With growing global concern around climate change and unsustainable agricultural practices, many countries and major enterprises are collaborating through various international pledges to work towards a more ecologically conscious future. Hybrid smart contracts—smart contracts that combine blockchains, oracles, and API infrastructure to create advanced, interoperable applications—are quickly emerging as a way to incentivize global collaboration around shared sustainable initiatives via transparent and highly reliable data-driven automation.
While blockchains provide a way to store and enforce user commitments in a tamper-proof and public ledger, oracle networks offer a framework to validate the data used to trigger various climate rewards and penalties. These hybrid smart contracts can be applied within a variety of established climate compliance frameworks to automate actions like incentivizing sustainable business practices, promoting regenerative agriculture, issuing carbon offsets, penalizing high emissions, and more.
Building a Trusted Framework for Companies to Demonstrate Their Real-World Environmental Impact
In support of hybrid smart contracts within global green initiatives, the Chainlink Community Grants Program is awarding a social impact grant to Hyphen, a transparent data reporting framework aimed at aligning industry action and financial services with the goals and objectives of various global climate initiatives, such as TCFD, TNFD, the Glasgow Financial Alliance for Net Zero, the Montreal Protocol, the Paris Climate Accord and the Science Based Targets Initiative.
The purpose of Hyphen is to provide a better method for companies to demonstrate their real-world environmental impact according to their preferred reporting framework. Hyphen will leverage Chainlink-powered decentralized oracle networks (DONs) to fetch various climate and reporting data, analyze the data against specific climate initiatives, and then deliver various outputs to the blockchains, such as real-world impact assessments and compliance reports. The data reports can also go on to trigger further smart contract outcomes, like automated climate actions. Through independent, decentralized, and transparent verification of data reporting using DONs, the Hyphen framework is designed to help prevent and reduce climate and environmental fraud, such as inaccurate self-reporting for greenwashing purposes.
David Grimes, former President of the World Meteorological Organization and member of the Hyphen Advisory Board, highlighted the need for change in climate reporting: “The latest physical assessment of climate change by the IPCC shines a spotlight on the urgency to take more aggressive climate action to significantly reduce anthropogenic greenhouse gas emission now. Such actions, as being considered by the financial sector will enable institutions, multinationals, companies, and eventually people to achieve this outcome and will go a long way to better managing climate risk and supporting the transition to a prosperous green economy.”
One of the initial focuses of the grant is establishing a technical basis for initial data migration from the existing legacy systems for ODS (ozone-depleting substances) and GHG (greenhouse gas) datasets to a Chainlink-powered decentralized framework for emissions management under the Montreal Protocol. The first of these datasets to undergo a data migration will be Nitrous Oxide (N2O), essentially bringing both ODS and GHG data sets securely onto public blockchains instead of isolated in legacy systems.
The Montreal Protocol is an international treaty designed to protect the ozone layer by phasing out the production of numerous substances that are responsible for ozone depletion. In fact, the Montreal Protocol already mandates the collection and reporting of ODS data on a global basis. The Montreal Protocol was chosen as the initial compliance framework because it has been shown, such as through a study published in Nature, that protecting the ozone layer is highly effective in preventing a range of catastrophic climate effects. The role of N2O as both an ODS and a GHG provides one potential bridge for connecting the Montreal Protocol to the Paris Climate Accord.
Hyphen Global aims to accomplish three key objectives for its initial decentralized oracle-based reporting model:
- Identify the appropriate data collecting partner within the Montreal Protocol emissions monitoring agencies (e.g. NOAA, ICOS, IG3IS), enabling Hyphen to access N2O data.
- Develop an API service that the data collector in the Montreal Protocol emissions monitoring agencies can use to feed into Hyphen Nodes for an initial collection of data. This includes the detailed, open-source documentation of the API.
- Develop open-source Chainlink External Adapters to get data from the API into the blockchain environment using Chainlink oracles, opening up a variety of hybrid smart contracts based on climate actions.
Alex Vermeulen, Director for ICOS Carbon Portal, indicates, “ICOS is committed to providing high-quality data on greenhouse gas concentrations and emissions and we are constantly striving to expand our network to more countries and now also to urban areas. Our unique data is essential when verifying how the reductions of greenhouse gas emissions really proceed, and how the Earth is reacting to the ongoing climate change. We are happy to see that the business world and banks recognize the value of the reliable and transparent ICOS data in order to take larger and faster climate actions, and we look forward to making it accessible also on-chain through Chainlink’s time-tested oracle infrastructure.”
Over the longer term, Hyphen wants to create a viable pathway for the use of the Montreal Protocol as a climate mitigation framework built upon blockchain and oracle technology, enabling faster and more reliable actions by governments, corporations, and the banking and finance sectors strategically planning to combat climate change and to prove their commitments to sustainability and Net Zero.
“The ability to access trusted, verified sources of emissions data has the potential to provide a new level of transparency and accountability to climate risk reporting,” stated Miles Austin, CEO of Hyphen Global. “Collecting, aggregating, and delivering this data on-chain via Chainlink decentralized oracle networks will give rise to new climate reporting ecosystems able to unlock the full potential of initiatives, such as TCFD, GFANZ, SBTi, in order to address the increasing ‘green swan’ risks to the finance and banking sectors.”
Through the Community Grants program, Chainlink continues to empower innovative teams, academics, and social impact projects which research and develop key tools and infrastructure that accelerate the adoption of hybrid smart contracts, secure oracle networks, and cutting-edge technology capable of creating a more economically fair world.
About the Chainlink Grant Program
If you want to learn more about the Chainlink Community Grant Program, check out our recent blog post that further expands upon its goals and the criteria for submission. We encourage talented individual developers and development teams to apply to the grant program here, or if you’re a researcher and want to collaborate, contact us. Chainlink Community Grants are provided in cash and/or LINK.
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