Ep. 14 BASIN Protocol is Building Nature's Balance Sheet

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If you look at corporations in the US, corporations have personhood and they're recognized as people.
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So why not ecosystems, why not species, why not trees?
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Welcome to Refi Generation, the podcast that talks to experts and leaders in the new frontier of regenerative finance to examine how blockchain technology is creating the next generation of environmental and humanitarian initiatives.
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I'm your host, Cash Upton.
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In today's episode, I have the pleasure of interviewing Timo of Basin Protocol for a third time.
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Timo, aka Thomas Morgan, having spent the majority of his career in commercial real estate, is the bridge we need for real-world assets coming on-chain.
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Timo discusses the nuances of nature being on the balance sheet versus nature having its own balance sheet.
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The former is the old extractive mentality, whereas the latter allows ecosystems to hold their own assets of value.
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Basin, as a protocol, is aimed to preserve, conserve and restore more land by building a network of agents that are stewarding and flowing value into ecosystems.
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The protocol uses financial models that take real value and then apply a monetary value to ecosystem services such as pollination, biodiversity, soil, health, etc.
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Timo explains how Basin's 14 different ecosystems and 18 real values of natural capital fits into the broader ecological benefits framework that you'll recall from episode 6 of Refi Generation.
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Corporations have personhood in the United States, so why not ecosystems?
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Why not rivers?
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Why not mountains?
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Basin is creating structures so that ecosystems can fund themselves in perpetuity.
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Basin is giving land back to nature where nature owned itself.
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Basin is creating mechanisms to perpetually protect ecosystems and land against future lease and sell pressure.
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I thoroughly enjoyed this conversation.
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I hope you do as well.
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Hey Timo, how you doing today?
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Hey great Cash, how about you?
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Fantastic Good to have you on for another conversation.
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Last conversations we were talking about a little bit more of the philosophical side of ReFi how can these tools be designed to solve problems?
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And now we get you back on to talk about Basin and the launch of the newest streams and how it actually has been becoming a balance sheet for nature, which has been really exciting for me.
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Why don't you start with giving us a little update on where Basin stands?
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Cool.
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Well, good to see you again and good to be here.
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Really appreciate our dialogue and really appreciate you becoming a Basin member and getting your Basin account all set up cashbasin, and so just really appreciate the support.
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Yeah, I was really excited to be on the team and feel like I now have some ownership in how this is coming about.
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And yeah, full disclosure, not financial advice, not getting anything out of this other than just trying to keep streams clean and just support the mission.
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So I was really excited to see that you're launching Dot Basins.
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Yeah.
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So I mean, I think maybe a good place to start is a lot of people in the natural capital space.
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Right now we're talking about putting nature on your balance sheet or on, you know, on corporations balance sheet or or on people's balance sheet, but in a way that framing is just another like extractive thing of like we are going to extract value from nature and put it on the human balance sheet.
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So so we're taking a different approach, which I, which includes nature on the balance sheet, but we're also creating a balance sheet for nature, and so every dot based in an account actually can hold assets, any type of value monetary, financial, economic, social, mrv measurement, reporting, verification value, mrv measurement, reporting, verification value and so basically giving individual ecosystems, individual ecosystem services, species places their own account, basically and they can hold that value, and then humans are also part of it and humans can have that value also and they own that value.
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But then humans actually steward the value on behalf of the ecosystems and species and nature.
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So what we say cash is, we're actually building nature's balance sheet, not putting nature on the balance sheet I love that.
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Yeah, actually, yeah Actually.
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Having um a seat at the table like makes me think about how New Zealand uh awarded that court case where a river has rights.
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Yeah, so.
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So a lot of this stems around rights of nature and personhood and, in my background, being in real estate and a little bit of law and whatnot, is that, if you look at like corporations in the US, corporations have personhood and they're recognized as people.
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So why not ecosystems, why not species, why not trees?
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And there's a lot of cool work being done on this.
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We're definitely not the only ones and there's a lot of cool work being done on this.
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We're definitely not the only ones, and no one here has a monopoly on nature or species or anything like that.
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We're all, I think, working together and just trying different ways.
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Ours fits within what we call the basin protocol and what we're trying to do is create a I call it a hyperstructure or, you know, nature hyperstructure that finances nature and ecosystems and species in perpetuity, so that nature can fund itself and buy actually buy and own its own land and and you know we can actually get into the legal and the technicalities of that how we work that out.
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And, like I said, there's a lot of people doing that, a lot of really cool groups, both nonprofit both for-profit, and we're all kind of doing it different ways and people have to do it in different jurisdictions, and so I don't think there's a winner-take-all approach and I definitely hope there's not a winner-take-all approach.
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If we're looking at this from like a biodiversity perspective, there should be a lot of different concepts and initiatives and they can all tie together and all link together, all work together.
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But basin protocol is just our rendition of this.
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Yeah, and so one of the latest launches was the streams initiative.
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Right, so you guys are focusing on streams to start.
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Yeah, so it's a metaphor.
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A metaphor right like basins in nature, store, hold filter water.
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You know the life giving.
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You know the one of the most important things right in the whole world, which actually you know water, the water cycle which leads to the carbon cycle, and you know all that sustains life and balances life.
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Basins play a key component of all that.
