GUIDE / Our Approach
DeCarbon - A new way to fund carbon reduction projects.
Offsetra is proud to offer the first ever mechanism for utilizing Decentralized Finance (DeFi) to make up for your carbon footprint. With this initiative— we're calling it DeCarbon— it's now possible to generate interest with your cryptocurrency, and automatically apply that interest towards our selection of carbon reduction projects. It's totally hands-off, completely free of charge, and you can withdraw your money at any time!
We think this is a great offering for blockchain enthusiasts who want to make up for the high environmental cost of cryptocurrency mining. It's made possible by some truly exciting technology - Dai, PoolDAI, and the Ethereum Blockchain.
It's also a great option for conscious consumers who just want to put their savings somewhere without supporting the banking industry and all its ties to the fossil fuel industry.
If you are already familiar with cryptocurrency and Decentralized Finance, it's super easy to get started. And if you aren't, skip to the next section to learn more about it.
- Visit Offsetra’s page on PoolDAI.
- Log in to the MetaMask browser extension.
- Choose an amount of Dai you would like to deposit - you can always withdraw it again at a later date.
- 🛀 Sit back and relax. Your tokens are now generating interest for our awesome carbon offset projects.
- Sign up to our newsletter to get notified when we withdraw the generated interest. For every $8 of interest, we will offset 1 tonne of carbon emissions!
What is DeFi?
If you aren't familiar with blockchain or cryptocurrency technology, start here.
DeFi is an abbreviation of the phrase "decentralized finance", which generally refers to the digital assets and financial smart contracts, protocols, and decentralized applications (DApps) built on the Ethereum Blockchain. In simpler terms, DeFi refers to financial software built on the blockchain that can be pieced together like "Money Legos".
DeFi has the potential to create a more accessible and open financial system for everyone. The DeFi community is full of passionate individuals, many of whom are dissatisfied with the status quo. This goes for the state of carbon markets, too! Offsetra is extremely excited to be a part of this movement and leverage the energy of DeFi development for offsetting carbon emissions.
How does DeCarbon work?
A few key pieces of revolutionary technology make this system possible.
Ethereum is an open-source, public, blockchain-based distributed ledger featuring smart contract (programmable) functionality. It enables developers to build blockchain applications with business logic that execute in a trustless environment, while leveraging the high availability of the Ethereum network. This means developers can build apps decentralized apps that have no central computer or owner— they are powered by everyone who is connected to the network! Unlike Bitcoin, the Ethereum blockchain is also a ledger for other cryptocurrency tokens, like DAI and countless others.
Dai is a popular asset-backed currency created by MakerDAO. It is the first decentralized "stablecoin" on the Ethereum blockchain. Every Dai token mirrors maintains its value of 1 U.S. Dollar. Dai is created through a collateralized debt position (CDP) to ensure that there is always $1 worth of collateral for every 1 Dai.
PoolDAI is an automated donation protocol enabling people to pool money together, lend it out, and donate the interest to a cause. You can use PoolDAI to send a message to the Ethereum network that you would like your cryptocurrencies to be pooled, and the interest forwarded to us. It allows you to add or withdraw donations at any time!
How does my pooled crypto generate interest?
PoolDAI is nothing more than some code (a "smart contract") that automates the process of lending to an open source, decentralized system called the Compound Protocol. In summary, borrowers will stake their own cryptocurrencies as collateral so that they can borrow a different currency from the network. These borrowers pay a small interest rate, determined by supply and demand. If these users borrow more than they can possibly repay (e.g. due to changing prices), their staked currency is liquidated.
The interest rate they pay is distributed evenly to all lenders— people like you, who pool your coins into the market. Lenders can always withdraw their pooled cryptocurrency at any time. You can read more about how it works here.
What risks are there?
By pooling your cryptocurrency tokens in our fund, you are effectively trading them for USD, at the market price. To be more precise, you are exchanging them for a different token called DAI, which is pegged one-to-one with USD. While your Dai tokens are pooled, they will maintain their original USD value, but the exchange rate of USD to any other token will most certainly have fluctuated in this timeframe. Thus if you intend to hold on to your original tokens as an investment, pooling on our fund could be either a benefit (hedge), or lost opportunity cost, depending on which way the market moves while they are pooled.
We feel the need to point this out, because many people are drawn to the cryptocurrency world with the hopes of profiting from the astronomical price increases seen in recent years. DeCarbon is in no way a speculative investment, nor a cryptocurrency of its own. You can not make a profit, but you can instead provide a steady stream of interest for our great portfolio of carbon reduction projects.
Lastly, this pooling system is built on top of open-source, decentralized technology and smart contracts, which are by definition "trustless"— you don't need to trust any central authority to hold and protect your assets!
This is just one of the many ways we are working to make offsetting your carbon footprint as easy and transparent as possible. Check out the Quick Start section above and start offsetting your carbon footprint in minutes, totally hands-off, completely free of charge.