How do we price CarbonABLE NFTs?

How much would you pay to restore nature? CarbonABLE is cracking the algorithm to determine highest positive impact on nature and highest financial return for our holders. Here is how.

The cost of climate change

How does CarbonABLE decide on the price of NFTs? CarbonABLE has climate mitigation at the center of our mission. Our NFTs are backed by real projects that help to restore balance to the carbon cycle. Along with restoring nature, these projects issue carbon credits, which are tradable on the voluntary carbon market.

So. Do our NFTs cost 1$, 100$ or maybe 10,000$?

Do we base our NFTs price on the cost of carbon credits? Or how much we think the carbon credits will be worth in the future? Or maybe is it decided by calculating the value of a safe & flourishing habitat for the animals that live in the area to be restored?

Financing a climate mitigation project

In fact, our NFT pricing scheme is really simple. First, we must take into account the cost of financing a project that will restore carbon sinks.

Imagine we are considering financing a project that will support an agroforestry project in Panama. When we receive the due diligence of the project, we see that it will produce 20,440 carbon credits.

The cost of financing the project is split into two main categories.

  • The more expensive part is the operational costs of the project. These are things like getting the land ready for restoration or replanting, buying the seedlings from a nursery, paying the people who plant the trees a fair salary, and watering costs.
Operational costs include seedlings, fair salary, plantation…
  • The second part is the certification cost. This includes the research and planning of the feasibility audit, the due diligence report at the beginning of the project, and any monitoring costs for the life of the project.

In our example, to execute this project it might cost: 250 000$

From there, we add 10% to the total. This is the only margin we collect. It is basically our operating budget, financing our team of blockchain, carbon credits and climate experts. So, the total cost of this example project might be: 275 000$. As we will progressively move toward DAO, fees could be voted by the community.

Pricing carbonABLE NFTs

How, then, do we decide on the price of the NFTs?

We have two possibilities:

  1. We’d like to sell NFTs for the project at a specific price (for example, 100$). So, we divide the project cost by 100 and that gives us the number of NFTs that will be available. In this case, the price would be 100$ and we’d sell 2 750 NFTs;
  2. We’d like to sell a maximum of NFTs, for example, 10,000 NFTs. In that case, we divide the total cost by 10,000 and that equals the price of the NFT. So, sticking to our example, the price per NFT would be : 27.5$.

But how do we decide which possibility to use? By defining the right size per project to ensure balance between democratization and fullfilment of the funding needed. One of our driving values is that we want our NFTs to be accessible. You’ll never see us selling an NFT for 20,000$.

Democratizing and making the combat to fight climate change possible is key to us. We believe any investor should be able to participate, even those with smaller sums to invest. This also has a secondary benefit: it allows us to finance many projects quickly and efficiently, increasing our overall impact.

The objective: maximum impact

If we were doing this to earn a huge profit, we could speculate on the price of carbon credits, and how it is going to increase astronomically given the rising demand for premium carbon credits¹. Then we could set up a model that would set the price of NFT’s based on the revenues of the carbon credits. But that’s not for us. The revenues of the carbon credits are the yields for our NFT holders, period.

At the heart of CarbonABLE, we want to capture as much carbon from the atmosphere as possible. Through these NFTs we want to finance as many carbon sink restoration projects as possible. We believe in pricing our NFTs this way. And we believe that engaging the DeFi community in restoring the planet through NFTs is how we’re going to do our part in fighting the climate crisis.

Sources

(1)https://www.mckinsey.com/business-functions/sustainability/our-insights/a-blueprint-for-scaling-voluntary-carbon-markets-to-meet-the-climate-challenge

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Carbonable.io

Carbonable.io

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The smartest & easiest way to invest in carbon removal 🌱 We align the best interests of business & the planet 🌎