Crédit Agricolecreator with SEB of the platform so|bond and a new blockchain Proof of Climate awaReness (PoCR) resumes the principle from competition from PoW. A difference of size nevertheless: the competition by theenvironmental footprint.
At the beginning of April, two traditional financial players, SEB and Credit Agricole CIBintroduced the so|bond blockchain platform for issuing bonds in digital format. Their promise, via a new consensus of Proof of Climate awaReness (PoCR) A sustainable and open solution.
On the occasion of the conference DIMS 2023 of the IMA, including RoyalsBlue.com is the press partner, Guénolé de CadoudalHead of Digital Assets Group for Crédit Agricole CIB, came back in detail on this project and the specificities of PoCR [Ndlr : prononcez Poker].
Blockchain finance positive for the climate
The ambition: “to make the blockchain something useful for the climate” and thus counterbalance systemic criticism of the energy consumption of this technology. To achieve this goal, CA CIB has therefore created a new blockchain (Ethereum compatible).
The project is open source and the bank hopes to convince partners to join it to continue the developments. Robust bases are nevertheless already defined. They were born from a reflection: “What more can be done on a public blockchain for the climate ? “.
Ethereum has already partly answered this question by migrating from PoW to PoS, emphasizes Guénolé de Cadoudal. The developers of the new network wanted to go further, while taking inspiration from what already exists and in particular from the way the Proof-of-Work as implemented by Bitcoin.
A public blockchain is a competition between the players who run the network. On the PoW, the competition is based on the amount of computation that can be injected into the network in order to secure it. In terms of security, the PoW is very efficient,” says the expert.
Node compensation based on environmental footprint
However, this approach has a disadvantageThe disadvantage is the intensive use of computing power and carbon-emitting infrastructures. Crédit Agricole is responding to this “finger-pointing problem” while maintaining a competitive mechanism, which has been proven to be effective.
This one persists. On the other hand, the “rules of competition” change. The operators of nodes are thus compete on the quality of their environmental footprint. The principle is to encourage participants to “be virtuous with their IT systems”. They are paid for this through a native token, the CRC (Climate awaRenes Coin).
Its distribution further encourages blockchain validators to improve the carbon footprint of their underlying computing. To take care of it, energy consumption is not the only parameter measured. The footprint of the whole hardware is taken into account, and this over its entire life cycle.
“An environmental footprint is much more than a carbon footprint,” insists the head of digital assets. Multiple indicators, each with an impact on the environment, are taken into account: the production of greenhouse gases, the extraction of raw materials, the primary energy consumed, water consumption and pollution.
An evaluation based on standards
“We have taken the four main indicatorsthat is, those that correspond to 50% of the total environmental impact,” he explains. Moreover, the calculation of this score does not focus solely on usage.
We go from the creation of the hardware, that is to say the manufacture of its various components, their assembly, transport, use in the datacenters (…) and recycling. This is what we call life cycle assessment, defined by the ISO 14040 and 14044″ standards, Guénolé de Cadoudal details.
Based on this system for assessing a node’s footprint, its operator will communicate the specifications of its IT system to an auditor – and prove them. Each node is thus assigned an EF (environmental footprint) score and all are measured according to the same methodology applied by independent auditors.
The score obtained determines the position of the node in a ranking and thus the CRC obtained. The rule of distribution of the remuneration is detailed in the whitepaper of the blockchain project, freely accessible on Github. The first in terms of ranking is awarded one token unit. For the second, it is 0.9 to the power of 2 (and power of 3 for the third, and so on).
Halving mechanisms inspired by Bitcoin
In order to prevent the supply of tokens from growing too fast, the blockchain includes halving mechanisms – a system applied in particular on Bitcoin to reduce the rewards earned by miners. “They go a little further than Bitcoin halving, but they are very inspired by it though”.
As for the value of CRC, it will be dependent on supply and demand. “It will ultimately correspond to the intrinsic value of the blockchain network and therefore of the IT service offered by it.
Crédit Agricole and SEB intend to use blockchain “more for large companies “eager to demonstrate the eco-responsible nature of the technology they operate. However, the bank’s spokesperson does not rule out uses by individuals.
He adds that PoCR is based on a proof-of-authority consensus and the Ethereum standard – and thus EVM compatible. Its operation, which implies a knowledge of the nodes, also allows the control of the origin of the tokens. This characteristic is essential for use by corporates.
This is reassuring for large companies. They can demonstrate to their compliance officers the origin of the token purchased. This allows them to set up a virtuous circle for token transfers and knowledge of their life cycle. So it’s a blockchain that will be of interest to companies that need to be eco-responsible and compliant with AML and anti-terrorist financing regulations.”
Governance in DAO mode
The governance finally. It is also inspired by the models in force in the crypto world. No private consortium as is common in the world of permissioned blockchain. “Crédit Agricole and SEB did not want to keep control”. Instead, a DAO-type governance inserted in the genesis block – an approach inspired by Tezos.
Voting rights are not dependent on the number of tokens held. Thus, each node is equivalent to one vote. For Guénolé de Cadoudal, “this avoids the concentration of power”.
And given the consensus in force in proof of authorityThe addition of a node requires the endorsement of a majority of existing nodes. An application claim mechanism and an acceptance protocol have been designed to support this process.
However, this blockchain was not developed “for fun”. It must serve use cases. The technology was used for a bond issue in partnership with SEB and for a as yet unknown client. His identity will be communicated by the summer.
The operation consisted in issuing a green bondwhich was preferable with an eco-responsible blockchain, argues the CA CIB framework. The bank and its partner were also inspired by the CAST framework opened by Societe Generale Forge in order to operate in P2P mode, without recourse to central players.
The pilot scheme, an opportunity for PoCR
None of the players is central to the scheme. The world of bond issues has several roles [Ndlr : registrar, custodian, agent de paiement…]. We wanted them all to interface with each other through a set of smart contracts.”
Several contracts are involved. The registry consists of a smart contract “with a long duration. It will be the same throughout the life of the voucher”. In addition, there are smart contracts satelliteswhich are “a way of acting on the registry without the smart contracts being under the authority of the registrar”.
These satellite contracts intervene, for example, during a transfer – which prohibits, compared to a classic ERC-20, the unsolicited reception of a token on its wallet. The contract plays a controlling role and will ensure that both parties agree on the exchange, or on the payment method – which may be CBDC or stablecoin. Coupon and redemption events will be handled in the same way via satellite smart contracts.
All software components of the V1 of the Proof of Climate awaReness (PoCR) blockchain are available in open source. The objective is to encourage other financial market players to adopt the model and to contribute to it in a logic community. Another ambition is to promote its use in the experimental projects carried out under the pilot scheme.
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