<aside> ❕ Important Note: This is a living, iterative document.
The process for creating this page is through open, collaborative work sessions based on reviewing the writings & input from many ReFi leaders & voices, reflecting on & synthesizing key concepts from articles, blog posts, tweet threads, & discussion.
versión en español **aquí** (thank you Tereza from ReFi Medellin for translating!)
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A collaborative effort to collectively answer “What is ReFi?”
Regenerative Finance, commonly known as “ReFi”, is an emerging global cultural movement and field of finance that seeks to create economic systems, practices, and strategies that support regenerative and restorative outcomes in ecological and social systems. ReFi's core principles involve the reorientation of financial & economic systems away from extractive, exploitative & degenerative practices towards sustainable, inclusive, resilient, and regenerative models which account for externalities and prioritize ecological harmony and holistic capital.
While standing for Regenerative Finance—a term with history stemming from the field of Regenerative Economics—the “ReFi” abbreviation has origins stemming from the DeFi (Decentralized Finance) movement, and it is often used specifically in reference to the application of Web3, Distributed Ledger Technology (DLT), AI (Artificial Intelligence), dMRV (digital Measurement, Reporting, & Verification) and other advanced technologies in supporting the visions and practice of Regenerative Finance.
ReFi marks a paradigm shift from conventional, extractive economic models. Historically, these models have prioritized the extraction of natural resources for financial gain, often disregarding social and environmental consequences which are approaching critical tipping points . By contrast, ReFi practitioners, or “Regens”, aspire to establish non-extractive economic systems which instead place value on living systems, biodiversity, resilience, and natural capital. These systems place ecological benefits and the well-being of the planet and its people at their core.
Regens value collaboration over competition. They champion transparency and the stewardship of public goods and commons. Moreover, they embrace whole systems thinking and social equity. They also seek to learn from indigenous knowledge and dismantle the socioeconomic structures stemming from colonial and imperial practices. The ReFi cultural movement extends beyond changing financial infrastructure. It aims to transform social narratives and politics, fostering a better world rooted in ethics, consciousness, and distributed technology.
The underpinnings of ReFi can be traced back to the early 20th century with innovative ideas around monetary policy and economic theory. In 1916, economist Silvio Gesell proposed the concept of "Freigeld," a currency designed to encourage economic activity through a negative interest rate, which discouraged hoarding and aimed to improve the economic status of those in poverty.
In the subsequent century, various scholars and economists further shaped the theoretical basis of ReFi. John Fullerton argued that money, beyond its practical utility, was a reflection of a society's spiritual and cultural values. This line of thought was echoed and elaborated upon by Charles Eisenstein in his thesis, "Sacred Economics". Eisenstein postulated that money served not just as a medium of exchange or store of value, but also symbolized societal values and moral systems, reinforcing the idea that economic systems are inherently tied to social and ethical structures.
source: https://capitalinstitute.org/8-principles-regenerative-economy/
The feasibility of communal and sustainable economic systems was exemplified by Elinor Ostrom's research on common-pool resources. Contradicting traditional wisdom, Ostrom demonstrated that communities could sustainably and equitably manage shared resources through cooperation and trust, a paradigm shift that earned her the Nobel Prize in Economics in 2009.
The holistic approach of ReFi aligns with Kate Raworth's "Doughnut Model," which defines a range of economic activity that is both sustainable for the planet and sufficient to meet basic human needs. This model establishes both a lower limit for social foundations and an upper limit for ecological ceilings.
In 2011, Gregory Landua & Ethan Roland published “the 8 forms of Capital” which expands the traditional idea of capital, incorporating Social, Material, Financial, Living, Intellectual, Experiential, Spiritual, and Cultural Capital. This comprehensive framework redefines wealth, factoring in various resources beyond financial, and facilitates a more holistic view of societal interactions.
More recently, the practical implementation of ReFi has been seen since 2018 in initiatives like Gitcoin Rounds, showcasing how these economic theories can be put into practice.
And then in 2022 we have the self-published book & movement launch, “GreenPilled: How Crypto Can Regenerate The World" by Kevin Owocki. It focuses on cryptoeconomic systems that create positive externalities for their neighbors and the world, exploring how cryptocurrency and blockchain technology can be leveraged to foster regenerative and restorative outcomes.
Collectively, these key events and developments have laid the philosophical and practical foundation for Regenerative Finance, setting the stage for a new economic model that aligns financial practices with the restoration and enhancement of social and natural capital.