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All the watersheds, all the rivers, all the lakes, all the oceans, and the water cycle recirculates all that you know through our ecosystems, you know through the biosphere, and so there's a big metaphor there.
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And our thinking cash revolves around ecological economics, the field of the study of ecosystems and their interactions, and then also ecosystem accounting, and two of the main concepts in those two fields are stocks and flows, and so our whole concept is around basins, the dot basin account, or just the word.
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Basin is a stock right, it holds, it's a vessel, it filters, it distributes and then flows or streams is the movement, is the.
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You know that's the movement of value through our protocol.
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So stocks and flows relates to ecological economics, ecosystem accounting, but then also is mimicked in our, in the protocol.
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I can get into the details of how that works, but, yeah, streams are the, basically the flows of value that go through the protocol.
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Okay, cool.
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And then, yeah, I want to pull on the like how the protocol works a little bit more, just for our listeners.
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Um, in that, like, each dot basin account can hold value, um, and I and different NFTs can hold other NFTs, right, so kind of what's that?
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What's that structure where, um, you're imagining different assets being steward, that then, uh, then hold value for another asset.
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So every dot basin account and I think you have a crypto audience so we can kind of get into some of the weeds on the terminology but the dot basin contract is a ERC-721 contract.
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Every dot basin so let's say cashbasin or timobasin or roaringforkriverbasin or coloradoriverbasin or amazonbasin they're all individual accounts and they can hold and manage their own value inside both collectibles and financial assets as well.
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So they can hold any other type of NFT, any other type of semi-fungible token, any type of ERC-20 token, and all of it is EVM compatible, is uh evm compatible.
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So if you know your cashbasin uh wallet or you know uh account works on every single evm or will.
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We're still in the process, so that's still coming out.
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But, um, and then you know, but you could steward um the creek there, what was it called the san jose the creek there?
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What was it called the san jose?
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Yep, san jose creek, yeah, san jose creek um there by santa barbara, for example, example.
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You can steward that so you could manage or help manage.
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You could do it individually or you could get a group together or you could work with the basin foundation to steward the assets inside the San Jose Creek Dot Basin and basically build a perpetual trust fund to help fund projects, nature projects, biodiversity projects, resiliency projects in your watershed.
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And so the idea being is that it's not just Cache Dot Basin but it's also San Jose Creekbasin holding its own assets and then basically funding land for other purchases of, call it, eco credits or call them biodiversity credits or resilience certificates.
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And it doesn't have to, those don't have to be within the basin protocol, but San Jose Creekbas basin could go out and buy its own assets and eventually buy its own land and then San Jose Creek dot basin, by being part of the basin protocol, shares in the value flows across the protocol.
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So other basically dot basins help fund maybe the smaller ones.
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You know, like the way we kind of see it is like Pacific dot basin or Atlantic dot basin, two of the bigger right watershed Right.
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Yeah, we're going to capture and that's you know, I really don't like that word but they're going to capture more value just because they're going to have more flows into them and so they can actually fund other projects and basically they all become buyers or what we call agents.
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The kind of the cool thing is, if you're in the gaming world as npc or non-playable characters are actually becoming what are?
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You know they're not becoming playable characters.
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So if you can think of each dot basin as its own character, as its own agent, and it can have a human steward or it can have a semi-autonomous or an autonomous steward that helps manage or balance the portfolio across the protocol, so all these agents basically become buyers and sellers of assets and actually can own their own assets as well, and we can get into the real estate Underneath all that is real assets and real estate.
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Yeah, yeah, and I definitely love the real asset, real estate angle too.
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But yeah, just to close up, that thought that's really exciting.
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So you know my cashbasin I gave you some coordinates for it.
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It's some land that has a little shipping container on it growing some agaves on it.
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You know, in theory, as I do different ecosystem services on that land, I could be earning eco credits, co2 credits, biodiversity credits, soil improvement credits, and those could all be going into the cash dot basin.
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Or, for the San Jose Creek example, there could be some creek cleanup efforts cleaning up trash, doing some soil embankment stuff and then those credits would then go into the San Jose Creek dot basin which could then be used to, as you said, a perpetual fund to continue to restore the watershed and restore the creek.
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Yeah, I think that's great framing and I think a way to look at it is every stream is what we call a certificate of insurance.
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They ensure the protection, restoration and stewardship of ecosystems and species and so if you go to confluencebasinglobal, you basically people can buy streams right now which are these certificates, and so you can pick from any of them on there and they're all what I call semi-fungible.
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So at a base level they're all one-to-one shares in the gross basin protocol, but at the same time some of them might be worth more or more valuable to you or more valuable to me.
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They're semi-fungible.
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So they're fungible in the sense that they're all one-to-one, but they're semi-fungible in the sense that value is subjective, value is relative to the beholder, and so if cashbasin logs on, connects your account to Confluence, you basically buy shares and whatever you want, whatever you're interested in, whatever you care about, and they go into your account.
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To Confluence, you basically buy shares and whatever you want, whatever you're interested in, whatever you care about, and they go into your account.
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Or you could actually, you know, we can create a multi-sig with the San Jose Creek Basin and we could decide together to go on and buy shares of any other types of any watersheds, any species, other people, whatnot.
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And the funds right, you use actually real money to do this USDC or ETH or Matic or DAI and you actually that that money goes into the basin that is the seller.
