Solid World Takes a Step Towards Carbon Credit Financialization
Solid World, a climate finance firm, has announced the opening of the first forward carbon assets pool on an automated market maker, with support from Polygon, as stated in a recent press release.
Advancing Carbon Credit Pre-Sales
According to Solid World CEO Stenver Jerkku, the liquidity pool allows projects to pre-sell future carbon credits at a price determined by an automated market maker. This move marks a significant step towards financialization of carbon credits on the blockchain.
Blockchain Startups Aiming to Tackle Climate Change
In recent months, a new breed of blockchain startups, including Solid World, has emerged to provide financial and technical tools to address climate change impacts. These entrepreneurs are optimistic that blockchain technology can enhance transparency and boost funding for climate-positive projects.
Focusing on Mangrove Restoration Carbon Projects
The Solid World pool will specifically target mangrove restoration carbon projects. These projects aim to develop ecosystems of small trees and shrubs growing in coastal brackish waters. According to the WWF, mangroves can store up to four times as much carbon as other tropical forests, while also providing coastal protection against storms and sea level rise.
Liquidity Pools in the Crypto Market
Liquidity pools in the crypto market function similarly to market makers in traditional finance. Users pool their funds to enable the buying and selling of assets. Forward contracts, often tied to parameters like price, specify the purchase or sale of an asset at a later point in time, frequently used in hedging strategies.
Certainty for Long-Horizon Carbon Credit Projects
By utilizing liquidity pools, Solid World brings certainty to carbon credit projects with long horizons. The liquidity pool provides essential funding to the mangrove projects “while offering structured inventory to distributors seeking to sell high-quality carbon credits,” the press release stated.