Regenerative finance or ReFi is a type of finance that seeks to change the extractive and exploitative strategy of traditional finance, creating a financial ecosystem capable of better responding to the needs of all stakeholders now and in the future with tools that people can use now.
Basically, Regenerative Finance (ReFi) is a combination of two different disciplines: regenerative economy and decentralized finance, with the aim of opening up new opportunities for access to sustainable and open financial services for all.
Origin of Regenerative Finance (ReFi)
The concept of Regenerative Finance or ReFi, was born in 2015, when the economist John Fullerton coined the term Regenerative Capitalism in a document that outlines eight principles that could underpin a new economic system. The idea behind these principles is to generate an economic and financial system capable of generating shared prosperity for all.
These principles are known as the Principles of Regenerative Economy and you can see them in the following image:
Principles of Regenerative Finance (ReFi)
These principles can be explained as follows:
in right relationship
This principle aims to see humanity as a whole, in which there is no real separation between "us" and "it". A vision that reaches the economy and its relationship with the biosphere in which it is embedded.
It basically means that all financial relationships must occur in the correct terms among all its parts, avoiding the existence of unequal relationships that, like a snowball effect, end up generating even greater unequal relationships and break the financial ecosystem and its harmony.
See wealth holistically
This second principle seeks to show wealth beyond simple numbers within a bank account or cryptocurrency wallet. Instead, ReFi seeks to define wealth as a state that must be systemically defined and managed in terms of the welfare of the whole.
Innovative, adaptive, responsive
In this case, Regenerative Finance (ReFi) seeks to ensure that its services are always in constant change and evolution, adapting to the natural dynamism that dominates every characteristic of the world in which we live. Basically, this principle follows a long-known premise given by the naturalist, Charles Darwin: "In the fight for survival, the fittest win at the expense of their rivals."
Thus, ReFi seek to adapt to the needs of the world to which they open their services, seeking to survive in a competition in which only the fittest and who else adapts and evolves will be able to survive. This is another way of saying that ReFi advocates a free enterprise system and the free flow of capital, both freedoms being essential to be able to develop ReFi correctly.
empowered participation
The fourth principle of Regenerative Finance (ReFi) seeks to generate an ecosystem in which all its parts are "in relationship". In this way, with the larger whole in ways that not only empower them to negotiate their own needs, but also allow them to add their unique contribution to the health and well-being of others. larger wholes in which they are embedded.
Therefore, while inclusivity may be morally desirable, empowered participation is a non-negotiable quality within ReFi. At this point, things like the DAOs they are critical to ensuring empowered participation within these decentralized finance structures.
Community of Honors and Place
The ReFi are nourished by the development of healthy and resilient communities, each uniquely informed by the essence of its individual history and place. This is something that we always see in the crypto ecosystem, it is part of its essence to put it in some way, and ReFi seeks to exploit this to develop and sustain itself over time.
Border effects galore
Regenerative Finance (ReFi) as a constantly evolving community system, according to the principles already seen, is also a space where creativity and abundance flourish synergistically at the "edges" of this system. Basically, ReFi seeks create synergies that generate new opportunities to develop services, products or financial benefits that reach their community and the environment where they are developed.
robust circulatory flow
ReFi requires a robust and healthy circulation of money to all ends of the system. This seeks to generate a healthy financial circuit in which not only finances can be developed, but also the human entities that make use of them. In the end, if the users develop together with the financial services they use, the cycle is completed, strengthened and allows the generation of a broader cycle, in which new units can enter and enjoy the system.
Seek the Balance
Finally, the last principle indicates that Regenerative Finance (ReFi) seeks to maintain a healthy balance between all parties. An essential point to keep, not only the system in operation, but also so that human, social, natural and physical capital develops in the same way.
Vision and mission of Regenerative Finance (ReFi)
To achieve all this, ReFi clearly have a vision and mission, which we can explain as follows:
Vision
Regenerative finance, or ReFi, is based on this theory of the regenerative economy, taking advantage of the development of ideas such as DeFi and Web3. Within the ReFi space, a multitude of communities are emerging with the common goal of leveraging blockchain to address sustainability challenges such as climate change, biodiversity loss, resource scarcity, and the underlying socioeconomic and institutional structures that exacerbate these crises.
Thus, the ReFi seek to leave the "extractive and exploitative financial model", to transform it into one whose actions increase the systemic health and discourages actions that lead to systemic degradation. It applies the principles of regeneration of nature to socioeconomic systems, supporting equitable well-being and thriving ecosystems.
Mission
The mission of Regenerative Finance (ReFi) is to systematize the incentives to make regenerative places viable. Addressing the current crises in depth means designing alternatives to our systems of culture of domination with regenerative systems that value care and nature.
One of the central tools for doing that is redesign money in itself in a way that writes a new story of what it really means to be a whole human being living on a shared planet. A story that encapsulates the values of care, reciprocity and human flourishing. And even redesigning money requires understanding tokens and tokenomics, which makes visible and captures all the different forms and manifestations of capital.
Regenerative Finance (ReFi) in the blockchain ecosystem
The development of Regenerative Finance (ReFi) has great exponents in the blockchain ecosystem. For example, projects like MakerDAO, Celo, KlimaDAO, and Toucan Protocol are some of the projects with ReFi strategies within them.
For example, Zeal has been developed under an economic model derived from the ideas of Charles Eisenstein and his Sacred Economics. This is a theory of change that describes how short-term actions will lead to long-term social impact.
Thus, Celo's goal is to create the conditions for prosperity, defined as "people meeting their basic needs, growing along their own paths, and supporting each other." All Celo projects have a specific hypothesis that links our activities to one or more of these prosperity indicators.
Klima DAO for its part, it is a project that seeks to build a new green economy. The idea of KlimaDAO is to reinforce the climate finance to sustainability projects that are developed worldwide. To do this, KlimaDAO uses a ReFi scheme focused on rewarding users who use its services and thereby reduce their carbon footprint by supporting the development of global sustainability projects.
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