Natural Asset Management: Blockchain-based Applications and Peer-to-Peer Trading

10:30:46 AM | 23/5/2019

The benefits that blockchain technology can offer are visible, such as financial transparency and the investments focusing on off-grid solar power, water trading, or carbon trading. With respect to this issue, Vienam Business Forum would like to introduce a research topic about crowd-funding for blockchain-based start-ups reviewed by Nguyen TQ and Das AK, lecturer at RMIT University Vietnam and director of Research and Development Department, Infinity Blockchain Lab, Vietnam.

Introduction

A new fundraising phenomenon – Initial Coin Offerings (ICOs) or token sales – has recently been in practice since 2017 for many blockchain-based start-ups, including businesses in the area of natural asset trading. Start-ups transform their ideas, which are grounded in social values, such as clean energy, carbon trading into projects by creating their own crypto tokens and offering discounted rates to early investors before entering cryptocurrency exchanges. LO3 Energy Brooklyn Microgrid offers consumers to trade clean energy using peer-to-peer business model and processing cryptocurrency transactions. Civic Ledger developed a blockchain trading platform called Water Ledger that allows stakeholders to allocate and trade water resources. The benefits that blockchain technology can offer are visible, such as financial transparency and investments focusing on off-grid solar power, water trading, or carbon trading. Hence, it is crucial to review blockchain-based business related to token sales in the context of natural asset management.

Methodology

This research adopted well-established guidelines by Webster and Watson (2002) and Okoli (2015) to conduct a literature review on blockchain-based products and services related to natural assets that were registered on ‘icobench’ website, one of the prominent websites keeping track of ICO projects. The keywords used to search for literature were ‘carbon’, ‘greenhouse’, ‘climate’, and ‘biofuel’. The search returned a total of 107 ICOs. After reviewing the abstracts and introductions, four categories were established, including (1) renewable and clean energy, (2) carbon offset and credit, and (3) natural asset marketplace.

After the screening stage, which only selected ICO projects with 3.5 stars or above, the results only yielded a total of 22 ICOs. Primary reports and whitepaper of those 22 ICOs were extracted and reviewed to extend the knowledge of asset trading mechanism. Through this review process, 3 most prominent ICO projects were selected for the analysis.

Analysis and results

Based on the classification, only 3 ICOs were selected to review the mechanism of exchanging tokens.

Power Ledger is operated in the renewable energy industry. Its effort is to conduct trading cross chain. In 2017 Power Ledger raised approximately 17 million AUD. Power Ledger offers peer-to-peer trading on energy. In the 2nd quarter 2019, it claimed that products are fully operated on a public proof of stake blockchain.  

Poseidon tries to enter carbon credit markets and runs on Stellar. Poseidon describes in great detail how carbon credits can be exchanged via a smartphone application. Moreover, Poseidon raised more than 4 million euros.

Veridium Lab focuses on natural capital assets. The targeted customers are individuals and enterprises. Owners of Veridium Lab develop products on Stellar platform and endeavour to evaluate the correct value of natural capital assets. In exchange, carbon credits can be used for the awarding system. However, in the whitepaper, there is little information related to how the capital is spent and how to measure the natural assets.

Conclusions

Innovators go through a few steps to enrol on the ICO process, from publishing whitepaper (detailed information about the project to be carried out and the issue of tokens), to creating token or cryptocurrencies (either based on existing platforms or a new one), to ICO promotion, and to selling tokens on peer-to-peer platforms.  Published information related to mechanisms to evaluate and quantify values of natural assets remains limited. Moreover, although start-ups received a large capital fund, investors and consumers have a few means to validate the values of carbon offsets and credits across different markets.

Start-ups on the area of natural asset management are founded in many countries while there is no Vietnamese start-up found on icobench website. Hence this might be the niche for Vietnamese innovators to establish blockchain-based businesses that can assist the government to have a better water and carbon management.

Highlights

  • A relatively new way to raise funds is Initial Coin Offering (ICO) for Blockchain-based start-ups, especially those in the area of natural asset management.
  • Start-ups offering carbon credits exchange and trading on clean energy attract millions of dollars.
  • Asset and currency tokens are common practices to trade natural assets between stakeholders.