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So it's not the protocol on Confluence, is not the seller of all these assets, the agents or the actual, the basins, cash are the sellers.
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So, like San Jose Creek Basin, like, for example, is the seller.
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So if there's 10 streams or 100 streams or whatever listed for that asset, they're the seller, not the protocol, and the money goes into their account, into their basin.
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So the idea being is, if you're buying shares of watershed, their species or whatever, the money goes into their own account and this is all verifiable on the blockchain.
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We can get into the details of how you look at it, where you see it, whatnot.
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And the idea being is that the protocol, it's all linked.
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So the protocol, like the total value locked, grows over time, Like each individual basin might not have that much in it, but the whole protocol starts to get a lot of value.
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Like you know, if you have a million named species, or if you have a million watersheds in the world, or you have a million people that join Basin as members, all of a sudden you have 3 million agents all storing value on behalf of ecosystems and managing and flowing that value.
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And then we have incentives that we're building for people to why they would actually flow value.
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Or, like you know why you would actually buy from one species or one watershed or one you know another basin, as opposed to buying from another or sending money, or don't you know donating money.
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So yeah, that's really cool, and you know, last time we talked, I remember you mentioning how refi tools can start to provide incentives for land stewardship and regeneration, past just the feel-good philanthropy side of it.
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And so my next question is is there an incentivization mechanism?
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Is there a return?
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What's the Basin protocol going to be doing with revenue?
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Just kind of to, yeah, talk about that a little bit more.
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Yeah, so.
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So all this is grounded in, you can say, real world assets or RWA, or real assets or or real estate you know, that's my background real estate, investment, and so all this is, how do you actually basically preserve, conserve, restore more land?
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So if you look at the Biden's or the UN 30 by 30 initiative 30% of land and water conserved by 2030, a lot of people just say that's not enough.
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So the goal is half Earth, eo Wilson's half Earth concept that basically half of the Earth's surface should be protected, conserved, stewarded and not just extracted from.
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So this whole mechanism we built with the protocol is to help inch towards half Earth.
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I don't have the billions and billions of acres number off the top of my head, but if we did 20 million acres, which is our kind of rough goal the Tompkins Foundation down in South America they did like 15 million acres and we said what the heck, if a couple or two people can do 15 million acres, we have to.
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We have to be higher than that.
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So our little 20 million acres is our goal and we use acres to where the in the U?
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S.
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But you can easily convert the hectares.
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Yeah, um, that, you know that, but that's a fraction of, of the 50% I mean like.
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I mean it's like off top of my, my head, it's like 0.5 percent of, like, what needs to be conserved.
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You know.
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So, the basin protocol even though we have big goals and big aspirations, if you start to do the math on that, there's a lot of money required to conserve, protect, restore 20 million acres, and that's only, again, that's only a fraction of half earth.
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Um, but we, our math has worked out okay.
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So how do we actually get to 20 million acres?
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And so our model, we call it insurance with an E, so ensuring ecosystem function and condition in perpetuity.
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And it's a financial model, cash, that takes the real value.
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And it's a financial model, cash, that takes the real value.
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And that's another framework, is the real value of natural capital.
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It actually applies monetary values to ecosystem services pollination, habitat, climate stability, water supply, water filtration.
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We have 18, what we call real values and we can put a dollar value on each of those, and insurance basically insures that real value.
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And it's the juxtaposition, this interplay of what's the real world cost of the real estate but what's the ecological value that that real estate or that polygon is producing.
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And so our model cash triangulates that and figures out okay, if we pay $100,000 a year for this piece of property, it's protecting a million dollars of real value, of natural capital value, ecosystem service value a year.
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And it is all site specific.
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Every, every single property is going to be different.
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But you know, santa barbara, real estate might be different than, obviously, than, or similar maybe, to aspen, where we are, or it's going to be very different to the mississippi delta, you know, or uh, somewhere in florida, or you know, ohio or something, or Central America.
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So you basically look at the polygon, which is a property, and our real value methodology calculates the dollar value annually of all those ecosystem service flows.
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And then we can work backwards, based on the real estate market value, and say, okay, this is what we actually need to fund in real dollars to protect and conserve the ecosystem value, the ecological value.
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And then that's where this really starts to get interesting is then we can actually mobilize philanthropic money, or what I call real asset investor money or income investor money.
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That's been my career for 20 years, is why people invest in passive income, real estate, hands-off real estate assets, and all this allows for yield, like, while putting these polygons what we call in trust.
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So our model cash.
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It creates a $0, what's called residual value at the end of the period, the holding period.
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So a lot of these Wall Street firms, they're going to have to flip the property.
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They're going to, okay, go buy a property for $5 million, they're going to increase the ecosystem service value or regenerative agriculture or the timber value, but then they're going to have to flip that property for $10 million to get their yield.
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Ecological insurance by Basin calculates the residual value at zero.
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So guess what happened to the ecosystem?
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It's permanently protected.
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After all this math, the ecosystem basically is protected.
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It doesn't have to be flipped, it doesn't have to be sold again.
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In theory, it doesn't even have to be leased again or no one even has to pay for it again.
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It goes into what we call in-trust, and this is going back to nature owning itself and this concept of protocol, owned assets, where the protocol and all these, these basin accounts that we just talked about, we talked about earlier earlier, own, own the real estate at the end of the period, and so we can calculate that period.
