Why the Carbon Market Needs a DAO
Decentralized autonomous organizations (DAOs) exist online and are collectively owned and run by their members.
Rather than decisions being made by a director or CEO, for example, members make proposals and vote for their approval, with the decision being carried out automatically once the voting is complete.
Even the financial side of a DAO is kept out of the hands of a single person – no one can access their DAO’s treasury without the approval of a majority of the other members.
As all decisions and actions are fully transparent and verifiable by all on the blockchain, DAOs allow groups of like-minded people to work together without ever having to question their trust in one another.
DAOs often incorporate governance tokens (permitting them the right to vote), which are usually issued to members in the early stages of the project or can otherwise be earned or purchased via a decentralized exchange.
DAOs are flipping the traditional, top-down hierarchical organizational ownership model on its head, in favor of collective ownership – and leadership.
DAOs are gaining such prominence that it seems like every blockchain project is now launching with a DAO embedded, or in tow, bringing unprecedented levels of democracy to every venture.
One market in urgent need of democratization is the carbon market. The fate of the planet should be held in the hands of a global community, not in the hands of a single government or a small number of companies or individuals.
Additionally, the carbon market cannot and should not be a profit playground for a small number of middlemen, such as brokers and retailers, getting rich while projects struggle for funding.
This is why JustCarbon is democratizing the carbon markets by introducing the JustCarbon Governance Unit.
JustCarbon aims to democratize the carbon market by ‘giving away’ its ownership from the outset. Uniquely, no single entity or vested interest group will be able to control and shape the future of the carbon market.
The JustCarbon Governance Unit (JCG) will leverage blockchain technology to give organizations committed to robust climate action voting power over the platform’s governance.
By separating the emission token from the governance unit, JustCarbon ensures that buyers are not disincentivized from retiring carbon credits by burning their Carbon Removal Units (JCRs), as doing so will not remove their voting rights.
Conversely, JCG holders will receive a discount on transaction fees relating to their JCR activities, providing a financial reward to those engaged on the platform and involved in the ecosystem.
Most importantly, JCG holders will be able to vote on the direction of the JustCarbon platform. They will be able to decide who operates it day-to-day, what features to develop (and who will develop them), and decide where to place any treasury reserves – i.e. potentially as an investment or grant back to the most promising Project Developers. This will increase the amount of JCGs and governance voters on the platform, further amplifying the impact of the JustCarbon ecosystem.
As it stands, the JustCarbon DAO is represented by a Foundation based in Anguilla. There are five council member positions and one guardian position, all of whom have been selected from the founding team.
The role of the Foundation is to enact the wishes of the DAO, but also to manage the mundane weekly activities that keep an organization operating. Major events will always be voted on by the DAO, including the decision over who sits on the council.
Currently, governance of the carbon market is effectively performed by a relatively small number of brokers and retailers who profit as middlemen by matching buyers and sellers.
As this matching is largely manual, despite the technology existing for it to occur autonomously, costs are higher and, therefore, fewer funds are reinvested into climate action. In addition, too much emphasis is placed on co-benefits, preventing liquidity in the market.
For a function that is so integral to the future of our planet, we believe that the carbon market is stuck in the past and in great need of democratization. It’s clear to us that the carbon markets should benefit from a fully transparent DAO.
JustCarbon is committed to enabling collective governance of the carbon market, allowing for carbon credits to maintain a fair and consistent price, and be purchasable via an equitable and transparent DAO platform.
This will reduce the friction holding back the current carbon credits system while making it easier for new buyers to enter the market, all without the need for middlemen.
It’s a better system for businesses, project leaders, and the planet.