You can explore more key events that shaped the ReFi movement using this interactive Miro board:
https://miro.com/app/board/uXjVM_gjiM4=/?share_link_id=534042235903
In addition to foundational concepts like web3 & Regenerative Economics, many ReFi projects have ties to multiple social, environmental, and economic initiatives & adjacent technologies. These include Regenerative Agriculture, emphasizing soil health and carbon sequestration, and Circular Economic models, which promote reduced waste through material recycling, Renewable Energy sources to minimize greenhouse gas emissions, Social and Economic Justice Policies advocating for equity and indigenous inclusion, and Carbon Markets & Payments for Ecosystem Services (PES) to regulate carbon emissions & incentivize preservation of ecosystem services.
The movement towards ReFi is also closely linked to the concept of planetary boundaries and thresholds depicted in Joe Brewer’s book The Design Pathway for Regenerating Earth, which seek to define a 'safe operating space' for humanity that doesn't jeopardize Earth's ecological systems. The online culture in ReFi also shares some similarities with Solarpunk.
The principles and practices of ReFi provide a stark contrast to those of Traditional Finance (TradFi). While both models share the aim of facilitating economic transactions and growth, their methodologies, guiding philosophies, and ultimate objectives often diverge significantly.
soure: https://blog.toucan.earth/what-is-refi-regenerative-finance/#comparison
Traditional Finance is characterized by centralization and opacity, where a few entities or "controllers" dominate decision-making and understanding of financial systems. However, ReFi fosters transparency and decentralization, empowering individuals and promoting broad financial participation.
A key characteristic of ReFi is its commitment to equitable access. In the realm of Decentralized Finance (DeFi), often employed in ReFi projects, all actors—regardless of capital or banking services—can enjoy equivalent conditions, such as interest or exchange rates. This inclusive stance contrasts with the exclusionary practices of traditional finance, which often favor those with significant capital. ReFi overcomes geographical barriers, extending its global reach and economic opportunities to a diverse set of participants, an aspect often limited in conventional financial systems.
At its core, the objectives of traditional finance and ReFi differ significantly. While traditional systems mainly serve capital through wealth accumulation and resource consumption, ReFi aims to serve both people and the planet. This focus reflects in how regenerative economic theories tackle societal and environmental issues, including poverty, inequality, and environmental degradation.
The philosophy underlying ReFi represents a significant mindset shift from traditional economic paradigms. It encompasses several key principles that strive to integrate finance with a broader set of social and environmental objectives.
At its core, ReFi promotes a mindset of abundance over scarcity, focusing on giving to nature and society rather than merely extracting value. Businesses and individuals are incentivized to act in the long-term interest of the planet and its inhabitants, displacing a myopic focus on profit maximization. This mindset embraces conscious consumption and efficient use of resources, valuing well-being over mere growth.
The idea of creating economic systems that mimic nature, or biomimicry, forms a cornerstone of the ReFi philosophy. By aligning financial mechanisms with natural cycles and principles, ReFi seeks to foster sustainable and resilient economies. This perspective also manifests in how wealth is measured, with metrics of natural and social capital favored over traditional fiat currency.
Contrary to the "Degen" culture in the cryptocurrency world, which is heavily focused on rapid financial gains, the "Regens" of the ReFi movement emphasize individual regeneration, interdependence, and net positive impact for all. This approach seeks to leverage the potential of Web3 technologies while divorcing them from pure price speculation.
The list of thinkers inspiring ReFi is expansive and includes non-Western and indigenous voices, acknowledging the crucial insights these perspectives offer. This inclusivity is important to counter the historical dominance of Western thinking in economic and financial theories.
The wisdom of Audre Lorde rings true within the ReFi community: "the master’s tools will never dismantle the master’s house." However, proponents of ReFi argue that tools born from extractive ideologies, such as information technology and finance, can be re-contextualized within a new value system to yield regenerative outcomes. The aim is to subvert these tools, originally used to uphold conventional financial systems, to instead forge a path toward a more equitable and sustainable world.
The Regenerative Finance movement encompasses several core principles that guide its vision and objectives. While interpretations may vary, the following principles capture it’s essence:
By adhering to these core principles, Regenerative Finance seeks to reshape financial and economic systems to align with ecological imperatives, generate holistic value, and foster a more sustainable, regenerative, and equitable future.
Understanding the distinctions between extractive, sustainable, and regenerative systems is crucial to the principles and concepts of ReFi. These categories represent different stages in the evolution of economic and financial systems in response to environmental and social challenges.
