital platform using a blockchain platform. The observed concept indicates a measured and trustable nature object related to the coin. Nonetheless, a more accurate observation indicates that a forest must be measured by its transitioning balance towards being a carbon sink or a carbon source. A certain financial value can be attributed to the fact that the forest is a sink or a source. For instance, the forest can be a sink with a carbon capture capacity of one million tons, or a source with a capacity of negative one million tons. An effective coin associated to forest carbon storage must be supported by physical observations that indicate that the forest is moving towards being a sink or a source. For instance, negative observations such as traces of fire, tree’s cutting and other disturbances indicate that the forest may me decaying, and positive observations such as biomass and forest preservation actions, indicate the forest will maintain its carbon sequestration patterns. Such information is key for a trustable forest carbon project. Overall, most coin based projects linked to forest coverage have not clearly outlined these concerns. They only show a piece of land, registered and bounded by GPS positioning, thus ensuring its existence. That is a fundamental issue to assure the existence and particular allocation of its carbon sink function, however, it does not secure the sink/source flow, thus, its real environmental service and carbon account.

Finally, the issue of double accounting of carbon credits, especially in the voluntary markets, poses a relevant question to all blockchains and coins related to nature projects. The absence of central databases and governance for all voluntary carbon credits does not assure a buyer using digital currencies or not, that his/her credit has not been traded elsewhere. Solutions come with the development of a shared digital data protocol across standards with an open source digital infrastructure to create an operating system for all planetary carbon trades [14]. This data protocol should be tailored to specific project types by defining necessary project data fields and procedures to protect the integrity of the verification process. In this perspective, shared digital data protocols should explore the use of satellite imaging, digital sensors, combined with blockchain distributed-ledger technologies (DLT) to further improve speed, accuracy, and integrity. Implementation of the digital data protocol could be a first step towards broader end-to-end life-cycle and value-chain tracking of all carbon credit data [14].

4. Models for cryptos and nature conservation effectiveness

The observed distances of Blockchains and tokens to their nature objects offers a large room for improvements and proposals to place the nature conservancy objectives clearly outlined and above the blockchain, itself. The major concept here presented is to place the object in first place, leaving the coin and the blockchains to better subsidy funds, provide storage of indicators and resolve governance issues. The issues covered in this part are: fundraising, Fintechs and DeFis, responsible tokenomics, and building a community around the coin.

4.1 Fundraising

The typical sources of funding from cryptocurrencies and blockchains can be summarized in Grant Coins, Initial Coin Offerings (ICOs), Microfinance with capital coins; and Donations through blockchain smart contracts.

Grant Coins, among many applications, are donations from specific purpose coins directly to a project. ICOs are the typical launch of a coin, in this case, with all set of project objectives, responsible tokenomics and clear governance and economic return to investors and the project beneficiaries. Micro finance with capital coins and donations through Blockchain contracts aim at providing funds to communities through coin based donations and micro loans, commonly addressed by Defis and Smart Contracts⁴.

Initially, the relationship of blockchain and tokens to a nature project, can be analyzed under a framework containing the project objectives with the blockchain and coins roles. In this perspective, the major role of a coin and the blockchains are related to funding and financial services for a conservation project including nature preservation and lifequality improvement of locals, representing a group of beneficiaries. Therefore, the project must address questions about the problem to be solved; the funding potential; regulations; technology structure; coin exchange needs; and associate financial needs. An example of fundraising and associate financial needs using blockchain and coins for a nature conservation project involving local populations, is presented in Table 2.

Fundraising from cryptocurrencies	What Problem will be solved?	Funding potential	Regulatory complexity	Technology Infrastructure	Coin Exchange Needs	Associate Financial Services	Communication with coin investors & donors
Grant Coins	Raise funds from coin donation sources	medium	low	low	yes, but not for gran-tees	yes	Periodi-cal reports
Initial Coin Offerings—ICOs	Raise funds out of debt & equity and donors’ restrictions	high	very high	very high	Yes	yes	constant, chat groups
Microfinance with Capital Coins	Provide microfinance to communities through coin based donations and loans	high	high	high	yes, but not for grantees	yes	moderate
Commited donations through Blockchain smart contracts	Provide donations to communities through coin based funding and loans	medium	low	medium	No	no	moderate

Table 2.

A Blockchain fundraising matrix example for a conservation project.

