Pollution is a massive problem that poses a challenge to water quality worldwide. Although most pollution occurs at an industrial scale tucked away and out of sight, we all contribute to pollution by directly or indirectly introducing hazardous material to our waterways. 

All forms of pollution ultimately end up back in our watersheds, yet traditional water quality trading markets remain nascent and unable to address global concerns.

With an alarming increase in global hypoxic zones, water quality issues are rising, and communities will look for new ways to deal with this pollution.

flowDAO will maximize value creation for its community by accelerating global water quality trading markets and building the roadmap to a vibrant and regenerative economy.

flowDAO will be deployed on Polygon, an energy-efficient L2 solution; deploying on-chain will bridge pollutant offset supply with DeFi demand.

Economic activity within the ecosystem will increase the supply of FLO; a new FLO can only be minted by locking a BPO (Base Pollutant Offset) in the flowDAO treasury and removing it from the market. The supply of (FLO backed by) NPC in the treasury will be inversely proportional to the availability of pollutant offsets on the traditional water markets. 

Removing the supply of pollutants like nitrogen and phosphorus and locking them within the treasury will interfere with demand conditions in the traditional markets, increasing the cost of pollutant offsets and increasing the intrinsic value of newly minted FLO. 

There are two critical pieces of the infrastructure underpinning the system:

The BPO (Base Pollutant Offset) — flowDAO's reserve asset — is a pollutant offset index token representing a basket of different tokenized and standardized pollutants starting with Nitrogen and Phosphorus.

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:

Different NPC tokens can represent pollutant offsets from various projects, e.g., a nutrient bank in Virginia or a water quality 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.

The core principle of the flowDAO ecosystem is that the treasury can only mint a FLO token if at least 1 BPO is deposited and locked away. 

Because every BPO is backed by a Nutrient Pollution Certificate that guarantees the mitigation or removal of 1 tonne of nitrogen or phosphorus, this system internalizes the cost of nitrogen/phosphorus and a handful of other common pollutants that naturally enter the water stream, giving FLO an intrinsic value attached to the price of contaminants locked in the treasury. 

FLO will be traded on the open market (and exposed to price discovery speculation). 

FLO's price will be underpinned by the cost of BPO locked in the flowDAO treasury -- we anticipate the price of BPO's to increase over time, in line with the broader water quality market. 

Longer-term participation in the flowDAO ecosystem is incentivized by bonding, staking, and community-driven governance.