Money plays an important role in the relationship with the planet. For a long time its incentive structure has compelled continued physical growth that has compelled taking more and more from the earth. A philosopher that we are fond of at cLabs, Charles Eisenstein, posits that we have reached a maturity beyond the “Mother Earth” mentality. “[A] new money must embody a new story, one that treats nature not as a mother but as a lover.” Our lover Earth 🌏.
“To a lover we desire to give as well as to receive, and we desire to create together, each offering our gifts toward a purpose transcending each of us, so that our union becomes greater than the sum of our individuality.”
Recent hype and technological advancements in blockchain and cryptocurrencies have shown great promise for the possibilities in many sectors, but is it possible for energy-consuming technology to coexist, even further thrive with nature? More so, can these technologies enable us to push beyond sustainability to regeneration and to foster the growth of a more beautiful planet?
At cLabs, we believe it can. As an open source technology, Celo’s mission is to enable a financial system that creates the conditions for prosperity — for everyone. This includes our planet. To empower this aspiration, the Celo community envisions a platform with sustainability considerations from the ground up through:
- A Proof of Stake consensus algorithm
- Carbon offsetting with each block reward
- Bounties for regenerative behavior
- Natural capital-backed currencies
These span from a reduction in resource usage of the core blockchain infrastructure, to offsetting negative impact through the protocol, and finally the real world experience in cryptocurrency incentivizing regenerative behavior. Each of these builds on top of the next and beautifully paints the picture of a system built to reduce consumption, sustain, and eventually renew environmental resources.
Many of the well known blockchains like Bitcoin and Ethereum generate blocks through a Proof of Work scheme. Miners compete to solve computational puzzles such as generating hashes over-and-over until one of them achieves a desired value. Network security relies on many players. If any one organization acquires the majority of the “hashing power” they can conduct a 51% attack. Thus, many miners consume vast amounts of compute power and electrical energy performing these constant calculations just to prevent a network takeover and rarely process an actual transaction. In short, high security requires a large number of miners and costs high environmental resources.
Pulling inspiration from a few other recent crypto projects, Celo employs a Proof of Stake design, adopting a Byzantine Fault Tolerant (BFT) consensus algorithm. Through the algorithm, a set of validator nodes (the equivalent of miners) agrees on the next block by broadcasting signed messages between themselves. A decision is finalized once a quorum of validators agree. As a result, nodes only use compute power on processing each transaction once and for BFT communications. They consume about as much energy as an average mid-range server-class machine, about the equivalent of running your average consumer electric coffee maker nonstop. Additionally, a smaller pool of hardware to ensure network security means even lower operating cost. This results in a network that uses a fraction of the energy of Proof of Work.
Despite greatly reducing the energy consumption of the foundational blockchain layer, Celo still requires compute power. To address this, the protocol includes a proposal for a Carbon Offsetting Fund to make the infrastructure of the Celo platform carbon-neutral. It works by tapping into epoch rewards, similar to mining protocols’ “block rewards”. At the end of each epoch (the time frame an elected validator set runs), the protocol distributes epoch awards to participating validators, voters, and various funds including the Carbon Offsetting Fund.
cLabs partnered with Celo Alliance Member Project Wren, a Y Combinator Carbon Offsetting startup, to estimate the energy usage of the network and to allocate funds to vetted tree-planting projects. The blockchain network currently supports around 100 validator nodes in addition to unlimited other full nodes that maintain synchronization with the blockchain but do not partake in validating. These full nodes mainly serve requests from lightweight nodes on mobile devices, and their compute power is expected to be significantly lower than validators. The number of full node machines will likely grow at the rate of one full node per 3000–5000 platform participants. Other supporting services such as proxies and attestations run as Virtual Machines and consume a fraction of a machine’s computational power. To ensure the system at least satisfies carbon neutrality, the energy usage was calculated with an overestimate of 200 mid-range servers with associated data center and cooling overheads. Another assumption taken was the geographical split of these nodes as some countries source cleaner energy than others. As Celo aims to be a globally distributed system, the world average carbon intensity (0.475kg CO2e/kWh) for energy consumption was used.
Given these inputs, cLabs and Project Wren estimate the network to generate just over 800 ton CO2e annual carbon footprint. How much that costs to offset depends on the invested project. Subject to on-chain governance, the Carbon Offsetting Fund will direct resources to select tree planting projects in Kenya, Uganda, and Tanzania, The International Small Group and Tree Planting Program (TIST). TIST also supports Celo’s greater mission of prosperity for all, already providing $140 million in economic benefits and leadership building in these communities. Through this project, the yearly offset cost for the network is about $10,000. cLabs computed the fraction of the block reward distribution to achieve just over $10,000/year.