This is a chapter from the book Token Economy (Third Edition) by Shermin Voshmgir. Paper & audio formats are available on Amazon and other bookstores. Find copyright information at the end of the page.
Rebalance Earth developed a token system to incentivize the preservation of keystone species like African forest elephants with biodiversity tokens. The aim was to fund local communities to protect the forest elephants through the issuance and sale of tokens that represent a mix of carbon credits (referring to the elephant’s carbon sequestration services) and biodiversity credits (referring to the elephant’s contribution to the survival of other plant and animal life).
Disclaimer: This analysis is based on information provided by Walid Al Saqqaf and Tony Vernall of Rebalance Earth during a series of interviews. The token system described was still under development, with its implementation contingent on political support from participating governments. At the time of research, Rebalance Earth was preparing to launch a pilot project in collaboration with the Liberian government and various local and international partners. The elephant-focused initiative discussed here was one of several biodiversity projects Rebalance Earth was designing.
Various scientific studies and wildlife organizations estimated that the African forest elephant was at risk of extinction, which posed a severe threat not only to the species itself but also to other local plant and animal life dependent on its existence. Moreover, the loss of forest elephants significantly affected carbon capture in their habitats. Forests in the Congo Basin—where these elephants roamed—were found to contain 7 percent more above-ground carbon compared to forests where elephants had already disappeared. The International Monetary Fund valued the carbon sequestration services of African forest elephants at 1.75 million USD per elephant over a 60-year lifespan, emphasizing that protecting these animals could preserve critical carbon capture capacity.
Based on these findings, Rebalance Earth conceptualized a tokenized circular economic model to tokenize the “ecosystem services” of elephants by issuing ECO tokens, representing a blend of carbon credits and biodiversity credits. These tokens could be sold on voluntary carbon markets and other sustainability markets where organizations and individuals could purchase these certificates to offset their ecological footprints, directly funding elephant conservation efforts. The idea was to redistribute this income to local forest rangers and communities living alongside the elephants, creating a new revenue stream to incentivize their protection. By tokenizing proofs of biodiversity protection, the project aimed to establish an innovative funding mechanism that combined elements of carbon markets, micro-financing, and conservation funding while improving the transparency and reliability of biodiversity management practices.
This approach reframed the pity narrative around endangered species into a value-generation model. Based on the data collected, previously unvalued animals could be assigned a global ecological value as a common good or natural capital asset. Rebalance Earth worked with local communities in Liberia to co-design a system for distributing revenues generated through micro-investments. The goal was to serve the specific needs of these communities while ensuring the protection of elephants and their habitats. The Liberian pilot project was intended as a test case, seeking to demonstrate the feasibility of purpose-driven tokenization as a new type of environmental economic model.
The project initially focused on one national park and a single species to test the assumptions of the planned token system and gain practical experience. Plans were in place to expand the system to other countries and keystone species, such as ocean animals like whales, whose carbon capture and sequestration services had been valued by the IMF at 2 million USD per whale.
Purpose & Political Principles
At the time of writing this book, there is no adequate public accounting system for tracking the negative externalities of human activities, such as the loss of biodiversity. The benefits of protecting keystone species, such as forest elephants, are not adequately accounted for by existing economic systems. Governments and NGOs typically fund conservation efforts for elephants and other species, aiming to prevent their extinction or preserve them for tourism. The ecosystem services these species provide—like water retention, soil quality, and biodiversity maintenance—often go unnoticed and are not accounted for.
Forest elephants, for example, create their own water sources, which smaller animals also use. When these elephants go extinct, this critical ecosystem service is lost, impacting the surrounding flora and fauna as well as oxygen production and carbon dioxide sequestration. The only exception is CO2 capture and sequestration, which—despite its shortcomings—has an established market value in the carbon market. Meanwhile, live animals are generally treated as collectors' items or agricultural assets, with their value tied to private goods such as the sale of ivory.
