Whitepaper

Introduction

Biodiversity loss is an urgent issue that needs to be addressed now more than ever. Our planet is currently experiencing a massive decline in the number of species and habitats, with devastating consequences for ecosystems and human well-being. To learn more about why biodiversity is a ticking time bomb for our planet and the benefits of solving this problem, please read this.


The primary way to create positive impact in this field is to fund more nature based projects, as evidenced here - hence the BioCents project is an attempt at creating the technology infrastructure and financial ecosystem required for a more biodiverse and sustainable Earth. 


The Biocent token is a virtual currency to hold monetary value, and to provide transparency and traceability to all stakeholders, thereby creating a quantum leap in the ease of attracting capital towards these projects.


The entire project will be developed by our team in a phased manner, and will progressively involve the community as the core technology and ecosystem are created. We also aim to distribute governance control of the BioCents blockchain to a community of stakeholders. If you’d like to be an initial contributor, please see this.


This paper is an initial plan to make this vision a reality, subject to adaptations as we gain market feedback on our solution. 

Giving to Earth: The challenges

We see a three pronged challenge in the biodiversity funding space. We will propose solution to each problem in later sections

1. Consumer awareness

Loss of Biodiversity affects every single person on the planet, but the awareness among the consumers is acutely lacking. Our view is that there is a lot that can be done to help people empathize with what’s happening to our natural ecosystems. 


For us to make a dent on this problem, more people need to show intent of giving, and that can happen only when they acknowledge the problem


2. Lack of transparency

Audiences that already have an intent to donate, or act on this problem in other ways, do not find trustworthy and transparent options. It is hard to justify donating or contributing when you don’t know where the money is going. We also lack the right systems to scientifically measure the impact of every dollar.


3. Friction

Ease of giving is a massive low hanging fruit that has not kept up with innovations in financial technology. A combination of lower costs and higher trust in projects, opens up the possibility of passive giving, incentivized giving, embedded giving, and other models that can be designed by third parties using our API.


Glossary - Basic concepts 

DeFi-  Decentralized finance is an ecosystem of protocols and applications that allow for trading, investing, lending, and insurance markets to operate on permission-less decentralized blockchain infrastructure. 


Stablecoin - A digital (on-chain) IOU token that aims to maintain equal value with a chosen fiat currency. Usually done through one-to-one backing with said fiat with a "trusted" party. For our use case, USDC issued by Circle checks most boxes. USDC is used as a proxy for transacting and holding dollar values in the defi world.


Metadata - Metadata refers to additional information attached to a token, such as its name, issuer, supply, and other characteristics that provide context and meaning to the token. In our case the origination, flow and sink information associated with each token. The combination of these properties make each token inherently unique.


Token identifier - a unique permanent identifier attached to each token. This id is used to track the movement of the monetary flow and track all activity using block explorers and other indexing tools.


Accounts - These are digital addresses on a blockchain that hold digital assets and facilitate transactions. The BioCent blockchain will support many types of accounts types to facilitate traceability of transactions from source to sink. 


Sink Accounts -  Accounts held by organizations that carry out conservation and restoration projects, and are subject to community and expert driven guidelines around impact assessment. These accounts will receive special assistance by the foundation to help cash out BioCents into fiat currency in their jurisdiction of choice.


Expiry - The monetary value held in each token comes with a final expiry date after which all the value held in the token is considered to be donated to conservation and restoration projects. After expiry, all that remains is a clear record of what happens with the money, essentially an NFT full of pride for having done good for our planet.


Take rate - The percentage of fees collected by the system on each type of transaction. Take rates will differ for every type of transaction and serve two purposes. Incentivize certain types of usage while taxing others, and generating fees that go towards making the system financially sustainable to operate.


Epoch - Epoch is considered a specific period of time during which a set of transactions are validated and added to the blockchain. This period of time is used to specify when specific events in a blockchain network will occur, such as when incentives will be distributed, or when a new group of validators will be assigned to validate transactions. In our case, the donations can be streamed to projects at the end of every epoch.

Biodiversity Financing - One Biocent at a time.

The success of conservation and restoration projects lies in ensuring that trust is always maintained between all stakeholders - Donors (consumer or corporate), financial intermediaries and Receivers (Organisations compensating Earth). 


Incorporating transparency and traceability in a robust manner has the potential to massively increase the flow of money towards the right projects. Biocents will be a neutral infrastructure layer that minimizes and possibly eliminates platform and political risk. We see this as a public good and intend to build it like one.


