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The "Water Canal" is a protocol for a First-In-First-Out (FIFO) marketplace or Forward Contract Auction for Tokenized Water Quality Trading credits known as "Nutrient Pollution Certificates" that immediately retire on the blockchain upon first transfer.
Our protocol, known as the "Water Canal," allows anyone to bring their water quality credits onto the NeptuneChain Registry from legacy registries.
The NeptuneChain Water Canal automates the tokenization process. It successfully bridges pollutants in a step-by-step process by initializing, retiring, submitting, awaiting approval, and finally fractionalizing semi-fungible NPC NeptuneChain water credits.
NeptuneChain Protocol, "The Water Canal":
Our protocol allows anybody to bring their water quality credits on-chain tokenized. Tokens have multiple advantages over legacy credits in traditional water quality markets, including full transparency, programmability, fractionalization, and interoperability with the emerging DeFi ecosystem.
The Water Canal connects legacy water quality registries with the NeptuneChain Registry, an on-chain registry on the Polygon network. We believe that water quality needs to be a multi-chain asset, and more public blockchains will be supported in the future.
How it Works:
The NeptuneChain Water Canal is a one-way route: water quality credits can be brought on-chain but can't go the other way. This is because we want to prevent double-counting and apply the proper safeguards for the intrinsic value by leveraging the deterministic nature of public blockchains. This is why users of the Water Canal need to retire the credits on the source registry before bringing them on-chain. This way, we can guarantee that a water quality token is unique. Burning a water quality token on-chain is equivalent to retiring a water quality credit and doesn't require a centralized entity to retire the "real-world asset" in a water quality registry.
Every NPC represents a unique pollutant offset brought on-chain using the NeptuneChain Water Canal. Each balance is equivalent to 1 pound of Nitrogen or Phosphorus mitigated or removed from the atmosphere or watershed from verified projects across the globe.
Key characteristics of the pollution offsets are brought on-chain when it is transformed into an NPC, including:
- Project Name
- Serial Number
- Project Type
- Vintage Year
- Verification Standard
Different NPC tokens can represent pollutant offsets from various projects, e.g., a nutrient bank in Virginia or a trading project from New Zealand. However, creating a liquid on-chain market for pollution requires standardization. This is the role of the Base Pollutant Pool — each NPC can be locked into the Base Pollutant Pool in return for a BPO token. BPO is thus a pollutant index token, backed by various offsets from multiple projects.