The purpose of the Rebalance Earth project was to design a tokenized model that accounts for these externalities through the backdoor of carbon credits by providing financial rewards to local communities for their conservation efforts. Their goal, as stated on their website, was to “drive the transition to a nature-based economy by enabling the flow of private capital to protect and restore nature” via a system that incentivizes the communities that can protect their natural capital (i.e., forest elephants) and lets them co-govern the system. Their main political goal was to give market value to keystone species in the form of natural capital assets.
Based on scientific data, they wanted to create a new economic narrative and the necessary technological infrastructure to enable a transparent and traceable circular economy of funding sustainable economic activities that protect biodiversity. This approach stands in stark contrast to our current economic system, which only rewards the production of private goods, resulting in the accumulation of private property, while failing to incentivize the collective protection of public and common goods with adequate market mechanisms.
Functional Design
Elephants are not valued as natural capital assets since most of the common goods they directly and indirectly contribute to (soil quality, water retention, biodiversity protection, and oxygen production) currently have no direct market value. There is no publicly verifiable data regarding the elephants’ production of common goods, and as a result, there are no market incentives to protect them. To counter this, Rebalance Earth designed a system with the following functionalities:
- Giving a market value to the public goods produced by keystone species: Conservation efforts are typically underfunded, relying on taxpayer money and donations. In some countries, the protection of elephants has been particularly challenging due to limited resources. Protecting elephants from being killed by poachers or farmers affected by their presence has therefore been a difficult task. The functional solution to this problem was to measure the ecosystem services elephants provide and create additional revenue streams from their existence. This revenue would be generated based on proof-of-elephant per elephant per day, which would then generate a certain amount of ECO tokens. The system would track, account for, and monetize data related to the existence of a particular elephant at any given time, issuing tokens on a publicly verifiable infrastructure.
- Proof-of-Elephant, elephant NFTs & ecosystem services accounting: The question was how to identify and count elephants and issue sustainability credits for the ecosystem services they produce per day. A combination of human oracles (data collected by humans and fed into the network) and hardware oracles (data collected by a network of Internet-connected sensors) was proposed. First, each elephant would need to be identified, and an identity-based token could be issued upon first identification. Camera traps or other sensors could collect real-time data, tracking all elephants within the national park. Where digitization and automation were not possible, human experts such as conservation groups, scientists, and forest rangers would collect the data. That data would then be attributed to the respective elephant's identity token. Based on the collected data, ECO tokens could be attributed to each particular elephant and issued each time proof confirmed the elephant’s existence based on the number of days it had been alive.
- Alternative conservation funding: Once issued, these ECO tokens could be sold by the system operators on voluntary carbon markets and other sustainability markets. The proceeds could then be redistributed to the communities that cohabit with the elephants as an incentive to protect them:
- Forest rangers: Part of the proceeds from selling ECO tokens would fund the salaries of additional forest rangers, improving the working conditions of existing rangers, who are often underpaid or unpaid for long periods—making them vulnerable to corruption. However, rangers can only protect elephants within park boundaries; they cannot address the issue of farmers killing elephants on their own land due to inadequate park fencing.
- Farmers & local communities: While farmers could build electric fences to protect their land and crops from trespassing elephants, they often cannot afford to do so. Biological solutions to keep the elephants away—such as cultivating beehives and chili plantations—would be an alternative fencing strategy that could even generate additional income streams. However, many farmers do not use these methods and instead resort to shooting elephants when they trespass on their land. The idea was to allocate a portion of the revenues from ECO tokens sold to fund alternative solutions such as electric fences, beehives, and chili plantations.
- Web3 Infrastructure: To resolve many corruption and accountability challenges that current carbon markets face, the issuance of ECO tokens and the redistribution of tokenized revenues generated from their sale would be facilitated by blockchain infrastructure.
Funding, Governance & Protocol
The project was governed by a Community Interest Company established in 2021, which worked on developing the complex legal, economic, and technical protocols to enable national, local, and international stakeholders to interact with each other based on a tokenized governance infrastructure.
