More Than Just Carbon Credits | How We Invest in Web3 x Climate
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May 19th, 2022

Battling climate change and preserving the integrity of our environment is a truly global problem, and while there are many people working in good faith across the world looking to solve key problems to mitigate the risk to our future, there are profound limitations to the legacy models of centralized organizations and their ability to make an impact across borders and reach broad groups of stakeholders. Our view at Aera Force is that the following principles of web3 and underlying blockchain technologies have the potential to crack the code for mass coordination problems:

  • Creation of public records of immutable data 
  • Ease of transacting across a global platform in a global market
  • Enablement of unique incentive structures via tokenization
  • Ability to curate bespoke forms of governance enabling improved coordination
  • Lowering friction for reaching marginalized global communities organized around shared interests

From blockchain protocols designed to programmatically enable reforestation projects to validate and track their carbon sequestration efforts, to the ability to better engage the retail consumer to offset their footprint through artistic and cultural mechanisms like NFTs, we are exploring all avenues as a community. 

When we launched Aera Force in late February 2022, we started on a journey to not only to prove out a new, community-based model of venture capital, but to direct much-needed resources into seeding the climate solutions of tomorrow, powered by the mechanisms of web3. 

To date, it’s been an inspiring experience.

An Ever-Expanding Industry Landscape

The early applications of blockchain and crypto were focused on the original Bitcoin use case, the ability to instantaneously transact in a digital currency and power a distributed ledger. With the tracking and full history of every token and every transaction, it provided a basic level of insight we have never been able to efficiently do with fiat monies. 

This has lent itself to the most cited use case of blockchain for climate, the tokenization of carbon credits. This is indeed a powerful use case, with the ability to upend many issues with the current system. 

However, the application of these new technologies stretches far beyond this initial use case, and if you look closely, you’ll start to see the underpinning of a massive, interconnected global ecosystem of symbiotic partners working together to maximize impact on the environment. Fundamentally, the mechanisms of web3 allow for us to build solutions that were never possible. Here are some examples of what we have seen so far:

  • Vertically integrated protocols enabling ecosystem participants to document and monetize their contributions to carbon reduction or sequestration at all layers, not just the project development and financing levels.
  • Decentralized data platforms enabling individuals to share and own their environmental data in exchange for payment when leveraged by outside parties 
  • NFT projects focused around creating communities of like-minded, environmentally conscious people rallying around the cause of drawing down carbon
  • Crowdfunding platforms dedicated to climate focused projects with the ability to reach less developed and endangered communities at speed and scale with a lower burden of cost

There are countless other models and solutions being created that have varying levels of focus. With some projects hyper focusing on certain topics in the space to others providing a catch all umbrella as a key piece of industry infrastructure, the decentralized nature of Web3 will allow for cross collaboration and network effects hereto unseen in traditional centralized infrastructures.

Hypothesis for the Ecosystem

We believe the promise of the Web3 climate ecosystem, and its future legacy will be one of interconnected solutions. Each solution that emerges will find ways to interact and partner with others in the industry, stacking on top of one another like building blocks. We envision a world where environmental data protocols built to collect globally standardized data will feed into solutions validating and enabling high quality and carbon token generation that is additional to the problem of climate change, which in turn can partner with NFTs and other projects looking to generate interest and demand for the purchase of tokenized carbon from retail and institutional buyers. 

This type of streamlined coordination and processing with full traceability, ease of transacting, and multiple points of validation will start small and disconnected, but increased coordination and network effects will allow for the rapid growth of these solutions. 

At its core, there will be three broad categories of solutions that will emerge:

  • Origination and validation of high-quality tokenized environmental assets linked to positive, quantifiable environmental impact
  • Solutions driving new and unique demand for these environmental assets 
  • Developed infrastructure (data, marketplaces, wallets etc.) to enable the creation, financing and interaction of the supply and demand for these value-add solutions 

None of these three can unlock their true value as a standalone entity. A carbon token-generating protocol fails without ample demand; a demand platform has trouble keeping momentum and an active user-base if there is no way to validate or get access to environmental assets; and an environmental data protocol has no economic sustainability if there are no end users to leverage the information being curated on-chain (which is acquired for a fee). We keep this top of mind in order to both avoid siloing and leverage the network effect of cross-functional solutions. 

Our Guiding Principles:

All said, at Aera Force, we are diligent in our research, learning alongside the community and looking to support the founders dedicated to creating actionable solutions with the highest level of verifiable impact for the problems we are facing. 

Most importantly, we are seeking to find the projects and solutions that truly address pain points in existing web2 climate efforts, instead of replicating them in a new technology ecosystem. This includes, but is not limited to, issues like greenwashing, additionality, and the misclassification of at-risk ecosystems. At this initial stage of our journey, we have thus far developed an early framework for what we look for in every investment.

Currently the following are our guiding tenets:

  • Backing outstanding, dedicated, and forward-thinking founders with the ability to execute and deliver
  • Supporting solutions with sustainable business models that have a strong value proposition in both the physical and web3 world, and therefore are built for long term adoption and growth
  • Laser focusing in on projects that deliver high quality impact to the climate that meaningfully fix the problems of today, and most importantly
  • Innovations that are fundamentally leveraging the power of web3 at the heart of why and how they will be unique and successful in solving the problem in the marketplace and achieving massive scale

We have already been so impressed by the ideas that have been generated in this space and are looking to assist in the build of this ever-growing ecosystem through enablement of the best solutions for continued growth and flourishing. Aera Force seeks to be a hub to bring projects, communities, and creators together to continue to assemble the building blocks to a sustainable climate future.

Join Us

If you are looking to…

  • Invest, check out our website and get in touch. 

  • Join the community and get ETH to explore with us, hop in our Discord.

  • Do your own diligence (we love that for you), read our green paper.

  • Connect with the team, drop us a note.

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