Fractional Carbon

Breaks a single, verified carbon credit (typically 1 metric ton of CO₂) into smaller, fungible tokens (e.g., 1 token = 0.001 ton). This enables:

• Micro-transactions for individuals or small businesses.
• Precise offsetting of specific emissions amounts.
• Increased liquidity by creating a larger supply of tradeable units.

Permanently records the retirement of the underlying carbon credit on a public blockchain (e.g., via a retirement receipt or a retired carbon token). This creates:

• Immutable verification that the credit is permanently taken out of circulation.
• Public transparency for audit trails and corporate ESG reporting.
• Prevention of double-counting through cryptographic proof of finality.

Fractional tokens are smart contract-enabled, allowing for automated and novel use cases beyond simple retirement, such as:

• Embedded offsets in DeFi transactions or NFT minting.
• Automated recurring retirement via subscription models.
• Composability with other DeFi protocols for staking, lending, or as collateral.

Relies on bridging protocols (like Toucan Protocol or C3) to tokenize credits from traditional registries (Verra, Gold Standard) onto a blockchain. This process involves:

• Batch NFT creation representing the bridged credit.
• Third-party verification of registry retirement.
• Fractionalization of the batch NFT into standard ERC-20 tokens for trading.

Creates a transparent, on-chain marketplace where the price of carbon is determined by open market dynamics, providing:

• Real-time price discovery based on supply and demand.
• Public order books showing bid/ask spreads.
• Historical data for analyzing price trends of different credit vintages and project types.

A non-fungible token (NFT) or certificate cryptographically linked to a retired carbon credit. It is the final, immutable proof that a specific credit has been permanently consumed to offset emissions. Key attributes:

• Unique identifier for the retired credit.
• Public metadata including project details, vintage, and retirement beneficiary.
• Fundamental to integrity, as fractional tokens derive their value from the irrevocable retirement this receipt proves.

Companies use FCCs for auditable Environmental, Social, and Governance (ESG) reporting. Each token's on-chain history provides an immutable record of credit origin, retirement, and ownership, combating double-counting and greenwashing. This gives stakeholders verifiable proof of climate commitments tied to specific projects.

By fractionalizing large credit vintages, project developers can access immediate capital from a global pool of buyers, improving cash flow for vital conservation and renewable energy projects. This solves the traditional market's illiquidity problem, where credits often sit unsold for years.

Businesses can tokenize and retire FCCs at specific points in a supply chain (e.g., manufacturing, shipping) to create a verifiable carbon-neutral product label. This enables Scope 3 emission tracking and provides consumers with a transparent product passport.

As a standardized on-chain asset, FCCs can be composed with other protocols. Examples include:

• Staking FCCs to govern a climate DAO.
• Bundling them into NFTs representing carbon-negative digital art.
• Automating retirement via smart contract triggers based on real-world data oracles.

The process of converting a physical or verified carbon credit into a digital token on a blockchain. This creates a fungible, divisible, and tradable asset, enabling the fractional ownership model. Tokenization is typically achieved through a bridging or minting process where a custodian locks the underlying credit and issues a corresponding token.

A recognized protocol for measuring, reporting, and verifying (MRV) greenhouse gas emission reductions or removals. These standards are the foundation of credit integrity. Key examples include:

• Verra (VCS): The world's largest voluntary carbon standard.
• Gold Standard: Focuses on sustainable development co-benefits.
• American Carbon Registry (ACR): A leading offset program in North America.

The permanent removal of a carbon credit from circulation to claim its environmental benefit, preventing double-counting. On-chain, this is achieved by burning or locking the token in a public retirement registry. The resulting proof of retirement (a transaction hash and certificate) serves as an immutable, auditable record of climate action.

A transparent, immutable ledger (like a blockchain) that tracks the full lifecycle of tokenized carbon credits. It records issuance, ownership transfers, fractionalization, and retirement events. This replaces or complements traditional, opaque databases, providing real-time auditability and preventing double-spending of environmental assets.

A smart contract that holds reserves of fractionalized carbon tokens and another asset (like a stablecoin) to enable automated, permissionless trading. These Automated Market Makers (AMMs) create continuous liquidity for carbon, allowing users to swap small amounts without needing a counterparty, which is crucial for scaling retail and corporate offsetting.

Core principles for carbon credit quality. The baseline is the projected emissions scenario without the carbon project. Additionally proves the project's emissions reductions are real and would not have occurred under the baseline scenario. These concepts are critical for assessing the integrity and environmental value of the underlying asset being fractionalized.