A financial system that eliminates platform risk requires radically open governance, and that is a crucial feature of modern blockchains. The BioCent foundation will be community governed, and operate as an internet native organization that will create, maintain and upgrade this financial infrastructure, as well as attract partners and coordinate ecosystem activities in the initial years.


Our 5 overarching tenets

Token Design Considerations












Blockchain Architecture

We find that there exist three different paradigms of blockchain architecture that apply to BioCents. These three paradigms have been analyzed according to our overarching technical requirements. 


Monolithic sovereign chain

A monolithic sovereign blockchain is a self-contained, single-layered blockchain system that handles all aspects of a decentralized network, including transaction processing, validation, and storage.


These days, open source sdks like cosmos with tendermint, IBC and Polkadot substrate are starting points for designing very robust, use case specific blockchains that can be customized to a great extent.



Smart contract platform

A smart contract platform is a blockchain-based system that enables the creation and execution of self-executing contracts. These contracts can automate the exchange of assets, data, or services, without the need for intermediaries.

 

Application developers can take advantage of consensus, security, communication standards and mature development patterns with a huge developer community.

Examples that use EVM  include Ethereum, Polygon, Optimism, Arbitrum, CELO, Avalanche

Non-EVM options include ICP, Solana, NEAR, HBAR, Sui, Aptos 



Secured chain

A secured chain model is where security is provided by a third party set of validators on a host chain, and the execution environment can be customized up to an extent. This is an evolving paradigm where tradeoffs are not yet fully clear and continuously evolving alongside competing approaches such as private sharding.


Examples : Cosmos shared security, SKALE network, Polkadot, NEAR private shard


Possibility of Customization on execution layer 

A combination of gas model, virtual machine available, development language and other “under the hood stuff”


Security and consensus

To explain the different paradigms better from a consensus and security perspective, SCs offer this out of the box, shared also offers it out of the box but with a higher cost of onboarding, and a sovereign chain by definition needs to raise an independent community of validators bringing in capital to secure the chain.

Development ease

tested smart contract standards. Basically how much time will it take to get to market.


Token Issuance

The closest reference standard and implementation is the Ethereum SFT standard. The SFT standard is not yet extensively tested, and is not present in a standardized manner on most non-EVM smart contract platforms. We will likely have to implement it ourselves from the ground up if we take the non-EVM route. 


Hence, using the existing standard as inspiration, we are proposing our design from first principles.


Token Standard

As found here - ERC-3525: Semi-Fungible Token : An explanation on FTs, NFTs, and the motivation for SFTs.


“Tokenization is one of the most important trends by which to use and control digital assets in crypto. Traditionally, there have been two approaches to do so: fungible and non-fungible tokens. Fungible tokens generally use the EIP-20 standard, where every unit of an asset is identical to each other. EIP-20 is a flexible and efficient way to manipulate fungible tokens. Non-fungible tokens are predominantly EIP-721 tokens, a standard capable of distinguishing digital assets from one another based on identity.



However, both have significant drawbacks. For example, EIP-20 requires that users create a separate EIP-20 contract for each individual data structure or combination of customizable properties. In practice, this results in an extraordinarily large amount of EIP-20 contracts that need to be created. On the other hand, EIP-721 tokens provide no quantitative feature, significantly undercutting their computability, liquidity, and manageability. For example, if one was to create financial instruments such as bonds, insurance policy, or vesting plans using EIP-721, no standard interfaces are available for us to control the value in them, making it impossible, for example, to transfer a portion of the equity in the contract represented by the token.



A more intuitive and straightforward way to solve the problem is to create a semi-fungible token that has the quantitative features of EIP-20 and qualitative attributes of EIP-721. The backwards-compatibility with EIP-721 of such semi-fungible tokens would help utilize existing infrastructures already in use and lead to faster adoption.”


Creating Store of Value

The value stored in the BioCent tokens need to be spent exactly like the currency that users are used to. The natural choice in global finance today is undoubtedly USD, hence we will have 1 BioCent = 1 cent USD


This will be made possible by using USDC as the locked collateral whenever the smart contract issues a new BioCent SFT. USDCs permissionless APIs allow for direct onramp and offramp from USD <-> USDC and we can add another layer of smart contract automation to enable USDC <-> BioCent conversions.


Hence, at all times, the soundness of the economic value in the system can be monitored by comparing the total value circulating in BioCents with the total USDC locked in the smart contract at any given time. Both values should always be equal.

