What is Regenerative Finance?

Learn more about ReFi and its use on the blockchain.

By Staff

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Several areas where blockchain technology can greatly improve living quality have been discovered since the blockchain’s inception.

Regenerative Finance is one of them and it not only helps individuals save money but also fights climate change. In this article, we define Regenerative Finance (ReFi) and discuss how it is applied to blockchain technology.

ReFi is a concept of regenerative economics that recognizes and rewards individuals for their contributions to society.  It is a new economic paradigm that operates at the intersection of climate action and Web3 communities.

For example, imagine that you own land and that keeping the rainforest alive would bring you more money in the long run than cutting it down for timber, farming, or cattle grazing. Also, imagine that there was money to be made by looking for empty land and putting money into reforesting it.

This method leads to the creation of good land, which brings together the factors of production and gives you more money.

ReFi is anchored in decentralized finance, (DeFi), and the theory of regenerative economics. Regenerative economics focuses on the creation of systems that restore and preserve the physical resources essential for planetary well-being.

There are three steps to follow to make a model of economic regeneration effective. 

1. Assess the worth of preservation/regeneration.

2. Turn it into a tradable asset.

3. Provide liquidity for that asset.

According to the World Economic Forum, today, ReFi is a call to action, galvanized by the need to address both the failure of traditional markets to account for the negative externalities of carbon emissions and the inefficient allocation of resources.

Additionally, it is also a call to action for policymakers to provide legislative direction and support for Web3 innovation in applications as an impetus to positive environmental and social outcomes for all, not just the privileged few. Progress on this latter front is making some headway.

ReFi offers support so that other firms can profit from Web3’s advancements without having to pay additional costs.

Users anywhere in the world with access to the Web3 infrastructure, a wallet, and the DeFi application can invest in, purchase, use, and trade tokens of these natural assets without needing authorization after tokenizing them for ReFi initiatives. The ReFi project’s smart contract opens for the application of decentralized lending and AMM Swap, as well as the tokenization, pooling, or standardizing of natural assets. This improves the ReFi project’s ability to use cash and increases the transparency of natural resources.

Regenerative Finance, in a nutshell, is a movement that combines web3 and the strength of blockchain to combat climate change, safeguard the environment, and improve the sustainability and fairness of the financial system. This offers an opportunity to get engaged in safeguarding the environment.

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