Crypto carbon credits exchange 1GCX partnered with T3 Trading, raising $2 billion in assets under management (AUM) and establishing a $100 million liquidity pool to facilitate carbon credit transactions.
1GCX is a digital asset exchange offering cryptocurrency, commodity and carbon offset trading.
T3 Trading is a proprietary trading company investing in cryptocurrency and carbon offsetting.
With their partnership, carbon credits or carbon offsets meet crypto. It will combine digital assets and carbon credits to capitalize on growing investor interest in both sectors.
Promotion of liquidity on exchanges for emission allowances
With ~$2 billion in the AUM and 100 million dollars Regarding the liquidity destined for carbon credits, the T3 fund seeks to improve liquidity on the 1GCX credit exchange.
The financing will help generate revenue for the growing carbon credit market. It will also increase 1GCX’s goal of establishing a standard for buying and selling carbon credits.
Referring to the exchange’s President and COO, Michael Wilson, he stated:
“Carbon credit has the potential to scale to a multi-trillion dollar market in the next few years, but the market opportunity remains relatively untapped as the sector continues to mature…”
He further said that with T3 Research as an external liquidity provider, 1GCX will drive price discovery and trading volume in the voluntary carbon market.
More importantly, the platform will help normalize on-chain carbon credit supply and demand.
The fund raised for tokenized carbon credits made the deal possible. It is also being driven by increasing interest in the securities from institutional investors such as pension funds.
But there are a few risks associated with carbon credits as an asset class.
One of them is the volatility of this financial instrument. There are also criticisms of how good these loans are at curbing global warming.
There is also another issue related to liquidity: as digital assets, carbon credits are illiquid products.
This is where 1GCX comes in to offer a solution – tokenizing carbon credits for liquidity.
Marrying carbon credits and cryptocurrencies
Both 1GCX and T3 Trading have tried some related trading pairs marrying stock commodities and cryptocurrencies.
Their main idea is to attract institutions to both markets, including those familiar with CO2 assets but new to digital assets. They will do this by creating a series of liquidity pools to reduce market transactions.
Both companies believe there is a strong case for tokenizing carbon credits to build the right marketplace.
The partnership will also bring these new offerings to investors on the 1GCX platform:
This unique trading platform will improve the transparency of pricing and the real benefits (fighting climate change) of loans. These are the two difficulties that are keeping institutional investors from entering the space.
1GCX Tokenizing Carbon Credits aims to help investors deal with liquidity problems and clouded prices.
- 1GCX is also in the early stages of developing its own blockchain. The system has a token with elements of Proof of Stake (PoS) consensus mechanisms.
This staking method is commonly used on private, centralized blockchains, as opposed to public permissionless systems.
Recently, Ethereum switched from a power-intensive proof-of-work system to PoS. The crypto firm claimed that PoS reduced their energy consumption and carbon footprint by a whopping 99.99%.
Traders using 1GCX have access to Ether and other digital assets such as Bitcoin, AVAX and SOL. His largest $2 billion deal to date with T3 Trading has this main goal:
“Creating a digital asset based marketplace inspired by the green web mixed with the internet of energy.”
In their quest to reach net-zero emissions, companies urgently need carbon credits. And their growing demand will continue to explode as the world must decarbonize by 2050.
By adding crypto to the solution mix, 1GCX’s new carbon credit trading platform seeks to increase transparency, fair pricing and liquidity. At the same time fraud is prevented.