Token Ownership & Value Transfer

At any point in time, all Biocent SFTs act as records of economic activity that compensates Earth. The value can move through any number of holders, but also post minting, the value keeps decaying to biodiversity loss mitigation projects.

Decay is used here as a value transfer mechanism in which the SFT value is slowly & continuously transferred to these projects(sink).


The organizations managing the projects also hold SFTs with value in them, but are an exception to the value transfer mechanism. This is because the sink is set to itself in SFTs held by the organizations. Only certain addresses are allowed to hold SFTs with this configuration, and can only belong to vetted and trustworthy projects.



Biocent Minting, Transfer &  Decay

In this diagram, wallet_1, wallet_2 & wallet_3 are user wallets while sink wallet is owned by the nature fixing project. Minting happens at t=0 when wallet_1 deposits USDC into the Biocent smart contract to mint Biocent SFT. Post minting, decay starts and a % of the original value keeps getting transferred to the sink wallet. At t=t3, the entire value has been transferred to the sink and hence the SFT value in the user wallet changes to zero.


This design allows for tremendous flexibility in terms of origination and data stored, while still achieving our goal of accelerating the flow of money towards conservation and restoration projects.



User Redemption

Biocent is meant to primarily be a mechanism to compensate for the earth by funding nature based projects but developers may choose to build experiences where their users are rewarded Biocents in some form, let's say an e-commerce cashback. In such a case, however rare it may be, a user who wants to redeem it for USDC is free to do so, and has the incentive to do it as soon as they receive it. However, a higher take rate will be charged for the users.



NGO payout

Sink wallets are marked for receiving the decayed value from the SFTs in circulation. On a daily basis, we will aggregate the decayed values from all Biocents and unlock the equivalent amounts of stablecoin from our vault. (the issuer smart contract) and transfer it to the public and auditable wallets of the organizations. 


In regions where regulations support USDC to fiat conversions, the organization can claim to convert their SFT value to local currency directly. 

Redeem for Impact Credits

Multiple businesses and organizations often use impact credits such as carbon, plastic, etc. To minimize their ecological impact as well as to improve their ESG scores. Biocent provides a completely transparent mechanism for such orgs to purchase these credits. 

Token Specification

Token Data

Note: When sink_id is itself and there are no other sinks, it means the owner is an organization responsible for the biodiversity loss mitigation projects.


Events

Issue- The originator uses the issue function to lock up some stablecoin value and transfer the newly created SFT to an address which can also be self.


Transfer - Any holder of an SFT with non-zero value can transfer it's balance to another address


Decay - A special type of transfer where the destinations can only be conservation and restoration projects. This function fires every epoch for each BioCent SFT. Runs like an involuntary process 


Redeem - Any holder of an SFT with non-zero value can return the remaining value to the issuer contract to take back equivalent amounts of the stablecoin.


Expire - A function that is internally called when a transfer results in the balance becoming zero. Essentially converts the SFT into an NFT, as a record of having done good for the Earth. Stops the decay process by removing it from the decay queue

​

Events are simply logs of function calls which can be followed to recreate or track the flow of money and audit the financial system at any time. We will build a robust indexer layer to enable this querying activity.

Fig: Biocent Lifecycle

Accounts and Wallets

The BioCents blockchain will have accounts built in and cli tools to interact with these accounts. But wallets will be left to the community to implement. This lets us focus on building the core infrastructure.


The first wallet on our platform will be the flockby wallet which will provide a user friendly way to interact with BioCent accounts and tokens, designed with the Flockby shopping assistant in mind.


Security

The key challenge with crypto wallets today is that they’re built with the hardcore crypto enthusiast in mind. If you lose the private key or passphrase, you lose access to your tokens completely.


On the other hand, holding a user's private key on their behalf goes against the ethos of decentralization and avoiding central points of failure.


BioCent is meant for use by anyone, and wallets should be able to innovate on offering an experience that is as close to what users are already comfortable with, while continuing to offer users control over the usage of their BioCent tokens at all times.


Many third party wallets today offer a semi-custodial model, where users have secret keys and the wallet provider has backup keys to help you recover in case of loss.


Privacy

Another reason to not build our own wallet is because most third party applications will need to store personally identifiable information to offer their service to users. Not storing any of this information on-chain in a public way creates a layer of separation from a compliance standpoint while allowing for custom implementations for privacy preservation on an application layer.


