NCT on Osmosis: Carbon Markets are coming to the Cosmos

Regen Network and Osmosis have had a long-standing relationship, with Regen Network being the first project to carry out a Liquidity Bootstrapping Pool on Osmosis to establish a market price in June of 2021. At this time, Regen Network also dropped 1.2 million $REGEN to the Osmosis community for future liquidity. To this day, Osmosis remains the primary place to acquire the $REGEN token. Now these two powerhouse Cosmos protocols are back to bring liquidity pools with the first digital carbon token in the Cosmos ecosystem, REGEN: NCT and OSMO: NCT.

Osmosis Carbon Market with Regen Network

Establishing a Carbon Market on Osmosis with Regen Network

In March 2022, the Osmosis community voted to incentivize liquidity pools on Osmosis DEX for the NCT token. In their proposal, Osmosis committed to utilizing their store of $REGEN, as well as 140,000 $OSMO, to establish a carbon market on Osmosis launching via NCT: REGEN and NCT: OSMO trading pools. Osmosis and Regen Network will work together to incentivize these pools with rewards given in $REGEN at each regular epoch.

Before these pools officially launch (April 2023), there will be one more community governance proposal for the Osmosis community, following the traditional format for a new incentivized LP. For all Osmosis community members, be sure to keep watch for this upcoming proposal, which is key for making Osmosis DEX home to the first digital carbon liquidity pools in the Cosmos ecosystem.

What is NCT?

NCT is a fungible carbon token minted on Regen Network. It is backed 1:1 by carbon credits originally issued by Verra, a global leader in the voluntary carbon market. These carbon credits adhere to both Verra’s Verified Carbon Standard and the NCT standard established by Regen Network, Toucan Protocol, Moss and BICOWG.

The individual carbon credits behind NCT are ported from Polygon to Regen Ledger via a bridge developed by Regen Network Development and Toucan Protocol. Users with NCT balances in Polygon will be able to utilize the Polygon-Regen Network bridge to transfer NCT-eligible TCO2s to Regen Network, convert them to NCT through the Regen Marketplace, and add them to one of the NCT LPs on Osmosis.

Interested in trying out the bridge for yourself? Check out our bridging guides below!

Polygon to Regen Network Bridging Guide

Regen Network to Polygon Bridging Guide

Note: Polygon-based NCTs being bridged to Regen Network must be “2013 vintages” and newer, as there is a 10-year rolling window to add individual credits into NCTs on Regen Network and Osmosis. To do this, you will need to use the selective retirement function to ensure you can manually choose 2013 and newer vintages; automatic redemption will pull the oldest credits, which could result in a 2012 vintage credit.

Why NCT?

The launch of NCT brings benefits to both the Cosmos ecosystem and the longstanding Voluntary Carbon Market (VCM).

The VCM is a rapidly growing financial market, nearly quadrupling in value between 2020 and 2021. Partially responsible for this meteoric rise in value is the trending upward growth of individual carbon credits, which increased by nearly 60% over the same time period. Additionally, projects offering non-carbon environmental and social benefits (a requirement of NCT-eligible carbon credits) saw a rise in popularity in 2021. While this is still an emerging category within the VCM, projects offering non-carbon benefits invariably command a price premium over standard carbon credits.

As these trends are set to continue, the benefits of bringing tokenized carbon credits, and thus the VCM, to the Cosmos ecosystem are clear. With the launch of NCT, Regen Network is the first protocol to bring this explosive financial market to the Cosmos.

Digitizing carbon credits greatly improves the standard set by traditional (web2) carbon credit markets. Issues like double counting carbon credits are eliminated with the transparency blockchain technology is able to provide through its publicly available chain history. Through the use of a fungible token, digitized carbon credits are also much more liquid than in the traditional VCM, which caters to governments and large corporations. Through Osmosis DEX, anyone with a Keplr wallet can acquire NCT, which can then be traded for its underlying carbon credit, and retired on Regen Ledger.

In the same Osmosis proposal for funding and incentivizing NCT liquidity pools, the Osmosis community committed to making their chain carbon neutral with the Cosmos ZERO initiative.

Cosmos ZERO is a quest for the Cosmos ecosystem to become a carbon neutral blockchain community. Through the use of protocol community spend pools and the power of community governance specific to PoS blockchains, Cosmos Layer 1 communities have been able to offset the carbon footprint of their entire validator set. With its success, Cosmos ZERO became the first cross-protocol governance initiative within the Cosmos ecosystem.

Along with Osmosis, Stargaze (2022), Stargaze (2023), Evmos, ixo, Cheqd, Regen Network, Gravity Bridge, and Empower communities have committed to becoming carbon neutral: offsetting their carbon footprint partially or entirely through the purchase of NCT and the consequential retirement of underlying carbon credits.