4.2 Fintechs and DeFIs

Nature related projetcs can be supported by a specific financial services (fintech) entitity linking coin investors with projects gathering conservation issues and small businesses of sustainable local products. The fintech provides grants and loans, and if applicable, business mentoring support. The ICO must be supported by a thoroughly defined business model with a structured platform under blockchain. In a basic flow of funds, the fintech launches its coin, receiving Bitcoins or fiduciary currency, thus forming an investment account, abiding to all regulatory issues. The raised funds are directed to a specific credit account to perform grants and loans to projects. A DeFi takes the roles to channel and operate the payments, receivables and interest accruals (if applicable) in the scope of supported projects. All projects are selected from a thorough business analysis and once they receive the loans, a clear and continuous communication is established among the projects with the fintech staff and coin investors. The underlying coin is tradeable in a cryptocurrency exchange. This is a summary of an effective financial flow of funds between a coin and supported projects. The methods and systems may vary depending on the scope of projects. The key aspects of this solution is to provide an operating financial solution providing solid links between one coin or token to its supported objectives. A responsible coin will address these isssues, to effectively implement a project together with beneficiares, far beyond simple advertsing and basic web information. A key issue for a successful project fundraing from coins, lies also on a responsible tokenomics.

4.3 Responsible tokenomics

The uses of a token must be well structured. A responsible token project must be supported by a responsible tokenomics for a stable coin with clear outlines about the flow of resources and monitoring of project funds. The relationships of the token with the project must be qualified and measured, as briefly laid out in Table 2.

The key point for the creators of a cryptoasset is to understand how the digital currency will be used, in this context, understanding the clear link between the asset, the use of its blockchain, and the value and service offer attached to this asset. A well structured value offers a greater possibility of expanding the services and goods of the asset, thus generating a greater desire for its purchase and use, and therefore a greater demand and increase in the value of the currency. This logic is totally different from the “boom-collapse” effect observed in most currency issues. In this case, the concern with connecting the value of the currency to a clear value construction of the supported object, in this case nature and its beneficiaries, should be above the normal speculative orientation normally observed. In summary, key issues must be addressed, such as:

• How many coins and tokens are in existence and will exist in the future, and when will they be created;

• Who owns the coins? Are there any items reserved to be released in the future for developers?

• Will the coin project beneficiaries be rewarded? How and exactly they will participate? Are safeguards for massive speculation previewed?

• Is there any information to suggest that a large number of coins have been lost, burned, deleted or otherwise made unusable?

Cryptocurrencies and tokens built on the blockchain must have pre-defined issuance schedules created by algorithms for the coin issuers to accurately predict the coin’s volume and launching dates. It is relevant to point that yet it is possible for most cryptocurrencies to change this issuance schedule, such an event requires the agreement of stakeholders around the currency, thus offering further difficulties for its implementation. This issue becomes more relevant with the inclusion of the project’s beneficiaries in the coin.

Tokenomics should also be a guide to the potential future value of a coin. This prediction should be clearly placed within a relationship of the coins, investors and the projects supported. This measure will, at least, mitigate the speculative nature of the coin’s investors. A possible arrangement to improve the relationship between a coin and project beneficiaries is to include beneficiaries as asset holders, with guarantees of stability and tradeability of their assets, as following briefly introduced.

4.4 Build a community around the coin

A nature conservation-based project supported by a responsible token and blockchain should clearly address the areas and beneficiaries to relate, being entities and/or individuals. The scope of the project must be outlined for each purpose, such as nature restoration, fauna protection, income generation, social improvements, education and health support, for instance. The project must have specific, and measurable data to be collected with identified participants and provide veracity and control in DLT (blockchain) for the the guarantee of successfull objectives. The governance structure should join stakehokders, investors and beneficiaries enrolled in the project’s activities with clear roles. As seen below, the beneficiaries will have a role to provide key forest information for the project to be effectively measured, thus helping to its better effectiveness. These roles and obligations are better implemented by a Decentralized Autonomous Organization (DAO)⁵ linked to the project’s token blockchain. The major steps to initialise the funding are:

• Define the project area and beneficiaries with attention to fundraising, financial needs and related issues, as listed in Table 2.

• Preview and model an ICO, where buyers acquire tokens and the beneficiaries become providers, and receive tokens for free.

• The value of the token is tied to the providers’ obligation as the value of the coin is likely to trend higher if those obligations are fulfilled.

• The incentive for providers to fulfill their obligations is linked to the increase and preservation of the coin value over time.

• The incentive for investors is to hold their coin, buying and staking or bonding their investmets pegged to the currency.

The community around a coin should include the coin’s object providers and investors with mutual interest in conserving the forest, because both will prosper with the standing forest. A third group takes part in this DAO in the roles of field implementation, analyses and data verification about the forest and people’s social indicators. In a forest carbon project, for instance, the providers are the forest inhabitants or those with access to the forest’s dynamics. The coin investors, without access to the land, have a financial interest in preserving the land. The third group is made, possibly, of service partners, such as a nonprofit organizations to implement field projects; auditors; and scientists and researchers providing data verification and technical proposal roles. This last role, may be applicable in changing scenarios, where specific metrics and data may loose value for accounting the forest carbon and environmental preservation, at the same time giving room to new indicators that make better sense for the coin objective of supporting a standing forest, thus a carbon storage.

