3️⃣Unique Value Proposition

To achieve the scale of carbon removal required, potential solutions need to meet several key criteria. Carrot, with its bespoke Carbon Removal Token, proposes a comprehensive and innovative approach:

1. Grading to recognize Durability: Carrot’s grading system reflects the permanence of carbon removal, with the highest grade assigned to solutions that offer sequestration for 10,000 years or more with no risk of reversal. This incentivizes the development and adoption of solutions that provide lasting carbon removal.

Every project, hence token, is graded by its endorser according to DAO set requirements.

• Grade 1: Permanent > 10,000 years

• Grade 2: Long-term > 1,000 years

• Grade 3: Medium-term > 100 years

• Grade 4: Short-term > 10 years

Graded tokens can participate in liquidity pools or other financial instruments, as grade is a proxy for the underlying value.

1. Scalability to make impact: Carrot leverages a decentralized model, empowering a network of endorsers to curate and validate projects. This allows the ecosystem to support as wide a range of solutions as possible, and scale to meet the global demand for carbon removal. Regardless of the source of CO2 and the removal method, Carrot facilitates market access and adoption.

2. Traceability to foster trust: Transparency is at the core of Carrot. Each Carrot token is indelibly linked to the project and endorsers that validated it, providing a transparent and auditable record of its origin and authenticity throughout its lifecycle. This ensures accountability and minimizes risks such as fraud or double-counting.

3. Liquidity to leverage markets: Carrot promotes liquidity in the carbon credit market by supporting the creation of independent marketplaces where buyers and sellers can efficiently connect and trade. Its unique single smart contract but multi token architecture allows for the pooling of tokens from different projects while maintaining their individual identities, which enhances overall liquidity, and facilitates price discovery.

4. Governance to ensure alignment: Carrot incorporates a robust governance mechanism to ensure the integrity and sustainability of the ecosystem. A decentralized autonomous organization (DAO) oversees the selection of endorsers and holds the power to revoke projects or endorsers that misrepresent performance. This governance framework safeguards against fraudulent activity and ensures trust.

Financed acceleration: Carrot actively supports the growth of new carbon removal projects by facilitating a crowdfunding model that drives carbon removal innovation while rewarding early buyers. This model further solidifies the distinction between ex-ante (future) and ex-post (realized) carbon removal, increasing both transparency and trust. The Seed mechanism (described in section 5) accelerates innovation, expands market capacity, and ensures a steady pipeline of new, impactful solutions.