Extractive systems focus on the removal of resources for immediate economic gain, typically disregarding the long-term impacts on ecosystems and communities. These systems often distribute profits inequitably and downplay the intrinsic value of living ecosystems. An example of an extractive financial mechanism is the creation of currency supply based on debt and future growth, an inherently inflationary process.
Sustainable systems, on the other hand, seek to maintain the status quo by balancing resource use with their rate of renewal. Sustainability focuses on mitigating harm and minimizing the negative impacts of economic activities. However, it doesn't necessarily improve or regenerate what has been degraded.
Regenerative systems go a step further by actively restoring and enhancing natural and social systems. In a regenerative financial system, economic activity benefits all living participants in the system. Profits are more fairly distributed, and the value of living ecosystems is recognized and incorporated into economic calculations. ReFi envisions building currencies based on the protection and regeneration of natural capital assets, constituting a more sustainable and regenerative value source than traditional debt-driven mechanisms.
The progression from extractive to sustainable to regenerative models reflects an increasing recognition of the interconnectedness of economic, social, and environmental systems. Each step forward - from extraction to sustainability to regeneration - represents a deeper commitment to ensuring the long-term viability of our planet and all its inhabitants.
Web3 and Decentralized Finance (DeFi) form the technological underpinnings of ReFi. These technologies embody traits such as transparency, decentralization, user control, resistance to censorship, accessibility, and interoperability, which are all critical for building open, fair, and democratized financial systems.
Programmable Money, a concept highlighted in "Greenpilled," takes this a step further by allowing the creation of customized financial instruments that align with ReFi principles. Through the use of smart contracts and blockchain technology, financial transactions can be tailored to support regenerative and restorative outcomes. For example, funds can be programmed to be released only when specific ecological or social goals are met, ensuring that investments are directly contributing to positive change.
The transparent nature of blockchain technology is one of its key strengths, enabling public auditability. This means that anyone can review the code and transactions on the blockchain, resulting in a level of transparency unseen in traditional finance. Consumers, even those who may not be able to read smart contracts or analyze blockchain data, benefit from the auditing capacity of a broad range of individual reviewers. Instead of trusting a single organization to conduct audits behind closed doors, these transparent systems allow for collective oversight.
ReFi systems are flexible, efficient, and capable of eliminating friction points. They allow for the advanced coding of desired behaviors directly into the core of economic systems, automating positive actions. This makes ReFi globally accessible, not confined by the jurisdiction of any single nation-state. Such resilience to political risks contributes to the sustainability and robustness of ReFi platforms.
By making fully transparent codebases available for anyone to view, ReFi embodies the decentralization ethos of Web3 and DeFi, opening up new avenues for democratizing finance, reducing inequality, and promoting environmental sustainability.
ReFi, unlike many Web3 applications, has strong real-world ties and often impacts people's lives and tangible assets such as carbon credits. This makes blockchain's utility more prominent as it goes beyond purely technological advances. It uniquely transforms cryptocurrency into real-world currency, unlike Decentralized Finance (DeFi) where funds stay within the system. ReFi's pragmatism, flexibility, and safety-centered community is open to Web3 principle compromises, favoring identifiable transactions through Know Your Customer (KYC) measures, enhancing trust and accessibility.
ReFi's versatile applications address social and environmental concerns across sectors. It can automate compensation for emissions, quantifying and offsetting its carbon output, promoting a net-zero carbon approach. It also enables decentralized Universal Basic Income (UBI) systems to alleviate poverty and inequality.
In ReFi, natural resources gain financial value, such as attributing worth to trees or biodiversity, underlining the economic significance of nature preservation. Local currencies stimulated by communities support local businesses and economic resilience. Tokenized carbon credits let developers sell directly to corporations or individuals, potentially bypassing intermediaries and facilitating a sustainable revenue stream.
The ReFi movement offers a plethora of opportunities for innovation, collaboration, and positive impact. Some of the key opportunities include:
Despite its promising prospects, the ReFi movement also faces several challenges that must be addressed:
Regenerative Finance (ReFi) is a transformative movement that seeks to redefine the financial landscape by aligning economic practices with ecological and social values. By leveraging advanced technologies and embracing a collaborative and sustainable approach, ReFi offers a promising alternative to conventional financial models.
The movement is rooted in a rich history of innovative ideas and practical implementations, and it continues to evolve, offering exciting opportunities for positive impact. However, the path forward also presents challenges that must be thoughtfully addressed.