Given the diverse nature of the stakeholders—such as governments, national park authorities, carbon market certifiers, and local communities—the system was not designed as a fully decentralized organization solely reliant on Web3 protocols. Instead, the founders created purpose-driven tokenized incentives tailored for a multistakeholder network, but agreements were formalized through bilateral legal contracts, not blockchain-based organizations governed by smart contracts. Blockchain infrastructure would only facilitate specific elements of the system, such as monitoring elephants, issuing tokens, and distributing funds. For compliance with securities laws, financial market regulations, and other practical considerations, the founders planned to integrate legacy financial systems at the system’s fringes, at least during its initial iterations, until these regulatory and operational challenges could be addressed.
The plan was to divide the proceeds from ECO token sales among three key beneficiaries: 5 percent to forest rangers, 70 percent to local communities, and 25 percent to Rebalance Earth for maintaining the technological infrastructure, coordinating governance, and conducting research and development. Funds allocated to local communities would be used for initiatives such as education, beehive cultivation, and chili plantations. Additionally, they would be able to support micro-financing for local needs, such as building clinics or schools. Governance decisions by community representatives would determine the specific allocation of these funds. At the time of writing this book, it was still unclear how the different conservation projects (such as the Liberian Forest Elephant use case) should be governed on a day-to-day basis and how centralized or inclusive the system would be.
Token Types & Token Properties
The founders conceptualized a multi-token system with the following tokens: (i) CREDIT tokens, which were purchased against fiat currencies by investors. (ii) ECO tokens, which were minted upon proof-of-elephant per day and tied to the Elephant ID. (iii) CURRENCY tokens, which were allocated to predefined beneficiaries of the proceeds.
- CREDIT tokens were purchased with fiat currency by investors seeking to offset their carbon and ecological footprints. Initially, CREDIT tokens were sold exclusively to accredited investors on the Rebalance Earth platform. They acted as vouchers that could later be redeemed for ECO tokens once the system went live. The token was designed to be fungible but non-transferable. To receive ECO tokens, investors needed to sign legal agreements specifying the money they were willing to invest, paying in USD. The issuance of CREDIT tokens was limited to the number of elephants estimated in the national park. An app would provide investors with a visual overview of how many ECO tokens had been minted, which elephants generated them, and how their invested funds would be allocated. The project started out with accredited investors only, but the idea was that future iterations of the project would allow ECO tokens to be sold on public carbon markets, opening participation to retail investors.
- CURRENCY tokens were USD-backed payment tokens created when investors purchased CREDIT tokens, at which point the USD used for payment was held in escrow to back the CURRENCY token. CURRENCY tokens were designed to be transferable and fungible. CURRENCY tokens would be destroyed upon sending USD via legacy financial services to the whitelisted bank accounts of the recipients, such as forest rangers or community representatives. While manual and off-chain processes dominated the first iteration for regulatory and practical reasons, more automated processes were planned for future phases.
- ECO tokens: The idea was that after the pilot project was launched, an ECO token would be minted for every day an elephant was sighted alive and well. ECO tokens would not be minted for the days an elephant was not sighted by forest rangers but could be issued retroactively for the days they were not sighted upon their return to the national park. This process was designed to be manual in the initial phase and automated with sensor data at a later date. Once issued, the ECO tokens would then be distributed to the wallets of the respective investors who had previously bought CREDIT tokens. Their issuance also triggered a financial flow of funds, upon which CURRENCY tokens would be distributed to the predefined beneficiary groups (forest rangers and farmers).
Stakeholders
Rebalance Earth is a privately funded UK-based Community Interest Company, established in 2021, with the role of developing and maintaining the protocol and conducting research. They developed and deployed the Web3 infrastructure, including the sensor network and token economics, while seeking certifications from standardization bodies such as Verra. The certification process, a cost-intensive procedure that can take up to 24 months, is essential for selling tokenized certificates on standardized carbon markets.
- Elephants are the key stakeholders whose existence underpins the system, and their protection is the goal. Without them, the token system collapses.
- ECO token buyers fund conservation efforts by purchasing certified “carbon-plus” credits, initially targeting institutional buyers. Initially, only accredited investors could participate in the system. Retail buyers were expected to participate in future project phases after certification by Verra.