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It can be, you know, today, you want it to go into trust tomorrow, or you want it to, you know, go into trust in 2030 or 2050.
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Those numbers all vary depending on who the goals are, who we're working with, and at the end of that period, let's say, if someone does a 2050, it's zero dollars and so that asset, no one owes any money, it's paid off free and clear and it goes into a trust and, like I view this cash as like the ultimate land back of, like giving land back not just to people but to nature itself, and so this whole concept of nature owning itself, that's, that's that's.
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You know, that's where we started.
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You know the conversation is yeah, yeah, that's so cool and like would that piece of land for those 10 or 20 years, would it have been having stewardship on it?
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So are you thinking like, would there?
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Like is the process?
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There's a regenerative farm and that regenerative farm is maybe growing some food, but they're also earning these eco credits.
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They're improving the soil and the water and they're sequestering carbon and increasing biodiversity, so they're also earning these eco credits.
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They're improving the soil and the water and they're sequestering carbon and increasing biodiversity, so they're earning passive income for the land.
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Is that one of the like, these mechanisms that's allowing for that balance sheet to kind of be in the favor of the land, or?
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Yes, so the I think a distinction between what basin is doing and a lot of other like good work that's being done in this whole movement is that we're focused on getting the land back in the hands of Earth, back in land stewards.
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So our model is around that the land value, the land costs and this obstacle of high real estate values around the world, and you know pressure, you know land development, land use change, pressure, and so our, our whole thing is that ours is like a base layer of like okay, if we can get the land into trust and get it protected, or what I call off the chopping block, then like, for example, region network eco credit developers or vera carbon credit developers or gold standard carbon credit developers, or you know these new emerging biodiversity credit developers, can come in and do stuff, what I call on top of the land or on top of the ecosystem.
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So, so basin works out the math to actually get the property off the chopping block and put it in permanent trust, and other people, other land stewards, can then do the other work on top of it.
00:26:37.740 --> 00:26:45.871
The actual nitty-gritty biodiversity, uplift, biodiversity, net gain, all these different concepts that are evolving right now.
00:26:45.871 --> 00:26:48.223
And so ours is not.
00:26:48.223 --> 00:27:01.705
It doesn't exclude all that other activity, and I think just one other thing is it goes into our ecological insurance in order to ensure that the ecosystem is protected.
00:27:02.507 --> 00:27:06.971
As soon as we write what we call an insurance policy, it's protected.
00:27:06.971 --> 00:27:08.200
It's from day one.
00:27:08.200 --> 00:27:25.402
It's not permanently protected, but it's off the chopping block and so as long as, basically, the insurance premium is paid, it's continually off the chopping block.
00:27:25.402 --> 00:27:39.748
If people were or corporations, governments, people, whoever were just to pay this minimal nominal amount, it could basically be protected year by year, by year by year, for as long as that payment is made.
00:27:39.748 --> 00:27:50.532
But the benefit of the whole insurance model is we can actually calculate okay, we want this in permanent trust by 2030 or 2050, and the math is based on that.
00:27:50.532 --> 00:27:54.757
Okay, gotcha, and permanent trust by 2030 or 2050, and the math is based on that.
00:27:54.741 --> 00:28:07.279
okay, and we and we all know so it's yeah, it's protected from day one, but it's permanently protected, depending on the insurance formula okay, and that's just like a marginal yearly pay pay-in to which would have been a lump sum, at some at the end of 10 years or 20 years.
00:28:07.279 --> 00:28:10.104
It's being paid incrementally.
00:28:10.965 --> 00:28:43.285
Um, that then works out over time to protect the land and yeah, and, and so the idea being is like if you and it's all relative to real estate you know markets like if you're in a cheap real estate market or or if you're inexpensive, the, the insurance premium is going to be a lot you know, different depending on the cost of the real estate, and nothing prevents people, or you know land trust under our model, from doing the lump sum today, like if right, yeah, so what we're trying to do is make this basically cheaper.
00:28:43.285 --> 00:28:54.606
It's the model is based off commercial real estate and we don't need to get into those details, but it's basically based off like Starbucks, for example, oraldreens, walmart, whatever, none of them own their own real estate.
00:28:54.606 --> 00:29:07.625
They it, they're, they get a higher return on their capital by leasing their real estate or or utilizing someone else's real estate, and so it makes it cheaper, so they don't they don't have to.
00:29:07.726 --> 00:29:18.488
We're not doing the mcdonald's model no, it's in a way, in a way you could look at like basin, is kind of the mcdonald's, like the franchise, or like we're.
00:29:18.488 --> 00:29:43.022
We're going out and working with partners to buy and finance the land and then the land stewards corporations, governments would be like the franchisee in the mcdonald's model yep and then all those other refi projects that can be doing eco restorative services would be the tenants leasing um, doing some use case on the land yeah, and we're.
00:29:43.063 --> 00:29:52.028
You know, I try and be careful of like the yeah, using the word tenant and right um, because people just don't like that, because it's it's colonial.
00:29:52.308 --> 00:29:58.226
You know it's English law, it's Roman law and if you're putting it under trust, you know what can you actually do.
00:29:58.226 --> 00:30:05.047
The joke is that the, the BLM, is the Bureau of Livestock and Mining.
