4.3 NFTs as Licenses in the Carrot Ecosystem

In the Carrot ecosystem, NFTs serve as functional licenses, granting specific permissions and rights to the holders. There are two types of such NFTs:

• Endorser NFTs: These NFTs are granted by the DAO to organizations recognized as legitimate to select and endorse carbon removal projects. Endorser NFTs function as licenses, granting the holder the authority to curate and endorse projects. These NFTs are non-transferable and can be revoked by the DAO if the endorser violates the trust of the ecosystem. Endorsers can mint sub endorsers if they want to create categories of projects.

• Project NFTs: Such an NFT is minted by an endorser for each approved carbon removal project. Project NFTs grant the holder the right to mint project-specific Carrot tokens, representing the tons of CO2 removed by that project. Similar to endorser NFTs, project NFTs are non-transferable and can be revoked by the endorser or the DAO if the project misrepresents its performance. Project NFTs refer to their parent endorser. The parent endorser specifies a maximum minting rate to protect the ecosystem from being flooded by runaway minting or bad actors.

The use of NFTs as functional licenses provides a transparent and secure mechanism for managing permissions in a decentralized way and ensuring accountability within the Carrot ecosystem. The immutability of NFTs on the blockchain provides a permanent and auditable record of endorsements and project approvals, enhancing trust and confidence in the ecosystem.