5. How does the tokenization of carbon credits work?

To get started, understand more about blockchain

The blockchain stores transaction information (a cryptocurrency, a contract, or a digital file) in blocks. Each block contains the fingerprint of the previous block plus its own content, and with these two pieces of information, it generates its own fingerprint, creating a connection between the blocks. It is from this connection that comes the name blockchain.

The blockchain is secure, as every transaction is validated by a network that is fully decentralized and has several layers of security. Any new block added to the network goes through a process that validates (or does not) the information.

Therefore, the use of blockchain resolutely avoids any kind of manipulation of transactions in the market.

Now about the tokenization process and its benefits

Moss obtains carbon credits from certified environmental conservation projects and records them on the blockchain. Therefore, we transform our credits into tokens (MCO2), encoding them on the blockchain through a numerical combination to identify this asset. In short, we can say that MCO2 is an asset-backed token on the blockchain. That ensures that each credit is traceable, auditable, and offset only once, adding a layer of transparency and security in transactions. It is important to mention that each token is backed by a carbon credit, that is, it corresponds to 1 tonne of CO2 equivalent.

Moss makes publicly available the real-time monitoring of the MCO2 tokens at: https://real-time-attest.trustexplorer.io/moss.

That is where holders can check the total supply of tokens on the Ethereum blockchain and compare them to the carbon credits market inventory.

Tokenization makes the offset process simpler, safer, and more transparent. By creating our automatic calculator on our website, companies of all sizes, as well as individuals, can offset their carbon footprint within minutes. Therewith, we were able to facilitate access to carbon credits through the tokenization of this asset.

We also noted that the carbon market lacked credibility due to several frauds in the past. With the tokenized asset, there is no risk of duplicate sales or nonexistent credits, since it becomes traceable and auditable, being available forever reliably, on crypto network sites, in a public and easily accessible way.

MCO2's sales support certified environmental conservation projects that prevent the emission of GHGs. That way, companies and individuals that offset their emissions with MCO2 support projects that promote the conservation of the fauna and flora of the Amazon, contributing to the maintenance of the standing forest.

It is important to emphasize that, as they are digital assets, carbon credits already exist before tokenization, digitally and with serial codes. Therefore, if we choose to tokenize a carbon credit, it will not change: it will only be encoded in another digital language (in this case, cryptography). The carbon credit, when tokenized, does not change its essence: it remains the same asset.

How is the carbon market positioned in this context?

Historically, carbon credits have unfortunately had a bad reputation for being retired/used more than once, sold more than once, or even sold when there was no project associated with it.

The use of blockchain eliminated this risk and attributed significant value to the process, as it gave speed, accessibility, and reliability to the process of origination of carbon credits, and consequent remuneration for conservation. By making this more accessible, we managed to reach small conservation projects, which could not be in the traditional system, as it is bureaucratic and expensive.

More about the MCO2 token

MCO2 tokens are carbon credits from the largest global registry in the voluntary market, Verra. These are credits already issued, audited, and verified.

MCO2 is a pool of fungible carbon credits, and each MCO2 token is equivalent to a Verra REDD forest project carbon credit, tokenized on blockchain.

It is possible to have access to MCO2 public accounts in the global carbon credit registry, Verra, and check what MCO2 is made up of:

https://registry.verra.org/mymodule/rpt/myRpt.asp?r=205&idSubAccount=9464 https://registry.verra.org/mymodule/rpt/myRpt.asp?r=205&idSubAccount=10246 https://registry.verra.org/mymodule/rpt/myRpt.asp?r=205&idSubAccount=10003 All transactions made by Moss are carried out and recorded in an organized manner, being possible to keep track of how many tokens there are in circulation. The information is publicly available at:

Ether scan: $4.05 | Moss Carbon Credit (MCO2) Token Tracker | Etherscan

Dune: MCO2 (dune.com)

KlimaDAO: KlimaDAO Tokenized Carbon Dashboard | Beta

How do Moss audits and records work?

Moss has the most respected funds and clients, who make rigorous due diligence in our processes and numbers. We have external financial auditing and accounting on all our accounts and balance sheets, and our carbon flows and stocks in the Verra registry are audited by the most respected company in the blockchain industry, Armanino. The monitoring and audit reports can be found at:

TrustExplorer by Armanino: Real-Time Attest for Moss

AGREED-UPON PROCEDURES REPORT | Moss.Earth

This means that all VCUs (Verra standard carbon credits) owned by Moss and tokenized (thus all MCO2) are registered within Verra and audited by Armanino LLP.

We have a BDO audit with an independent assurance report in accordance with ISAE 3000 on the rationale and structuring (design and operational effectiveness) of the Carbon Credit Balance for the year 2021.

Finally, the MCO2 token is listed on major global exchanges, including Gemini and Coinbase, which require rigorous due diligence and auditing processes for listing.

Moss is the only Latin American company and the only carbon credit company in the world with tokens listed in Coinbase.