00:30:05.047 --> 00:30:09.280
Yeah, I like that.
00:30:09.280 --> 00:30:09.743
That's a good one.
00:30:10.494 --> 00:30:16.999
One of one of my past guests guests their episode will drop in february um, it's called alternon.
00:30:16.999 --> 00:30:24.317
They're colombian and they are um working on a protocol that it will not mine gold that's in colombia.
00:30:24.317 --> 00:30:27.565
They're working with like this huge us mining company that's in Columbia.
00:30:27.565 --> 00:30:35.483
They're working with like this huge US mining company that's been mapping the Colombian gold mine for a few years now.
00:30:35.483 --> 00:30:39.398
So they have a pretty good idea of how much gold is in the mine.
00:30:39.398 --> 00:30:46.676
And you know some of the statistics is that 90% of mined gold gets put back into banks.
00:30:46.676 --> 00:30:52.007
It's not actually used for for technology, it just gets taken out of the ground and put into another vault.
00:30:52.007 --> 00:31:10.726
And so their whole um, their whole thing is trying they're collateralizing against the gold that's in the ground and not actually mining it and then allowing for other ecosystem, tourism, regenerative land management practices to be done on the land that is unmined I, I love that.
00:31:10.807 --> 00:31:11.630
It's like, yeah, why?
00:31:11.630 --> 00:31:12.252
Yeah, that's.
00:31:12.252 --> 00:31:14.122
Why does it need to be stored in a bank, right, if it could?
00:31:14.122 --> 00:31:17.817
Just it can be kept in the ground, stored in the ground and still held as an asset.
00:31:17.878 --> 00:31:23.076
I love that, yeah yeah, I'm still like just thinking about it every few days.
00:31:23.076 --> 00:31:24.317
I think about what they're doing.
00:31:24.317 --> 00:31:25.798
It just blows my mind a little bit.
00:31:29.381 --> 00:31:39.015
Yeah, I mean, that's what I feel like this whole movement is about is just different incentive mechanisms of like, how can we incentivize the outcomes we want to see?
00:31:39.015 --> 00:31:43.688
And so that's you know.
00:31:43.688 --> 00:31:55.393
Our lane is real estate and real estate finance, but at the same time, you know this whole framework, the real value framework, the core benefits of natural capital, what we call it.
00:31:55.393 --> 00:31:59.579
It's all based on thousands and thousands of pages.
00:31:59.579 --> 00:32:08.894
At this point we've looked at over 150 ecosystem service, natural capital frameworks, land cover, classifications.
00:32:08.894 --> 00:32:23.555
All this is highly detailed in our docs and our appendix, and so if anyone wants to see where this all came from and how the math works and whatnot, it's all documented on docsbasinglobal.
00:32:24.740 --> 00:32:28.403
Cool, yeah, we'll put a link in for people.
00:32:28.403 --> 00:32:44.611
Well, you know, just to kind of finish up that loop for naysayers out there, I mean, I think your experience in real estate, you know, is a very resounding reason why this can work and just kind of show some credibility.
00:32:44.611 --> 00:33:00.256
So, just like from a bigger picture standpoint, you know, for naysayers out there, you know how have you, how successful has it been in the models that you know, the basin protocol, you know what you're doing is, is this philanthropy or is basin?
00:33:00.256 --> 00:33:06.188
You know doing something where it's a sustainable economical model too so.
00:33:06.328 --> 00:33:07.089
So that's the.
00:33:07.089 --> 00:33:29.263
The juxtaposition, like that we're we're working within is, I think all the different players have their, their role, whether it be government or philanthropy, or or finance or venture capital, or you know, whatever the risk return profile is of the investor, you know, or the capital allocator, like they all have their, their roles.
00:33:29.263 --> 00:33:39.442
And then you know same with, like, the science people and the conservation people and the on the ground people and indigenous people like we, we all like bring to the table our own unique experiences.
00:33:39.442 --> 00:33:44.355
So so I go back to like this, this concept of blended finance.
00:33:44.355 --> 00:33:46.682
That that's where we're working at.
00:33:46.682 --> 00:33:53.914
A basin protocol is a blended finance mechanism to finance ecosystems and their natural capital and perpetuity.
00:33:56.683 --> 00:34:05.550
So in our model, depending on who we're working with, you know, the insurance premium can be calculated at a 0% or a 1% rate of return.
00:34:05.550 --> 00:34:07.582
So basically, just at cost.
00:34:07.582 --> 00:34:22.731
Or if we're working with a private equity group or a high net worth investor and they say, look, I need an 8% IRR or 12% IRR or God forbid a 25% IRR, we can run the numbers on that.
00:34:22.731 --> 00:34:32.932
It doesn't mean that the community is going to want to pay for someone to make 25% IRR on nature, but our math enables that.
00:34:32.932 --> 00:34:46.199
If someone's willing to give $100 million or invest $100 million and they have an 18% IRR threshold, it's like, okay, well, that's $100 million that we wouldn't otherwise have.
00:34:46.199 --> 00:34:50.791
So we just need to show them and get them that 18% IRR.
00:34:51.940 --> 00:34:58.405
And the beauty about our model cash is that it's not 18% in perpetuity, it has an end date.
00:34:58.405 --> 00:35:03.112
So we can actually say like, okay, nature is free and clear of all that.
