LCO2x: Pooled Credits
The challenge with carbon markets liquidity today is that they're project based. This means that every new carbon credit brought on-chain requires its own ERC token contract as the credits are unique depending on the project and vintage. The unique attributes tied to carbon projects results in carbon credits being traded and sold as differentiated products. With the model of differentiated carbon credits, its hard to scale the market size of carbon credits. To scale the market's size, the credits need to look more like commodities (e.g. gold, rice, oil). That's where LCO2x comes in.
LCO2x is a pool of different types of carbon credits that share similar attributes. Pooling credits together increases the liquidity which makes it better to trade larger quantities of carbon credits in Likvidi Carbon DEX. Pooling makes the carbon credits more commodity-like and not differentiated products.
  • The pool only accepts specific carbon credits that are determined by Likvidi.
  • Each LCO2x is backed 1:1 with underlying LCO2 carbon credits.
  • Carefree option for buyers who are looking for high quality credits, but don't care about going into details of choosing the carbon projects.
Retiring LCO2x
LCO2x are retirable carbon credits. Whenever LCO2x is retired, its underlying project-based LCO2 is automatically burned to avoid double counting and making sure that the supply of LCO2x matches 1:1 with the carbon credits in the LCO2x pool contract.
When LCO2x is retired, the oldest vintage credits from the pool are automatically burned. By this method the LCO2x pool renews automatically.
Example of carbon credit attributes for pooling
We can create different types of pools that accepts carbon credits according to the pools requirements for attributes.
For example pool with the following attributes:
  • Methodology: REDD+
  • Vintage: >2017
  • Carbon standard: VCS/CCB
Pool with attributes above would only accept credits with REDD+ methodology and at minimum 2017 vintage with Verra / CCB carbon standard.
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