CarbCoin: One-of-a-Kind Example of a Carbon Credit Marketplace

The pace of climate change and global warming is alarming in the 21st century, and much of that disastrous impact is man-made. The primary cause of negative environmental processes is pollution caused by the GHG emissions of manufacturers. The innovative GreenFi sphere has emerged in response to the pressing climatic issues, targeting fairer and more transparent CO2 emission control. 

Client’ Profile 

The client is a Geneva-based investment fund, Pact Capital, specializing in GreenFi – innovative projects using cutting-edge technology to encourage environmentally-friendly practices across the globe. The client contacted 4IRE with a requirement to create a brand-new Web 3-based blockchain ecosystem. This innovative platform serves as an excellent example of a carbon credit marketplace, empowering companies and individuals to offset their excessive carbon footprint through the purchase of carbon credits.

Client’s Requirements/Goals 

The primary goal of the CarbCoin project was to develop a brand-new way of connecting carbon offset buyers and offset project developers via blockchain technology. Blockchain presented many comparative benefits for such a project, including faster transaction speed, broader population access, and lower on-chain fees. Therefore, this became the main goal of our carbon credit marketplace case.

Business Challenge 

The carbon credit market is not new, with many legacy credit marketplaces existing for many years. Yet, most of these marketplaces are based on Web 2.0 technology, which is slow, costly, and cumbersome. Besides, entering such a market has been a challenge for small-scale enterprises because of high entry barriers. Therefore, Pact Capital decided to take a fundamentally new approach to carbon credit marketplace design, making it Web 3.0-based and using a blockchain infrastructure. 

Other technical challenges that 4IRE developers faced in the process of work on the CarbCoin project included: 

• Building a brand-new, flexible blockchain ecosystem supporting the function of fee-earning, adding new green projects to the network, and providing incentives for new entrants to grow and achieve universal coverage in the GreenFi sector. 
• Enabling the entire customer lifecycle to connect buyers and providers of carbon offset credits similar to that of regular carbon credit markets. 
• Implementing two distinct mechanisms for carbon credit sales – Auction Sale and Direct Sale – with the latter requiring a robust and safe DEX platform. 
• Creating a blockchain explorer for easy transaction review and monitoring to ensure transparency of carbon credit distribution. 
• Minting two token types to enable transactions in the ecosystem. The governing token (CarbCoin) allows fee payment and on-chain carbon credit purchases. Project-specific Carbon Tokens are issued for every carbon credit provider and are equal to one ton of CO2 carbon credit each.  

Implementation 

The 4IRE blockchain architects chose the Polygon blockchain to create the CarbonCoin project from scratch. The choice can be explained by this blockchain’s full compatibility with Ethereum, robust infrastructure, and minimal user fees. 

The team that worked on the project initially included 12 staff members: a PM, a blockchain architect, 3 full-stack developers, 2 front-end developers, 1 Solidity engineer, 1 UX/UI designer, 1 DevOps specialist, 1 QA expert, and a Junior developer undergoing internship. That team worked on the project from August 2021 to February 2022 and had to be reduced to 4 members of the core project staff in February 2022 for emergency reasons.  

Solution Delivered 

Unlike other carbon credit marketplaces, the projected solution for the CarbCoin project includes:

• A full-scale CarbCoin blockchain platform connecting companies in need of extra carbon credits and the ones that have extra credits because of less CO2-intensive manufacturing activities in one marketplace. 
• A CarbChain explorer guaranteeing the transparency of all transactions and simplifying the process of particular transactions’ search and review. 
• Carbon DEX – a decentralized exchange based on the CarbCoin platform, allowing the exchange of Carbon Tokens among verified users. 
• CarbonChain Hub – a prototype of a larger ecosystem for GreenFi projects wishing to join the CarbCoin project in the future. 4IRE engineers created all infrastructure to allow other blockchain projects to link to the system and use Carbon Coins in their transactions. 

Project Outcomes 

The project is still in the making, with the initially negotiated deadlines extended because of the invasion of Ukraine by Russia. The CarbCoin project targets GHG emission quantification in the secondary manufacturing industry. This industrial sector specializes in metal, metal oxide, and alloy production from metal-bearing waste streams and consumes less energy, thus resulting in lower GHG emissions from the industrial process. The project initially covered AMG Advanced Metallurgical Group N. V. Ohio Complex, which has industrial facilities in Cambridge and Zanesville (Ohio, USA) but is open for expansion by adding other industrial players to the ecosystem. 

The expected outcome of the CarbCoin project’s launch is a reduction of GHG emissions by at least 200,000 metric tons per year.