00:35:03.112 --> 00:35:11.760
You know that the yield chasing or the, you know that the capitalism by 2030 or by 2050.
00:35:11.760 --> 00:35:21.396
And it's in trust, it's nature owns itself at the end of that period and that that extractive capitalist model goes away.
00:35:21.396 --> 00:35:24.744
So this we're viewing this, this is like a permanent.
00:35:24.744 --> 00:35:28.452
You know it's a temporary mechanism for permanent results.
00:35:29.021 --> 00:35:30.583
Basically, I love it.
00:35:30.583 --> 00:35:33.409
That's most of what I wanted to dive into today.
00:35:33.409 --> 00:35:38.389
Is there anything that, like we didn't cover, that kind of helps wrap things up for for folks?
00:35:38.610 --> 00:36:01.800
I think that's a really good way to put it, though I think just, um, like people understanding that you're putting a dollar value on on nature, like it's not something new, right, and it's not a bad thing, like all of our food, all of our timber, all of our you know, aggregate concrete, you know, you know anything in nature is already priced.
00:36:01.800 --> 00:36:04.304
It's just not valued accordingly.
00:36:04.304 --> 00:36:18.027
So what we're doing is we're appropriately valuing it based on the real value of natural capital methodology, and then we're triangulating it with the real asset cost and price of like what does it cost to actually buy the real estate?
00:36:18.027 --> 00:36:23.251
And then making it so that those two numbers like offset each other.
00:36:23.251 --> 00:36:29.295
They basically take, you know, like $100,000 of annual payments.
00:36:29.295 --> 00:36:33.789
Protects a million dollars of public goods value a year.
00:36:33.789 --> 00:36:38.351
That's just a rough example on one property we're working on right now.
00:36:38.351 --> 00:36:44.068
So that's like that's a 10 X annual return on capital invested.
00:36:45.532 --> 00:36:47.505
Poor nature, that that's a big return.
00:36:48.309 --> 00:36:49.958
Yeah, and, and people too.
00:36:49.958 --> 00:36:52.987
So, like you know, back to your other question of what you had asked earlier about, like what's the yield, like there are any profits too.
00:36:52.987 --> 00:36:54.177
So back to your other question you had asked earlier about what's the yield?
00:36:54.177 --> 00:37:04.367
So any profits, or any of these yields, or anybody making money within the Basin protocol, whether it be real estate or media providers or service providers.
00:37:04.367 --> 00:37:12.954
The idea is that 10% goes back into the protocol, minimum to actually do distributions throughout the protocol.
00:37:12.954 --> 00:37:30.664
And then, and also, if you know, if basin itself does land deals and there's a significant amount of profit, profit, that money goes back into the protocol as well and then it's streamed through the protocol and so so people are part of the protocol.
00:37:30.664 --> 00:37:38.588
So, like people can actually make money by being a part of this, and the ecosystems make money, the species make money at the same time.
00:37:38.588 --> 00:37:49.019
And so in our technology, the way the contract works is that value, that financial value, is streamed as dividends or patronage shares through the network.
00:37:49.019 --> 00:37:51.306
So that's the financial incentive.
00:37:51.969 --> 00:37:52.960
Okay, cool, yeah.
00:37:52.960 --> 00:38:14.248
And I saw that there was a really cool like media providers angle where if there's a photographer that takes a picture of this beautiful natural asset, like a canyon or stream or a basin, part of part of that, would go into a royalty of for that uh basin account, right that that owns that stream yeah, we're working on automating it.
00:38:14.590 --> 00:38:16.722
um, yeah, yeah, right now we're.
00:38:16.722 --> 00:38:18.525
You know it's manually, manual minting.
00:38:18.525 --> 00:38:38.612
But if anyone sends us a, a picture of you know, like jeff on our team, just really he just took some awesome aerial pictures of, uh, mountain rain, because here in colorado he's flying back from I, I think, utah and this incredible aerial photos and so if he submits the photos he gets a share of the mint.
00:38:38.612 --> 00:38:52.793
So if we mint 100 streams for those photos, or 1,000 streams, he gets 10% of the mint and then the rest of it gets distributed to whatever mountain range or river or whatever the asset, whatever the ecological asset is.
00:38:52.793 --> 00:38:56.731
It gets put in those walletsets and then they become the sellers.
00:38:57.800 --> 00:39:20.641
Those mountain ranges then become the sellers of their own assets and if you or I go pay real money for that photo of the asset, that money goes into that mountain ranges wallet and it now has its own money to manage, you know, on behalf of itself, and own other assets itself and trade within the network and then eventually buy real estate.
00:39:20.641 --> 00:39:31.079
You know we didn't get into that part, but maybe that's another episode, but we have this whole concept with these other experiments we've been doing with cougar dao and fabrica with putting.
00:39:31.079 --> 00:39:43.914
We have a farm as an nft, we have a piece of real estate in Arizona as an NFT and basically these are all designed for the protocol to own their own pieces of real estate.
00:39:44.440 --> 00:39:45.324
So if the mountain range.
00:39:45.364 --> 00:39:51.085
Had enough money, it could actually buy a piece of property in its mountain range.
00:39:51.085 --> 00:39:54.722
It can buy that 100 acres at the bottom of the mountain range and own it.
