03 February 2022 |

OUT OF STEALTH AND ONTO THE BLOCKCHAIN

By Nick Van Osdol

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What’s up in another sizzling hot climate tech vertical? There’s a new entrant at the intersection of carbon markets and blockchains. The project? It’s called thallo and will focus on building a decentralized marketplace for voluntary carbon credits.

I’ve covered carbon markets in depth in explorations of other blockchain and crypto focused projects (e.g. here). Why is this space so en vogue? 

  • Carbon markets are in desperate need of innovation. They’re highly fractured, inconsistently regulated, and have been plagued by problems like double counting for decades. 
  • In turn, demand for voluntary carbon offsets is forecast to explode – estimates vary but some see demand surging as much as 50x 📈
  • A successful marketplace that unified liquidity ($$$) on the demand side and the carbon credit supply that’s fractured across markets and marketplaces would benefit the planet – and the team – handsomely. 

There’s a lot of debate about just how useful blockchains and crypto in general are, but they’re at least relatively good at a few things that are applicable here: 

  1. Blockchains can help prevent double counting and keep a strong audit log.
  2. Crypto tokens can be designed to offer flexible incentives to market participants.
  3. Absent new regulation, this can be executed reasonably democratically. As a user, you don’t need accreditation to participate in these markets.

All of the above are focal points for thallo. In a one-pager they shared with me, they described their initiative as follows:

By democratising access to on-chain carbon credits issued by trusted accreditation bodies, verified credits can be freely bought, sold, held or retired by companies or individuals committed to offsetting their carbon footprint. thallo also creates access to a market previously inaccessible to retail investors.

MY TAKE

thallo isn’t the only name to step into this space in recent years. There’s Nori, a company I’ve covered in depth that’s building a carbon removal marketplace as well as a token to provide market price discovery for carbon removals. There’s Regen Network, which is building a blockchain based marketplace for carbon removal projects based on regenerative agriculture and ecology. 

How will thallo stack up against these competitors who have a head start? Sourcing supply for their marketplace strikes me as a forefront challenge, in addition to building the actual tech for the marketplace. Everyone I talk to in this space harps on supply constraints. Onboarding vetted, quantifiable, scientifically sound supply is a highly intensive process, and there already isn’t enough of it to go around.

Bigger picture, more marketplaces competing for the same supply could also intensify the supply crunch before any of these marketplaces can attract more investment in generating future credit supply. Nor will more marketplaces help un-fracture the carbon market.

All that said… may the best marketplace(s) win… and (ideally) win fast!