Carrot Network: Unified Layer for the Circular Economy

Purpose: Carrot is a blockchain network whose mission is to accelerate the transition to a resource-efficient, low-carbon and inclusive circular economy by scaling recycling rates to upwards of 90% in our focus countries within 10 years. By doubling the current circularity rate, we could address 85% of global GHG emissions reductions needed to stay below 2 ºC (Circularity Gap Report), making the circular economy one of the most effective solutions to combat climate change. Introduction: Carrot provides a globally scalable and economically practical solution to increasing circularity rates. Our dMRV technology meticulously tracks waste through the recycling supply chain, certifies recycling, and mints the associated recycling and carbon credits via peer-reviewed, third-party methodologies. Upon credit sale, revenue is automatically distributed to the recycling participants whose circularity work led to the creation of each individual credit, completing a transparent value flow loop.

Credit sales place a value on environmental work, recycling by waste type, and avoided carbon emissions (from recycling instead of extracting and processing raw materials). Automatic credit revenue distribution acts as a direct investment into recycling infrastructure and incentivizing increased recycling participation –– bridging the gap between the cost of recycling versus landfilling, which is paramount to leading (with a Carrot and not a stick) the transition from a linear to a circular economy.

As our network of recyclers and recycling service providers grows, so does their aggregate up-chain reach and incentive to onboard Waste Generators (businesses or individuals who produce waste). If the waste generators are identified in a supply chain and have properly sorted waste, the associated recycling credit sale then distributes a portion of revenue to the waste generator. Additionally, when Waste Generators are identified, revenue distribution is also then increased to all other down-chain recycling participants, creating another potent incentive mechanism for down-chain participants, such as haulers and recyclers, to onboard their waste generators, leading to increased sorting rates, fully digitized supply chains, and greater depth to the data embedded within each credit. Properly sorted waste is paramount as it drastically reduces the costs of recycling, and in many cases, the sorting of waste is the primary factor in whether recyclable materials end up being recycled or simply landfilled. These sustainable incentive models, coupled with Carrot’s technology, create the foundation to creating system change in the waste industry and transitioning to a circular economy.

Project Impact: This is our first time applying for a GG or Climate Solutions Round Grant. However, in the past year, Carrot has completed building out its v1 technology stack, MVP UX/UI, and tracked ~32,000 tons of organic materials through their supply chains to six composting facilities in Brazil, leading to ~39,680 tons of avoided methane emissions. Methane is a potent greenhouse gas with 84x the global warming potential of CO2. We are currently going to market with the 32,000 tons our first recycling credit type, Breakthrough in Organics Landfill Diversion (BOLD), created with the BOLD Methodology, whose value packages in avoided methane and several other positive externalities. Our projections for 2025 are to grow volume in recycled tons to 279,000, and to 907,000 in 2026.

On a smaller scale pilot project, Carrot’s founders successfully implemented a Pay-As-You-Throw program for food waste, glass recycling, and commingled recyclables at 85 bars and restaurants. Four composting facilities were born from the initiative, as well as the first service in the country for glass pickup and shipment to a glass bottling plant more than 900 kilometers away, which was possible by only adding a US$10/ton fee. Within 6 months, recycling rates improved from less than 3% to more than 93%. The total volume of landfill diversion per month reached 143 tons, generating more than US$10k per month in service fees, which supported ~49 jobs. A total of 522 tCO2e per month were avoided through composting (when factoring in the green waste), an estimated 122.6 tCO2e from other recyclables, as well as 18 tCO2e from carbon capture, for a total of 663 tCO2e per month.

Use of Funds: In order to scale, and to truly create system change, to address climate change in our launch country (Brazil) and our following focus regions (EU/USA), we need to successfully sell our initial batch of 32,000 tons of BOLD credits. The recycling industry is very low margin, and as soon as Carrot can demonstrate revenue distribution flowing to our current recycling partners, onboarding additional recyclers will be extremely easy (we have high levels of interest from most of the largest recyclers in Brazil and conversations with key players in California and Switzerland). This then enables exponential growth of tracked, high-performance recycling and the resultant credit volumes. Carrot Network also receives a portion of revenue distribution. This means that high enough credit sales will allow Carrot to become self-sustaining and to self-finance development and growth, expanding our ability to address climate change without the need for additional fundraising. Our Network stakeholder model is very demand side driven, making BOLD sales the catalyst for Carrot Network growth, financial sustainability, proof of product market fit, and building credibility within the recycling industry and credit markets.

With the utmost importance of BOLD and Credit sales to activating our model being stated, Carrot will use the funds to accelerate our sales function to achieve the above mentioned key outcomes. Our sales team is currently extremely lean, and only includes our two co-founders (who have huge workloads outside of sales) and one additional employee who is a veteran in the carbon credit industry. We have made significant progress in the development of our sales pipeline and in negotiations with potential institutional buyers of BOLD credits in the last month since beginning our sales outreach efforts. This gives us complete confidence in the disproportionately high network, and eventual resultant environmental impact, of each dollar used in expanding our sales team. We are also Headquartered in Brazil, where it is roughly 5x cheaper to hire than in the USA or EU, allowing for highly efficient use of funds and bootstrapping.

Team: Ian McKee: began his career in finance (Goldman Sachs), then spent 15 years working on large sustainability projects before becoming a tech founder (now on his 3rd venture). Ian is an accredited LEED AP and TRUE Zero Waste professional, an advisor to the Zero Waste International Alliance, and the program director of the Ecozinha Institute. He launched a movement for a Green World Cup in Brazil, certified the 1st LEED Gold stadium in the world and was a speaker at Rio+20, Greenbuild, and SmartCities Summit, among others.

Marcelo Doria: is a serial entrepreneur with experience in media production, sports business, advertising, and big data. Marcelo was the CEO of a Sports Agency firm (took the X-Games to Brazil and led the Brazilian National Basketball back to the Olympic Games after a 15-year hiatus)and has negotiated more than $100 mn in deals.

Rafael Bertolli: Our Chief Product Officer and CTO is an enthusiastic developer of digital products with more than 15 years of experience in fintech and e-commerce. Before Carrot, Rafael served as Director of Product Management at VTEX, and is also a former Founder & CEO of Yamí, a fintech company that was sold to PagSeguro / PagBank.

Silvan Adermatt: Is a Carrot Foundation Director, and a Foundation Council member and expert in Swiss legal, financial and digital asset management. Silvan is a serial entrepreneur and advisor to blockchain and FinTech companies. Expert in Swiss Foundation management with a passion for sustainability. Masters in Law and an MBA with advanced studies in Blockchain and FinTech.

We have 15 other FTE who can be seen in our linked deck in the following section of this grant application.

Additional Information and Documentation Links:

Deck

Whitepaper

BOLD Methodology

Carrot LinkedIn

If any GG21 participants are connected with sustainability leaders at corporations or elsewhere, any introductions would be greatly welcomed =). We have not yet opened a community TG/Discord but will later this year.