The decentralized CARROT Ecosystem: Transparency and Traceability
Last updated
Tracer White Paper version 0.99 A
Last updated
This community consists of TRACER token holders who actively participate in the governance of the CARROT ecosystem through a Decentralized Autonomous Organization (DAO). They have voting rights on crucial matters such as selecting and onboarding new Endorsers, approving upgrades to the platform's smart contracts, and taking disciplinary action against projects or Endorsers that violate the established rules and standards of the ecosystem.
Endorsers are reputable organizations, including certification authorities and established registries, that are recognized by the DAO as qualified and trustworthy entities to assess and endorse carbon dioxide removal projects. They play a critical role in curating the pool of projects on the platform, ensuring their quality, and verifying their compliance with the stringent standards set by CARROT.
Projects are the entities that are directly involved in the implementation of carbon removal solutions. They encompass a diverse range of activities, from nature-based solutions like reforestation and afforestation to innovative industrial solutions such as direct air capture and enhanced weathering. Projects are granted the responsibility of minting CARROT tokens, which serve as a quantifiable representation of the amount of carbon dioxide they have effectively removed from the atmosphere.
The CARROT platform's functionality is built upon a foundation of two core smart contracts:
This contract governs the management of the TRACER token, which is an ERC-20 token designed to facilitate governance within the ecosystem. It incorporates mechanisms to protect against Sybil attacks, ensuring fair and democratic participation in the DAO. Furthermore, it includes a built-in deflationary mechanism where a portion of the proceeds from CARROT minting is automatically used to buy back and burn TRACER tokens, creating deflationary pressure on the token's price. This incentivizes TRACER token holders to actively participate in governance and make decisions that contribute to the overall health and effectiveness of the CARROT economy.
This is a more complex smart contract that is responsible for managing three distinct types of tokens: non-fungible tokens (NFTs) for Endorsers and Projects, and fungible CARROT tokens that represent verified carbon removal. This smart contract is based on the ERC-1155 token standard, which is specifically designed to allow for the efficient management of both fungible and non-fungible tokens within a single contract. This standard enables efficient batch transfers of tokens and supports the creation of diverse baskets of CARROT tokens that can represent carbon removal from various project origins while maintaining consistent grading standards.
The architecture of the CARROT token is \ designed to achieve a balance between two critical aspects: traceability and liquidity. These two qualities are often considered conflicting objectives in the carbon credit market, but CARROT's innovative approach successfully addresses both:
Each CARROT token is assigned a unique identifier (ID) that indelibly links it to the specific project and the Endorser that validated its carbon removal claims. This ensures complete transparency and traceability of the token's origin and authenticity, providing a high level of assurance to buyers and supporting robust audit trails.
CARROT tokens are not treated as homogenous units; instead, they are graded based on the permanence of the underlying carbon removal solution they represent. Higher grades are assigned to solutions that offer more durable and long-lasting carbon sequestration, such as geological storage or mineralization. This grading system enables the creation of a more nuanced and sophisticated market where tokens from different projects with similar persistence characteristics can be pooled together, increasing overall market liquidity without compromising the integrity and transparency of individual carbon credits.
CARROT recognizes the paramount importance of robust governance in ensuring the long-term integrity and sustainability of the carbon removal ecosystem. To this end, it incorporates a well-defined governance mechanism with the TRACER DAO at its core. The TRACER DAO plays a crucial role in overseeing the selection and onboarding of new Endorsers, ensuring that only qualified and trustworthy entities are granted the authority to validate carbon removal projects.
Additionally, the DAO has the power to revoke the endorsement status of any Endorser or Project that is found to be misrepresenting its performance or violating the established standards of the ecosystem. Importantly, the incentives of TRACER token holders are intrinsically aligned with the overall health and efficacy of the CARROT economy.
As the pace of carbon removal accelerates and the value and volume of CARROT tokens in circulation grow, a small but significant portion of the generated value is systematically used to buy back and permanently burn TRACER tokens. This creates consistent deflationary pressure on the price of TRACER tokens, effectively incentivizing TRACER holders to actively participate in governance and make decisions that promote the growth and integrity of the CARROT ecosystem.
Within the CARROT ecosystem, Non-Fungible Tokens (NFTs) serve a distinct and crucial function: they act as functional licenses, granting specific permissions and rights to their respective holders. There are two primary types of NFTs that play key roles in the system:
These NFTs are granted by the TRACER DAO to organizations that have undergone a rigorous vetting process and are recognized as legitimate entities with the expertise and authority to select and endorse carbon removal projects. Endorser NFTs effectively function as licenses, granting the holder the exclusive right to curate and endorse projects within the CARROT ecosystem. These NFTs are designed to be non-transferable, preventing unauthorized delegation of endorsement authority, and they can be revoked by the DAO if the Endorser is found to be in breach of trust or in violation of the standards and rules of the ecosystem.
These NFTs are minted by authorized Endorsers for each carbon removal project that successfully meets the stringent requirements and is approved for participation in the CARROT ecosystem. Project NFTs grant the holder the exclusive right to mint CARROT tokens corresponding to the amount of CO2 verifiably removed from the atmosphere by their project. Similar to Endorser NFTs, Project NFTs are non-transferable and are subject to revocation by either the issuing Endorser or the DAO if the project fails to adhere to the required standards, misrepresents its performance, or engages in any activity that undermines the integrity of the ecosystem. This strategic use of NFTs as functional licenses provides a transparent, secure, and tamper-proof mechanism for managing permissions and ensuring accountability within the CARROT ecosystem. The inherent immutability of NFTs on the blockchain ensures that a permanent and readily auditable record of endorsements and project approvals is maintained, significantly enhancing trust and confidence in the platform.