The tokenomics must address the coin value linked to forest key indicators in a model requiring constant observations and verified contributions. At the ICO, providers are issued with coins, aside from the investors’ purchase. The role of providers is to report positive and negative observations, to contribute to modeling the future of the forest; whether it will be in a sink or source state. The better the providers accomplish their role, the more is the certainty over whether the forest will be in a sink or source state. At the same time, the value of the tokens received during the ICO will trend upward, thereby incentivizing them to keep providing observations to the model. Internal data providers contribute to the model by changing the value of the parameters of the model, in accordance of governance principles, pre defined in the DAO agreements. Internal data providers, like researchers or scientists, keep their role to permanently assess and review the intrinsic dynamics of the forest considered in the project objectives as laid out in the digital currency model of contribution to the forest and their inhabitants, the beneficiaries and data providers for the model.

Additional attention to this model must relate to forest protection issues, such as the avoidance of illegal ownership of forest areas under carbon and coins’ incentives; the issuing of forest leasing mechanisms, when applicable; and carbon verification to assure a legal framework of compliance with applicable legislations and the avoidance of double accounting of carbon credits. Finally, a responsible token initiative should address their results to nature and social issues according to the Sustainable Development Goals (SDGs) [15] as a measurement for its key project indicators, thus, providing material, measurable and comparable results for all.

5. Conclusions

This study raised questions about cryptocurrencies and blockchains effectiveness to provide nature conservation support. The world has seen the rise and exponential growth, valuation, an extreme devaluation of cryptocurrencies, in short period of time. Most cryptocurrencies have been launched with weak and unclear objectives, leading them to just speculative ends. Among them, many coins have been launched claiming to support forest, fauna and nature related projects; and a relevant group of tokens have been launched to link carbon credits to blockchains providing easy and secured carbon trades. In addition, many other cryptocurrencies have been launched with the promise to help nature related projects. The general observation of these blockchains is that the ones related to carbon projects claims to deliver trustable accounts of carbon credits, especially in voluntary markets; and the non carbon coins present vague information about the nature related objects they claim to support. In the carbon trading projects, specifically for forest conservation, the issue of verified standards and the inclusion of local populations must be improved for a better assurance of the continuous forest coverage and their inhabitants’ lifequality.

The general perception about most coins and blockchains related to nature is that they are more relevant than the project itself, thus, placing the solution mechanism on top of the object, presenting few evidences that the nature and local population are really being benefited. Instead, they should place clear and objective nature conservation and social indicators on top of the blockchain solutions. Blockchain and coin solutions shall be framed as intermediary activities because the nature conservation and people benefited by their claimed projects are the “Final/End activities”.

This study offered initial ideas for a better use of cryptocurrencies and blockchains for nature conservation projects. The outlined proposals are in the line of a deeper project appraisal, such as defining the fundraising modalities and distribution to beneficiaries, including them in the asset valuation and protecting them from massive devaluations. Such efforts would be better addressed with responsible tokenomics and a fintechc focused in the flows os funds from investors to the projects and its beneficiaries. The safeguards for this responsible approach lies also on clear governance and selection of the projects, after all, placing them above the tokens and ledgers. In a final conclusion digital currencies, cryptocurrencies, tokens, coins and blockchains related to nature conservation and social issues should be tailored to serve a purpose with a clear value proposal to their supported objects, showing a real concern for nature and people, with all possible barriers to speculation.

The ideal framework for a coin and blockchaim relationship with nature conservation projects, should firsthand, include the beneficiaries and stakeholders in the value chain. In this perspective, forest family, landowners become providers of data, supporting value under verified mechanisms. Providers are issued tokens with their value tied to conservation actions. Providers are incentivized to conservation action to either preserve or increase the value of the currency they already own. After all, this is a model based on “Conserve to Earn” principles, where investors do not aim at speculating with a coin, rather, they own, trade, learn and exchange information with stakeholders to effectively provide social and environmental improvements in nature based projects.

Future research and actions on this scope should explore detailed tokenization and project safeguards for effective nature conservation. Contributing technologies must take place, such as web3 platforms, linked to Artificial Intelligence and Internet of Things devices to better monitor the projects’ indicators. In addition an advanced DAO governance and operations shall set the path for a more responsible and effective use of cryptocurrencies and blockchains for the environment and social improvements. Finally, sound projects supported by crytocurrencies must include social technologies to better engage all beneficiaries and stakeholders to the assets and exchanges providing a positive perspective of value sharing and nature conservation for all.

Acknowledgments

Robson Rojas Andrade—Instituto Triad Systems; Christian Wiesenthal—OpenEarth Foundation.