- Forest rangers: In addition to protecting the elephants from poachers and other dangers, their role is to visually identify the animals, perform DNA testing of elephant dung, and manually input data into the system, as electronic tagging was not feasible in the initial stages.
- National park authorities manage species protection, pay rangers, and collaborate with conservation groups (including Rebalance Earth) that operate within participating national parks.
- Other conservation groups and NGOs such as “CMS,” “Fauna & Flora,” and “Born Free,” could participate by providing expertise on ecosystems, local communities, and biodiversity and supplementing data collection efforts with existing camera traps and sensors.
- Local communities: Farmers and their families are the most affected by migrating elephants when they leave the national park. They have the choice to save the elephant if it encroaches on their territory, despite having the legal right to kill it. Their role is to mitigate human-wildlife conflict by adopting measures like building fences or cultivating beehives and chili plantations to keep elephants away from crops. The role of community leaders would have been to help govern the allocation of funds to such initiatives and additional local infrastructure projects, such as building clinics or schools.
- Carbon markets and the standardization of more comprehensive sustainability certificates, especially on voluntary carbon markets, influence the ECO token.
- Certificate standardization bodies such as Verra and Gold Standard play a pivotal role in voluntary carbon markets and are the gatekeepers of these markets. Verified certificates typically achieve higher market prices as institutional buyers prioritize them to avoid greenwashing accusations. Rebalance Earth's goal was to align its operations with these standards to ensure the highest market credibility.
- International treaties like the Kyoto Protocol, Paris Agreement, and UN Sustainable Development Goals (SDGs) shape the moral and legal obligations of governments to support sustainability projects. Article 6 of the Paris Agreement, which was ratified in 2015 and took effect in 2016, dictated how carbon markets should evolve and impacted Rebalance Earth’s token economy. Any future development of these agreements and treaties will affect carbon markets and the token economic model of Rebalance Earth.
- Legal precedents: There has been a growing number of legal actions—generally referred to as “climate lawsuits” or “climate litigation”—where individuals, NGOs, and even governments file lawsuits against public and private institutions, seeking to hold them accountable for their contributions to climate change and inadequate efforts to mitigate its impacts. This has led to the emergence of legal frameworks for climate litigation. Courts in various countries have been willing to hear climate-related cases. These recent developments will likely influence the demand for ECO tokens on voluntary and potentially also mandatory markets.
- Government entities responsible for environmental policymaking & policy enforcement also grant “Sustainable Development Concessions,” which aim to prevent double issuance of CO₂ certificates and ensure compliance with SDGs. These concessions are critical for selling restoration and conservation project certificates. Government entities also manage the national parks. Their willingness to participate in the system proposed by Rebalance Earth influences the viability of the initiative.
Power Structures
The UK-based company designing the Rebalance Earth system had the power to shape initial policies, define stakeholder roles and rights, and establish the economic framework of the token system. However, this power was contingent on the cooperation and goodwill of national and local governments, particularly in Liberia, which determined the terms of their participation, if they chose to engage at all.
The company’s success also hinged on the collaboration of conservation groups and scientists, whose role was to provide essential expertise and resources, including access to existing sensor data. Furthermore, the project’s viability depended on the willingness of local communities to engage with the system, the conditions of carbon markets, prevailing social practices, regulatory frameworks, and the evolution of relevant international treaties.
Since the system remained conceptual and never became operational, it is difficult to predict the power structures that might have emerged. Future dynamics would have depended on the finalized governance rules, the economics of the ECO token, and the distribution model that allocated revenues among beneficiaries and defined their obligations. The system’s success would have required the political goodwill of all essential stakeholders. The governance rights of local communities, directly impacted by the token economics, would have been critical in assessing the system’s inclusivity and sustainability.
Challenges & Outlook
Rebalance Earth presented a compelling use case. If successful, it could have addressed many negative externalities of the current economic system by creating an accounting framework for ecosystem services of keystone species. However, the ambitious goals of the founders faced several simultaneous challenges:
- Multi-stakeholder challenges: One major obstacle for the founding team was achieving consensus among all stakeholders. This was essential for the success of the pilot projects, particularly given the constraints imposed by local social practices, banking systems, regulatory boundaries, and the need for the goodwill of all involved parties.
