Understanding The Why Behind ReFi
If you’re anything like me, when you look around at the state of the world today it’s clear that something has gone really wrong.
This dissonance we feel largely emerges from the financial system that we were all born into and runs our life and the global economy we live in. Despite trillions of dollars of value floating around in the global financial system, we still clear cut forests and pollute waterways while people can’t access affordable housing or healthcare.
The system is designed to make those on top even wealthier and to push the masses into debt and a lifetime of wage slavery. It’s clear that this is not a problem of scarcity and lack of resources, it’s a problem of misaligned values and improper resource allocation. In our current economy, an old growth tree is worth more cut down than standing in the forest, and an elephant is worth more killed for its tusks and left rotting on the ground than roaming across the savannah.
Crypto and DeFi (decentralized finance) tools are a great leap forward in creating a financial system that is more accessible, fair, transparent, trustless and resistant to corruption, but that alone is not enough.
The ReFi (regenerative finance) movement is another great leap forward, and its participants are creating the tools for a regenerative economy, where economic value is shifted from extraction to conservation, from exploitation to collaboration, and from degeneration to regeneration.
Though the ReFi movement is still nascent, its success can lead to a future with perpetual funding for regenerative projects, place-based communities with resilient local economies, and full integration of the immense value of natural capital and ecosystem services into the foundation of our financial infrastructure.
The Problem With our Current Financial System
The global financial system that we’ve all come to know and accept as “the way things are” is accelerating the destruction of landscapes all over the world.
It’s a system that requires constant growth as a measure of health, completely ignoring any sense of the Earth’s carrying capacity and respect of natural resources limitations. It leads to the degeneration of the environment, the exploitation of communities and the conversion of sacred natural resources into profane products and services, all for personal gain.
Even worse, the very nature of this financial system being managed ‘behind closed doors’ and controlled by pseudo-governmental entities with more power than nation-states and leads to the further consolidation of power and rewarding of corruption.
In his classic work, The Creature from Jekyll Island, G. Edward Griffin says,
“To cover the fact that a central bank is merely a cartel which has been legalized, its proponents had to lay down a thick smoke screen of technical jargon focusing always on how it would supposedly benefit commerce, the public, and the nation... there was not the slightest glimmer that underneath it all, was a master plan which was designed from top to bottom to serve private interests at the expense of the public... the system is merely a cartel with a government facade.”
To go deeper into the master plan laid out for our current financial system and the immense problems it has created is beyond the scope of this post, but is covered in-detail by many investigative researchers, authors and whistleblowers.
The important take-away point is this: the legacy financial system and central bank-controlled money supply is highly corruptible, inequitable, unstable, and in dire need of change.
Moving in the Right Direction with DeFi
In the world of crypto, technologies like Bitcoin have helped to create a more accessible, neutral, transparent and fair financial system. In the same way that nearly anyone can open an email account and send an email instantly and for free to anyone in the world, Bitcoin and crypto allow you to open up a digital ‘bank account’ that is permissionless, borderless and cryptographically secure.
A core ethic of the many in the crypto community is ‘banking the unbanked’, making a global monetary system that runs on math and code available to the people all over the world that for one reason or another cannot access basic financial tools like bank accounts, high interest savings, market liquidity, loans, and quick local and international payments.
These DeFi (decentralized finance) tools are undoubtedly powerful and are a rapidly becoming a viable alternative to the corrupted, outdated monetary technology that is our current financial system.
But it’s not enough. It does little to fundamentally shift our economic culture from one of degeneration to regeneration.
As Charles Eisenstein postulates in Sacred Economics,
“Today’s economic system rewards selfishness and greed. What would an economic system look like that, like some ancient cultures, rewarded generosity instead?”
DeFi simply does not address the fact that our current economic system rewards selfishness and greed. It may even exacerbate it. There’s even a trend for people in the DeFi to refer to themselves and their colleagues as ‘degen’ or degenerate, specifically referring to someone who spends their time flipping NFTs and trading altcoins for no reason other than to make themselves money.
The ReFi Revolution
Lucky for us (and all life on Earth), many of the world's most innovative economic thinkers and crypto engineers are building the technological infrastructure needed to support a financial system that rewards generosity and regenerative activities. The ReFi (regenerative finance) space is bubbling with energy and there’s a fundamental shift in people’s perspective, from competition to collaboration, where all parties are working towards a brighter future for humanity.
The overall goal of ReFi is to restructure how currency flows through a monetary system, rewarding participation, generosity and the inherent value of the natural world.
With these tools, we can give value to a forest that allows it to be protected instead of clearcut. We can create perpetual funding mechanisms for projects that remediate watersheds. We can facilitate the emergence of resilient local economies.
I can speak to this first-hand based on my work with RegenCLT and have taken part in many calls with ReFi organizations across the spectrum that leave everyone in the zoom room with chills. As you read this, a coherent vision for a regenerative human culture and the financial system that nurtures it is emerging.
It goes without saying that the scope and complexity of each of these projects mentioned is too beyond the scope of this intro article. That said, here is a short list of some projects, teams, and DAOs working in regenerative finance.
Regen Network is creating a registry and marketplace for carbon credits and other eco-credits so that land stewards can be fairly rewarded and verification of claims, agreements & data related to ecological state is stored on a decentralized public blockchain.
Commons Stack is building commons-based microeconomies to sustain public goods through incentive alignment, continuous funding and community governance with a library of open-source, interoperable web3 tools.
Token Engineering Commons is pursuing ethical and sustainable design for token ecosystems by building an economic layer to fund projects that discover, develop and proliferate the best practices for engineering safe tokenized economies, while aligning collective success with the individual benefit of token holders.
SEEDS is a currency that aligns money with value to co-create a new economic system by using algorithms within the SEEDS platforms to incentivize collaborative and regenerative behaviors and activities for the wellbeing of the whole.
RegenCLT is facilitating the development of resilient place-based communities by acquiring land that is held perpetually by a network of bioregional community land trusts and connecting the ongoing use and stewardship of that land to regenerative funding mechanisms.
Toucan Protocol and KlimaDAO are creating tokens backed by carbon and related Web3 x carbon tools that will increasingly offset atmospheric carbon emissions and fund regenerative on-the-ground projects as their networks grow.
I highly encourage you to let your own curiosity drive your exploration of the ReFi space, and I invite you to participate in the movement in any way you can.
There is no guarantee that this will be successful, and it’s far from being complete, but you can rest assured that a growing community of people all over the world are committing their life to building a ReFi future.
