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The GCO2 token minting process serves as a "bridge" to bring carbon credits on-chain.
A few things are required before you can bring carbon credits on-chain using Flowcarbon.
- 1.An account at a non-profit credit-granting registry holding carbon credits. Only credits from trusted registries are allowed. These registries ensure project validity and quality and enable an auditable mechanism to tie on-chain credits with their underlying off-chain counterparts.
- 2.A Celo account controlled by a compatible wallet.
Flowcarbon handles the entire GCO2 token creation process to reduce errors and lower the technical burden of those looking to bring credits on chain. At the moment, all requests to tokenize carbon credits are submitted via a form on the Flowcarbon website. In the future, a custom interface will be created to handle tokenization requests.
Upon submission of a tokenization request, Flowcarbon verifies the information with the registering body stated. Once the ownership of the account, project type and credit quantity is confirmed, the credits are transferred to a bankruptcy remote special purpose vehicle (SPV). This SPV is managed by a professional third party, with regular audits, ensuring the one-to-one ratio. It is important here to note that credits are not retired when deposited into the bankruptcy remote SPV. The credits in the vehicle are live, “unretired,” and therefore retain full off-chain value, allowing for the creation of a "two-way bridge" that can redeem tokens for the underlying off-chain credit.
Once the information of the batch has been verified and the credits have been deposited in the bankruptcy remote SPV, a new instance contract is created. This contract contains:
- The GCO2 token name
- The GCO2 token symbol
- The methodology or registering body
- The credit type (e.g. FORESTRY)
- The batch vintage
- A checksum of the universally unique identifier (UUID)
The registering body generates a UUID for every batch of carbon credits created and a tamper-proof checksum of that UUID that establishes a verifiable auditing workflow that links the token with the underlying credit.
Important note: A unique token will be created for each project and vintage of a project. So for example, if a company holds carbon credits of vintages 2017, 2018 and 2019 from one reforestation project, three unique tokens will be generated, one for each vintage.
A Flowcarbon distributor account is the initial receiver of the GCO2 tokens. Tokens are then transferred to the account of the original credit owner.