7. Carbon Defrag Module

Carbon Defrag Module

The Carbon Defrag Module allows users to analyse their ACC holdings and assess how fragmented their holdings are, i.e how many carbon projects their ACC represent. Fragmentation occurs when users buy ACC from a dex or supply ACC as liquidity. It is necessary to defragment ones ACC holdings if they wish to transfer their credits back into AirCarbon Exchange (ACX). ACX requires ACC be in homogonous batches of 1000, (equal to whole tonnes of carbon from a single project). In addition, those users wishing to trade their ACC on ACX’s spot exchange will also have to ensure they have homogonous batches of 1 million ACC, this is due to AirCarbon’s minimum trading amount of 1000 tonnes.

How does it work?

Users remove their ACC from the CO2Fi’s daps into their MetaMask Wallet, they then enter the CO2Fi App and click on the Carbon Defrag button at the top of CO2Fi’s dap. Once their wallet is connected Carbon Defrag will analyse their ACC holdings and give a breakdown of how many underlying carbon projects the ACC is made up of. If the user receives a 1 in the projects number, then all their ACC are derived from the same carbon credit batch. If the number is more than 1 then their ACC represents carbon credits from more than 1 project.

The trade figure will present users a percentage of how much their ACC is in neat batches and thus able to be traded readily on ACX’s spot exchange. 100% means that the user can transfer all their ACC into ACX and trade right away. A figure of 50% would mean that half a users holdings are readily tradeable on ACX, whilst the other 50% is fragmented in sub 1 million lots from different projects.

For example is a user has 2 million ACC from three different projects inf the following distribution:

Project A 1 million ACC

Project B 500,000 ACC

Project C 500,000 ACC

The Carbon Defrag module would report the user’s holdings as the following

Project figure: 3

Trade figure: 50%

The project figure is self-evident; however the trade figure takes into account that both project B and C only represent 500 tonnes each which is below the ACX 1000 tonne minimum trade volume. The user would then have the choice of depositing their ACC into the Carbon Defrag module which then balance out their holdings so that they have a project value of 1 and a trade value of 100%. The Carbon Defrag module would give the user an estimated period of time until their holdings were homogonous, at which point the user can withdraw their ACC from the Defrag module and transfer their holdings over to ACX.

Is it bad if my ACC represents more than 1 project?

Not at all, fragmented ACC doesn’t stop anyone selling their ACC through a dex nor utilising CO2Fi’s daps. A high project number only causes issues if users whish to transfer their credits back to AirCarbon Exchange (ACX) or wish to retire their credits (a future feature). One must also take into account how much ACC they hold, if a user holds 2 million ACC which represents two projects, then they may have 1000 tonnes of ACC from both which causes no problems when transferring them back onto ACX.

Is there a cost to using the Carbon Defrag Module?

At present it is free to us the Carbon Defrag Module, however if estimated wait times are too long on defragmentation’s then fees will be charged to incentivise liquidity to the Defragmentation module (see below).

What is the roadmap for the Carbon Defrag Module?

At launch the Carbon Defrag Module will be a stand-alone product representing its own LP pool which will be supplied with a steady stream of ACC liquidity by the automated ACC ACX arbitrage bot (this bot ensures that the prices on ACX and the Dex do not go significantly out of kilter). In future the Carbon Defrag Module will be able to draw upon multiple dex ACC LP’s in order to make users ACC holdings homogonous more quickly. In the meantime if the Carbon Defrag Modules estimated times are too long then it will be spun into its on LP where users will be able to deposit their ACC to accrue fee’s and ACC defragmentation’s through the pool would be charged. Ultimately we hope that the market for carbon will grow and evolve to such an extent that the Carbon Defrag module will not be necessary, as centralised exchanges such as ACX will not minimum trade volumes, and the carbon registries will embrace the blockchain and fractionalisation.