- Carbon-centric markets that fail to incentivize holistic biodiversity protection: Another significant challenge lay in the certification process. Not only was it lengthy and costly, but existing CO₂ certification standards did not account for carbon sequestration services provided by animal life, such as forest elephants. At the time of writing, certification authorities primarily focus on carbon sequestration linked to tree planting and do not address the indirect carbon benefits mediated through keystone species and their impact on ecosystems.
- Permission challenge: Ensuring accurate carbon capture accounting was critical to avoiding double-counting sequestration services. Rebalance Earth needed to negotiate exclusive permission from the Liberian government to manage elephant-related sequestration services. This process was time-intensive and heavily dependent on the government’s cooperation, which ultimately determined the feasibility of the project in that country.
- KYC/AML compliance: The distribution of investor funds, which is regulated by securities laws, is subject to stringent international Know-Your-Customer (KYC) and Anti-Money Laundering (AML) requirements. These regulations posed additional challenges, particularly in underbanked regions where many individuals lacked bank accounts and relied on cash or cash equivalents. These hurdles needed to be addressed to ensure the system’s compliance and operational viability.
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Footnotes
[1] https://www.newsweek.com/wwf-african-elephants-extinct-2040-1472697 https://www.iucn.org/news/species/202103/african-elephant-species-now-endangered-and-critically-endangered-iucn-red-list https://www.theguardian.com/environment/2016/aug/12/elephants-on-the-path-to-extinction-the-facts
[3] “Ecosystem services” is a holistic term that became popular with the Millennium Ecosystem Assessment by the United Nations in the early 2000s. It refers to the maintenance of balanced ecological systems – both the organisms and the physical environment with which they interact - such as agroecosystems, aquatic ecosystems, grassland ecosystems, or forest ecosystems - analyzing the impact of biodiversity loss on the provision of clean air, water, waste decomposition, climate stability, and food quality. It is an interrelation that scientists and environmentalists have discussed for decades, if not centuries, but the fallout of which is only now becoming evident to the general public. Ecosystem services also encompass the ability of CO2 to be captured by plant and animal life and in geological formations. However, CO2 is only one of many factors, next to soil quality, water retention, water quality, biodiversity maintenance and many others. As of today, only CO2 has a market, but certain standardization bodies are starting to include so-called “biodiversity offsets” into the equation when issuing CO2 certificates.
[4] https://www.imf.org/Publications/fandd/issues/2019/12/natures-solution-to-climate-change-chami
[5] https://www.rebalance.earth/
[6] The Sustainable Development Goals (SDGs) were born at the United Nations Conference on Sustainable Development in Rio de Janeiro in 2012. The objective was to produce a set of universal goals that meet global challenges. The Sustainable Development Goals are organized into 17 goals, which cover 169 more detailed targets. They cover social, environmental and economic aspects, and they often influence each other, which means that they cannot be dealt with in isolation. Environmental sustainability, however, is only one goal among several other interdependent sustainability goals, such as social sustainability and economic sustainability. Carbon offsetting is only one of many tools in the global attempt to achieve environmental sustainability by fighting biodiversity loss, climate change, soil erosion, etc.
[7] ESG is a method of evaluating the extent to which a company works on behalf of social goals that go beyond the role of a corporation to maximize its shareholders’ profits. ESG is inspired by the Sustainable Development Goals (SDGs) ratified by the United Nations in 2015. The term ESG was introduced in 2004 by a joint initiative of financial institutions at the invitation of the UN. Reliance on ESG ratings agencies to assess, measure and compare companies' ESG performance has increased over the years.
[8] Greenwashing is when a company purports to be environmentally conscious for marketing purposes, but isn’t taking the necessary actions to reduce their carbon footprint. For example, instead of investing in transforming their processes to hit Net Zero targets, they prefer to do carbon offsets via voluntary markets, as this is usually cheaper.