00:39:54.722 --> 00:39:55.905
People don't own it.
00:39:55.905 --> 00:40:01.244
The mountain range, mountain range, whatever you know saw watch range, dot basin owns that piece of real estate.
00:40:02.567 --> 00:40:05.632
That's another nft so that's so cool.
00:40:05.632 --> 00:40:08.585
Yeah, we gotta do a whole, a whole another episode on on cougar dow.
00:40:08.585 --> 00:40:09.768
But yeah, timo, I love that.
00:40:09.768 --> 00:40:12.641
I mean it's everything has a value, a price.
00:40:12.641 --> 00:40:14.302
But what do you want to call it Right?
00:40:14.302 --> 00:40:18.565
And so the idea, like for the longest time, has been negative externalities.
00:40:18.565 --> 00:40:25.070
You know nature is underpriced, undervalued or what it provides isn't actually given a real value.
00:40:25.070 --> 00:40:31.255
But we know the price of the value of water, clean air and what these services are provided by nature.
00:40:31.255 --> 00:40:34.358
I love that you're finally giving them their own balance sheet.
00:40:34.358 --> 00:40:37.429
Not just putting them on a balance sheet, but giving them their own.
00:40:37.429 --> 00:40:38.010
It's so cool.
00:40:39.081 --> 00:40:41.588
Yeah, and none of this negates the intrinsic value.
00:40:41.588 --> 00:40:55.851
The technical terms are we're using instrumental values, which is putting a dollar value on ecosystem services to help value the intrinsic value.
00:40:55.851 --> 00:41:06.000
So what we view Basin ads is like this in the middle of instrumental and intrinsic value is relational value, and these are all formal concepts.
00:41:06.000 --> 00:41:30.494
In ecological economics Like the Basin is just this mechanism of relational value, like how can we relate the financial value to the economic value, to the intrinsic value, and vice versa, to the art, the art value, uh, the you know, the subjective value that you know you might want to own um san jose creek dot basin shares, where I want to own roaring fork river dot basin shares because it's vocal.
00:41:30.494 --> 00:41:36.791
But I, but I also might want to own some of the san jose creek shares because you're there and I, you know, I want to support your watershed.
00:41:36.791 --> 00:41:41.295
So there's there's this whole idea of relational value and that's that's really what basin is.
00:41:41.295 --> 00:41:44.789
It's like this relational value engine that's.
00:41:44.789 --> 00:41:46.554
It's kind of the in-between I love it.
00:41:46.594 --> 00:41:49.443
Yeah, and then you can create a movement, you can create support.
00:41:49.443 --> 00:41:51.867
Yeah, you know people all over the world.
00:41:51.867 --> 00:42:02.346
There's sister cities, right, people living on the other side of the globe who are kind of connected to this other piece of land you know very far away, just because of a relational value.
00:42:02.346 --> 00:42:04.829
Yeah, 100.
00:42:04.869 --> 00:42:07.581
That's exactly and and that's, and, to me, cash.
00:42:07.581 --> 00:42:14.099
That's the definition of biodiversity and the interconnectedness of things of like, when you like, with what you just described.
00:42:14.099 --> 00:42:31.672
If you were to take a map on a globe and look at, like your basin connected to my basin, connected to roaring fork river basin, connected to, you know, green salamander basin to bald eagle basin to you know, whatever, whatever the different basins are, it's going to show that web of the.
00:42:31.672 --> 00:42:37.992
You know, it's just this deeply interconnected web that you, you know, you can't, you can't separate it from.
00:42:39.400 --> 00:42:40.125
Yeah, I love it.
00:42:40.125 --> 00:42:50.581
Kevin Milwaukee just talked about mycelium finance and just the, the underground web of mycelium and to try to mimic that more than what we do in the world.
00:42:50.581 --> 00:42:53.407
Yeah, that was a fun conversation he's got.
00:42:53.407 --> 00:43:06.210
Ethan is going to be dropping more about mycofinance and so like how ReFi can kind of mimic those mycelium-like structures is just kind of what you've said in the basin.
00:43:06.210 --> 00:43:09.510
You know every basin is connected in some way or another to another one.
00:43:09.940 --> 00:43:22.184
Yeah, and there's so many different tools like we could, you know, could plug into or you know, know, and I think we still will plug into, but it's you know, we're, we are trying to just create this, like you know.
00:43:22.184 --> 00:43:27.724
It's we're building the, the track right of the train of like how do we actually make it work?
00:43:27.724 --> 00:43:33.257
And for us right now, it's like we can't use 10 other tools or 20 other tools.
00:43:33.257 --> 00:43:33.777
It's just too cumbersome.
00:43:33.777 --> 00:43:36.103
10 other tools or 20 other tools, it's just too cumbersome.
00:43:36.103 --> 00:43:40.967
So we're building it ourselves for our own use case and then eventually, if we can use someone else's tools, great.
00:43:40.967 --> 00:43:51.074
We're actually using open source tools on most of it, so it's not exclusive of any other movement or any other project, any other movement or any other project.
00:43:51.074 --> 00:43:59.204
It's just like we're trying to just like prove, prove out the model and how it works and how it works within the protocol to flow those values around.
