Expansion Strategies

1. Expand the number of Carbon Standards

CarbonDEX currently tokenized carbon credits issued under 4 carbon standards: UN-CDM, Gold Standard, Verra, and International Carbon Registry. In the future, CarbonDEX fully intends to expand the list of these carbon standards & registries. These include other international and national standards & registries as shown below:

1. American Carbon Registry

2. Plan Vivo System

3. Climate Action Reserve

4. The Climate Registry

5. Local Carbon Registry

6. Universal Carbon Registry (India)

7. Carbon Registry - India.

We are also open to working with newer carbon standards as long as they can meet our own rigorous due diligence requirements. Which will look at the methodology used, certification, management experience, and registry mechanism, amongst others.

By accepting other carbon credits from more standards, CarbonDEX will be able to offer more diverse product offerings to its users and also attract more carbon credit issuers.

2. Enterprise Version for Institutional Investors & Larger Local Corporates

Another group of clients that CarbonDEX intends to target as users and also B2B partners are large local corporates (non-industrial) & financial institutions (especially asset managers).

For the large local corporates, CarbonDEX intends to market its carbon offset services to companies that are involved in the service industries but those that are involved in industrial, heavy manufacturing, and power industries, why is that the case? that’s because we believe these companies due to their heavy carbon emission will be under the impending national (country base) emission trading scheme (“ETS”) or may also have to contribute to the national (country) carbon tax.

For the financial institutions, CarbonDEX intends to partner with asset managers to issue carbon credit funds to their unit trust investors base.

In order to meet the inevitably stricter compliance requirements when dealing with these types of clients, CarbonDEX may launch an enterprise version of its DEX that comply with stricter KYC and AML requirements. Users will need to register and on passing the KYC/AML checks will be issued an identity token (in the form of an NFT). Successful wallet connection to the enterprise DEX will only take place if the identity token is detected to be in the connecting wallet.

3. Exchange of choice for countries developing their own ETS scheme

The map below shows the various carbon taxes and ETS schemes already implemented or scheduled to be implemented around the world. As more countries start to implement their COP26 commitments, we expect more country or national Emission Trading Scheme (“ETS”) to be implemented by governments around the world. This is where we believe CarbonDEX can position itself as an exchange partner to the governments, where it can offer its tokenization and exchange platform to these governments, we can also offer to create a new blockchain that will be used by the national ETS exchange.

Fig. 40: ETS and carbon tax implementation globally

National ETS Blockchain Registry

Since some governments are still wary about using public blockchain networks, we will offer to create a new ETS blockchain to power the National ETS exchange and act as its carbon registry.

To keep costs down the National ETS Blockchain will be built on the Polygon Edge framework. Polygon Edge is a modular and extensible framework for building Ethereum-compatible blockchain networks, sidechains, and general scaling solutions.

Therefore the National ETS blockchain will be fully compatible with Ethereum smart contracts. It uses the IBFT (Istanbul Byzantine Fault Tolerant) proof of stake (PoS) consensus mechanism. Therefore the power usage & carbon emission are minimal. The validators for the network can be government ministries, government-linked corporates, and large local corporates.

Polygon Edge also supports communication with multiple blockchain networks, enabling 2-way transfers of both ERC-20 and ERC-721 tokens, to other EVM blockchain public networks such as Ethereum, Polygon, and also to other national ETS blockchain networks (if required) and vice-versa by utilizing the chain bridge solution. This is important to expand the reach of the National ETS market.

National ETS Blockchain will also be open source and will adopt the Ethereum Virtual Machine run time environment for smart contracts. This means that other developers from both the public and private sectors can easily create decentralized applications (DApps) that can be seamlessly linked to the ETS products. A system token (linked to the value of the national or local currency) for the National ETS Blockchain can be created as the ETS medium of exchange and, to pay gas fees.

Why should each country have their own carbon credit exchange ?

Each country may have different goals and regulations for reducing carbon emissions, so having a separate carbon credit exchange for each country allows for more tailored and effective management of these efforts. Additionally, by having a domestic carbon credit exchange, a country can ensure that the revenue generated by the sale of carbon credits stays within its own economy, rather than flowing to other countries. Furthermore, it allows for a more transparent and localized monitoring of the carbon emissions and offsetting activities.

There are several reasons why it would be beneficial for each country to have their own carbon credit exchange:

1. Localized impact: Climate change affects different countries in different ways, and a carbon credit exchange would allow each country to target the specific emissions that are having the greatest impact on their local environment.

2. Cost-effectiveness: A carbon credit exchange would provide a cost-effective way for countries to reduce their emissions by creating a market for carbon credits. This would encourage companies to invest in low-emissions technologies and reduce their emissions.

3. Flexibility: Each country's carbon credit exchange would be tailored to their own specific economic and environmental conditions, which would make it easier for them to achieve their emissions reduction targets.

4. Transparency: A carbon credit exchange would provide a transparent and measurable way to track a country's progress in reducing emissions and achieving its climate goals.

5. Complementary to other policies: A carbon credit exchange can be combined with other policies such as carbon taxes, and standards or regulations to reduce emissions, making it more efficient to tackle climate change from different angles.

6. Encourages participation: Having a local carbon credit exchange can encourage more companies and entities within the country to participate and reduce their emissions.