In later implementations of the BioCents blockchain, applications should be able to encrypt some data fields in such a way that the user has control over who gets to access their data on-chain.



Governance 

This is a list of common governance actions. Initially, all of these will be under the ambit of the Foundation, and progressively decentralized, eventually becoming completely community driven.


Revenue Model

We've mentioned earlier that this is a public good. We believe that there should be no fees on money donated. Especially with the streaming payments, traditional financial infrastructure would turn out to be high cost, but with blockchains we have the solution available to us. Zero fees on all token transactions.


However, public goods survive only when they are financially sustainable to operate.


BioCents need a business model to ensure that our objectives are achieved. Hence, we propose two models



Creating an Ecosystem

Partnering with Organizations

Grassroot orgs work on ground to ensure proper conservation and restoration actions take place. The major challenge faced here is the sporadic flow of funds from corporates and philanthropies due to which the efforts fall short of the promised impact.

These are the sink of the Biocents where the money flows to. The goal of the foundation is to ensure these biodiversity loss mitigation projects are funded.

To ensure proper monetary funding, we need to establish a feedback loop wherein the efforts put in and the results are both put on chain to create a holistic and transparent monitoring and reporting system. This system is used to keep their work in check and ensure ethical fund utilization is maintained. More details on the monitoring system can be found here.


We plan to have an aggregator organization (can be the grassroot org or third party) to ensure accountability and transparency is maintained in fund utilization and proper on ground data is collected and reported. 


New projects and orgs can be onboarded through a community vote system. Every project is required to provide the following inputs to qualify for the voting stage:


BioCent Foundation is building a community of industry experts and academic researchers to moderate the project onboarding process and assist in development of biodiversity inclusive Monitoring systems.


Post approval, the project needs to follow the monitoring and reporting methodology provided by the foundation to create a transparent and digital data pipeline for biodiversity. This data will be publicly available and updated regularly for continuous monitoring.



Attracting Donors

While Biocent provides the infrastructure, developers build applications that attract donors. Biocent Foundation provides the financial infrastructure and a transparent dMRV pipeline for developers to utilize. 


Individual Donors

One of the first use case of Biocent will Flockby, a consumer application that will encourage consumers to lead more Earth-friendly lifestyles by tying many aspects of their lifestyle (content consumption, leisure activities, shopping and charity) to a giving target measured in terms of a virtual currency known as feathers based on Biocents. 


Institutional Donors

Biocents also have the potential to revamp the corporate CSR and ESG based investments wherein the impact gets tied to the biocents and can be accessed by the public globally.


As an additional sink, Biocents can be redeemed for impact credits such as carbon credits, where brands can use biocents for offsetting their emissions & footprints to achieve net zero goals.


Ecosystem Opportunities

Biocent is envisioned to be a thriving ecosystem that democratizes and distributes the roles and responsibilities of ensuring the ultimate goal of biodiversity protection. Few examples of applications could be:


Fig. Biocent Ecosystem

Monitoring Biodiversity Projects

Monitoring the biodiversity loss mitigation projects are critical for understanding the health of the ecosystems and developing effective strategies. We believe the success of the project relies on the collaboration and involvement of a range of stakeholders, including scientists, grassroot organizations, and local communities. 


The scope of developing a holistic monitoring system for biodiversity projects is to create confidence in efforts put in to  restore/ conserve/ protect / natural capital and ensure accurate accounting.


Currently, Monitoring Reporting and Verification (MRV) systems are extensively used for monitoring carbon-credit based projects. The current MRV systems have the following challenges:

To integrate biodiversity with the current MRV systems and embrace a 100% digitally-native approach, it is crucial to understand the limitations, challenges and complexity of biodiversity data. Additionally, a certain level of "outsider status" is necessary to approach the problem logically, without being influenced by outdated paradigms.

The past few years have resulted in the development of novel approaches by organizations such as Open Forest Protocol and Single.Earth that paves the way for a better monitoring of nature based projects. 

Biocent’s role is to work beyond just credit generating projects and focus and impact generation from all aspects. Hence, our monitoring system will not be limited to credit generating projects but will encompass projects that fall under any of the 6 impact categories:


Our goal is to instill the 4 pillars on which the Biocent is built on and create a vibrant and regenerative economy that thrives within the planetary boundaries. 

Regulatory Notes

There are multiple areas where we see some regulatory hurdles. Most of these are common to all blockchain projects today, but are important to disclose upfront