The first time I read the term ReFi was while researching the Crypto Commons initiative.
After some time in contact with the members of the Crypto Commons Innovation Hub, I set out to find out more on my own.
After just over a month of research on the topic, here I am trying to explain the basics to you.
In this first part of the text I present the term and some of its current applications, in the second we will bring the discussion to Brazil and present some proposals.
Regenerative Finances
Simply put: these are initiatives that aim to contribute to a more sensitive and responsible use of natural resources through economic and financial tools to regenerate or conserve nature.
One of the theoretical foundations of ReFi comes from the intellectual production of authors such as Humberto Maturana and John Fullerton.
The fundamental term of Maturana's contribution is the concept of autopoiesis, which describes the processes of creation and maintenance internal to all living beings.
Hence the idea of enhancing initiatives that involve regenerating spaces and processes so that life continues to happen on the planet.
From the side of Fullerton, who is a fund manager, comes the idea of operating the transition to more sustainable economic arrangements based on new financing models.
Such ideas take concrete form in a multidisciplinary approach originating from architecture, economics, ecology, philosophy, finance and DeFi in the context of blockchain technology.
Let's look at some practical and current cases of application of ReFi.
Successful cases
We'll approach three types of cases, the first concerning DeFi protocols aimed at regenerative finance, the second concerning financial market and the third that integrates the financial market, DeFi and ReFi.
Due to its low cost and accessibility, DeFi protocols have been one of the main spaces of economic and financial experimentalism today.
Among the large amount of protocols that exist, three are especially representative of this diversity.
The first makes the carbon market more accessible by cutting out middlemen and allowing the tokenization of carbon credits issued directly to producers.
The Toucan protocol is at innovating the carbon credit market and its reach is getting larger and larger.
The second, Regen Network, facilitates the meeting between the most sophisticated ways of using natural resources and the farmers themselves through different methodologies for analyzing production processes.
You can take part in Regen Network as an investor, producer and researcher, requesting, financing or developing new methodologies to reduce impact, increase production and balance the relationship with the planet.
The third protocol to be highlighted is as innovative as it is irreverent in using the most hyped art format of the moment, NFTs, to fund environmental conservation.
Project Ark has strong partnerships such as Chainlink, Polygon and The Commons Stack networks, in addition to being an initiative that arises from the cooperation between WWF and Carbonbase.
Regarding the presence of ReFi in the financial market, the trend is towards initiatives focused on building companies and institutions with a flexible proprietary structure so it don’t reproduce the vicious structures that exploits the producers to build profit for shareholders.
The focus of these companies and institutions is to prioritize their objective over the profit of shareholders and, in this way, protect their own existence.
We are talking about institutions that, in addition to generating revenue, which make their existence and reproduction possible, generate some kind of positive impact on the regeneration of the planet.
A successful case worth mentioning is the American Purpose Evergreen Capital, which offers funds opportunities challenging traditional models.
The way that the aforementioned fund found to challenge the old models is funding without the acquisition of voting rights, another mechanism, as important as the first, are analysis criteria that focus on impact and resilience in the long term, and not on short-term profit.
In addition to existing initiatives in the financial market and DeFi protocols, there are attempts to integrate solutions from both sources in a single environment.
The main one of these attempts, the only one I had access to in my research, was the Autonomous Communities for Regenerative Economies-ACRE.
ACRE DAO is a web3 application developed by Acre of America, a consultancy in environmental impact investments in order to bring technology closer to rural production.
More precisely, what ACRE DAO seeks is to bring ReFi closer to DeFi through a governance tool to facilitate the organization and funding of initiatives with a positive impact on rural production.
For now, the utility of the token is to be a ticket to the community (which, by the way, continues to grow), but there are plans to implement new features.
The community is made up of producers, investors, entrepreneurs and intellectuals who contribute to each other to create, organize and finance regeneration initiatives.
For a more accurate and comprehensive description of the performance of Acre of America and ACRE DAO, the reader can listen to the interview of its manager Kianga Daverington on Investing in Impact podcast.
Although they are the most sophisticated in the ReFi environment, the successful stories presented above are just examples of how economic tools, technology and good ideas can contribute to improving our relationship with the planet.
If we want to take the next step to understand how ReFi is already present in the Brazilian reality, it is necessary to take a step back so that we can differentiate such initiatives from those already present in the traditional financial market.
The conceptual core
The change proposed by ReFi does not concern exclusively the human impact on the planet, but it holds a holistic perspective that encompasses the most varied causes of this impact.
In this way, it is distinguished from the so-called “green capitalism” which generally encompasses initiatives that reallocate the damage caused by predatory use of natural resources.
At the same time, it is an approach that does not need an exclusive foundation among the current normative sources of political theory.
This implies that while we can describe it from normative sources such as socialism, anarchism and libertarianism, etc., none of these sources is exclusively necessary.
You only need to agree upon general principles of decentralization, productive justice and generational responsibility.
The conceptual core of ReFi is the provision of systematic changes to systematic problems in the practical sense of empowering agents.
The most sophisticated economic, financial and technological tools are used to facilitate the financing and governance of regeneration initiatives.
The demand for such supply arises from the perception that the most complex aspect of enabling long-term social impact initiatives concerns funding (without hijacking) and governance issues.
This arises because autonomy, economic and political, is an indisputable demand of any movement to break paradigms.
Especially when we talk about paradigms that currently benefit economic and political elites in Brazil and in the world.
The irony of being at the same time one of the biggest food producers in the world and being on the map of countries ravaged by hunger puts Brazil at the epicenter of demand for ReFi.
In part II of this text we will bring the discussion to Brazil, expose some examples already in action and outline some possibilities that can be explored.
This text was first published at Prensa.li.