00:44:01.351 --> 00:44:30.443
Yeah, I love that, and you know you mentioned earlier that 18 real values of land and makes me think about the ecological benefits framework of not just carbon tunnel vision but the other you know, six plus services that healthy land does for water and air and biodiversity and equity and all that yeah, and so and so, like ours, we're working with ebf right now, um, in order for us to put the dollar values.
00:44:30.704 --> 00:44:40.585
Like we, we have to stay abstracted at the 18 um value level because the the way the ecological economics work on this.
00:44:40.585 --> 00:44:46.481
But they all, in theory, could be plugged into the six um ebf.
00:44:46.481 --> 00:45:05.911
Okay, they're still down um and we're working with doug now to get our own busy ICONs so they'd be part of the EBF framework and ICON library, but they would just have a little hash mark that basically indicates that it's part of the basin protocol.
00:45:05.911 --> 00:45:16.398
Their visual language is the best I've seen to be able to express visually what does pollination look like?
00:45:16.398 --> 00:45:17.585
What does habitat look like?
00:45:17.585 --> 00:45:20.208
What does inland wetlands look like?
00:45:20.208 --> 00:45:23.289
We have our own definitions.
00:45:23.289 --> 00:45:37.652
We have 14 different ecosystems that we've defined and 18 real values of natural capital real values of natural capital, and so the the EBF icons that we're hoping to design would would basically use our definitions.
00:45:37.652 --> 00:45:41.728
But you know, but it would still be part of the EBF framework and have that same visual language.
00:45:42.369 --> 00:45:42.911
Okay cool.
00:45:42.911 --> 00:45:49.072
Yeah, I think that's really helpful for people to be able to see that picture with visuals is is a big help.
00:45:49.072 --> 00:46:13.382
Douglas, he had a real fun take just on, like him talking about the organic food movement and you know how we're now past organic right and and just the nuances of of that type of certification and now what the ebf can bring to you know kind of further expand on what type of land management practices, because there's so much different things that can result from organic right.
00:46:13.382 --> 00:46:27.695
So what, what are the actual outcomes and I love that that was something that he pulled on outcome based, not just, uh, one blanket certification yeah, and their framework is awesome and they've been able to distill something really complex down to something fairly simple.
00:46:28.056 --> 00:46:29.280
So that's you know.
00:46:29.280 --> 00:46:32.931
They're doing really good work yeah, six words, that's all.
00:46:32.990 --> 00:46:35.985
Douglas needs awesome timo.
00:46:35.985 --> 00:46:39.175
Well, hey, we'll direct people to confluencebasinglobal.
00:46:39.175 --> 00:46:41.842
Um, how can our listeners support basin?
00:46:41.842 --> 00:46:45.581
Right now, though, what's some call to action that we can do to support the work you're doing?
00:46:46.021 --> 00:47:00.489
I think just you know like, if you have time or you want to understand the nuances, the detail and the amount of level of work, this has been a 20-plus year career but also three years of fully focused work on this.
00:47:00.489 --> 00:47:04.003
That's all detailed in docsbasinglobal.
00:47:04.003 --> 00:47:08.710
It's all referenced and footnoted.
00:47:08.710 --> 00:47:10.992
It's all there.
00:47:10.992 --> 00:47:15.670
If they want to dig in and see what all this is we're talking about, it's there.
00:47:17.501 --> 00:47:18.887
People can get their own dot basin.
00:47:18.887 --> 00:47:26.911
They can DM me or email me and we can mint their own dot basin for them.
00:47:26.911 --> 00:47:33.324
And then they can grab it off OpenSea or Rarible or any marketplace and we can give the instructions as to how to do that.
00:47:33.324 --> 00:47:39.697
And then anyone, even without a dot basin, can buy streams right now or Rarible or any marketplace, and we can give the instructions as to how to do that.
00:47:39.697 --> 00:47:50.974
And anyone, even without a DAB basin, can buy streams right now At Confluence on Polygon, you can buy and support the different projects and different what we call them is place, purpose and people on Confluence.
00:47:50.974 --> 00:47:57.025
It's the intersection of all this and so they can actually buy and support and start funding this stuff right now.
00:47:58.208 --> 00:48:00.193
Start putting some funds onto nature's balance sheet.
00:48:00.193 --> 00:48:01.001
I love it.
00:48:02.143 --> 00:48:04.389
Yeah, yeah, no, it's, it's, yeah, we're excited.
00:48:04.389 --> 00:48:09.327
There's just so much unlock that can happen with crypto and blockchain under the hood.
00:48:10.769 --> 00:48:11.050
Awesome.
00:48:11.050 --> 00:48:12.922
Well, we love what you're doing, sir.
00:48:12.922 --> 00:48:21.445
Thanks for everything and this has been really exciting to see this progress and we will be up to date more and let people know that we can keep supporting and thank you, Timo.
00:48:21.726 --> 00:48:24.300
Thanks for the support and thanks for all your great questions.
00:48:25.983 --> 00:48:32.027
Thanks to Matthew Patrick Donner for the refi generation production, including the music, mixing and editing.
00:48:32.027 --> 00:48:37.867
As a reminder, none of this is financial advice, and feedback is the breakfast of champions.
00:48:37.867 --> 00:48:43.206
Please subscribe to our show and send your thoughts, critiques and ideas for future content.
00:48:43.206 --> 00:48:47.324
Be well, take care of each other and do something good today.