ReFi is trying to use blockchain to heal the planet

Crypto and blockchain don’t have a reputation for saving the planet. at least not yet. The emerging ReFi phenomenon is trying to change that.

British environmentalist and explorer Robert Swan said, “The greatest danger to our planet is the belief that someone else will save it.” That quote has probably never felt more relevant. Although it’s probably not one you’re likely to hear at your next crypto conference. But increasingly, the crypto industry is trying to do its part. Quietly, a mission is underway to enable all the benefits of blockchain without any social or environmental degradation.

Famously, bitcoin and its proof-of-work model are energy intensive. The world’s most popular cryptocurrency reportedly consumes the same amount of energy as the countries of Pakistan, Malaysia and Ukraine. It’s an inconvenient fact for a planet that has never cared much about climate change.

Last year, crypto conversation was dominated by Ethereum’s transition to Proof-of-Stake (PoS). Unlike energy-intensive Proof-of-Work (PoW) consensus mechanisms, validators are selected based on their stake in the network, thereby reducing energy consumption and improving computational efficiency. For non-crypto observers, the main takeaway was that the world’s second largest blockchain would use less energy.

Crypto markets more broadly are also controversial. Not everyone is convinced of the value of digital assets, which only adds to the controversy over their energy consumption. Observers who are ignorant of the intricacies of crypto often see it as a supercharged and unsophisticated version of traditional finance. Not a useful comparison, given that even traditional finance has struggled to get a good hearing lately.

ReFi: Finance for Good

Blockchain has helped to reinvent finance with DeFi (decentralized finance). But now there’s a new kid on the block. ReFi (or “regenerative finance”) aims to foster a more sustainable and equitable economic system with blockchain. In theory, ReFi projects prioritize environmental and social responsibility over profits. As a movement, it aims to promote a more inclusive and fair financial system.

The term is also incredibly broad – perhaps too broad. This could include carbon-negative blockchains, carbon capture and storage, or simply tokenization of eco-friendly assets. Because it’s such a new and amorphous term, it can be whatever you want.

And there is an audience for it too. There is more than enough data to show that we—as a society—are making an effort to behave more ethically. According to the 2022 Consumer Survey by Deloitte, consumers are increasingly making conscious decisions with sustainability and the environment in mind. A recent study by NielsenIQ found that 78 percent of US consumers say that a sustainable lifestyle is important to them. According to a 2020 McKinsey US consumer sentiment survey, more than 60% of respondents said they would pay more for sustainable packaging.

But the studies only tell us what is already clear to most. The general public may not care much about the social and environmental impact of their habits. (At least on paper.)

ReFi is still a relatively new idea

However, this change in habits that has occurred over the past decade or so presents an opportunity for a business with a savvy marketing department. “A ReFi label should not be enough to satisfy an ethical investment,” said Marius Grigoras, CEO of BHERO, in a discussion with BeInCrypto. “While we believe the ReFi movement is a positive force for change, we recognize that some projects may use the ReFi label to appear more ethical. Unlike other investments where a gut feeling may suffice, vetting investors should be really thorough when doing [these] Investment.

The regenerative finance movement arguably began after the 2008 financial crisis. Although the term does not appear regularly in digital records until the mid-2010s. However, its acronym (ReFi) alludes to its origins in DeFi (decentralized finance), which only started in 2020. Since then, crypto has made a name for itself in the wider world. It’s not always good.

Grigoras continued, “ReFi can help overcome some of the negative reputation that crypto has earned over the years, and we can start to see real-life examples of how powerful crypto can be.” “As crypto values ​​are largely dependent on reputation and demand, this is great news for the industry! Additionally, by providing investors access to a wider range of projects, ReFi will help build trust in the crypto space and attract more mainstream investors.” can help bring about.

greater awareness and education

If one asks Masa Finance co-founder Calanthia Mei about the obstacles facing the ReFi sector, Mei gives a simple answer: awareness and education. “Many investors are still unfamiliar with the principles behind crypto and the ReFi movement,” Mei said. “Additionally, there is a lack of clarity around the regulatory framework for ReFi projects, which has led to hesitation among some investors.”

Many argue that the so-called “Refi” movement has been in blockchain and crypto since the beginning. After all, some of the biggest beneficiaries of cryptocurrencies are those with unbanked and unstable economies. If that doesn’t count as ReFi, then what does?

“Awareness brings users, traffic and funding to ReFi projects,” Mei continued. “In a crypto bear market, some ReFi projects are struggling without sufficient funding. [This] It may also slow the innovation needed to get these technologies into the hands of those who need them most.”

“The crypto persona has, unfortunately, become a caricature, but it does not accurately reflect the dynamic set of builders and projects operating in the Web3 community.”