What Is Regenerative Finance (ReFi) ⁉️

Regenerative systems leverage regenerative finance to achieve robust properties of growth. In extractive systems, resources are depleted and the system loses capacity over time. Resilient systems are able to recover from periods of shock. In sustainable systems, resource availability is not depleted over time and the system is steady. Regenerative systems must grow over the long term and must, therefore, be resilient and cannot be extractive.

Resource capacity here could be any or multiple of the 8 forms of capital (social, material, financial, living, intellectual, experiential, spiritual, and cultural). ReFi regenerates the resource capacity of many types of capital simultaneously.

In a ReFi system, financial capital is not an end in itself but is employed in service of each of the other forms of capital.

Because regenerative systems build capacity sustainably, regenerate resources, and are resilient to shocks, ReFi can be employed to prevent systemic risks to humanity and address coordination failures (e.g. inequality issues or social and environmental issues such as climate change).

ReFi is changing the mindset of the Voluntary Carbon Market (VCMs) with different organizations seeing the potential of web3 to correct some of the issues with VCMs: double counting and the resale of retired carbon credits.

Equally, ReFi is having an impact in the field of conservation as companies that need to offset their carbon emissions can fund the preservation of a species or area via the use of smart contracts. This creates a win-win scenario in which species are preserved, companies can offset their emissions and communities will be paid for their efforts to preserve vulnerable species.

There are numerous notable projects within web3 that are paving the way for the ReFi movement. There are also organizations that help to build the infrastructure needed for ReFi projects to flourish.