New Earth Protocol LitePaper
Introduction to New Earth Protocol
New Earth Protocol is a climate-focused RWA project that aims to fill the gap between climate finance needs and the availability of capital for sustainable real-world assets (RWAs).
What Problem Does the New EarthProtocol Solve?
The New Earth Protocol was created to create a community purpose and accelerate investments in climate infrastructure which otherwise is struggling.
In Epoch 1, The network is filling the gaps in climate financing for agriculture so that new-age sustainable agriculture can thrive. To accelerate this we solve meaningful problems for both CE Farmers and Investors as follows:
CE Farmers:
Controlled-environment agriculture (CE) farmers face challenges in accessing affordable capital in the market. Even if the existing traditional finance (TradFi) and decentralized finance (DeFi) systems provide them with the capital they need it is either too expensive or overcollateralized.
And, unlike commodity-based farmers benefiting from the on-chain commodity RWA projects, CE farmers also lack this option because their produce such as vegetables, herbs etc are not listed on traditional exchanges.
Many farmers are not eligible to get capital from these systems due to high ROI and collateral needs. The farmers who get the capital from such systems have to increase their produce prices and become less competitive in the market. In both cases either due to lack of capital or due to the high cost of it, such farms close down after only a few years of their operations.
The New EarthProtocol solves farmers' problems by providing upfront capital in exchange for a percentage of their future harvest earnings.
Investors:
Investors who want to participate in sustainable RWA projects have no option available in the market that provides both good ROI and contribution toward a better future, a New Earth.
Traditionally, the ROI of sustainable projects are poor and also such investments are hazardous thus many investors avoid participating in such projects. This hampers the growth of such projects and also pushes interested investors out of the ecosystem.
With the New Earth Protocol, investors can avoid such problems by investing in a mutualized sustainable RWA pool and earning a daily yield generated by these projects in addition to the price appreciation of their investment. This encourages investors to participate in sustainable projects and at the same time they get the ROI for their investments with comparatively less risk.
How Does the New Earth Protocol Work?
The New Earth Protocol has three main participants:
Project Owners - In Epoch 1, these are Controlled-Environment Agriculture (CE) farmers seeking capital. They engage with the New Earth Protocol, committing to limited-time contracts where they provide a fixed monthly percentage of their harvests in exchange for upfront capital.
Investors - These encompass both crypto and traditional investors aiming to diversify their portfolios. They seek Yield-generating Real World Assets (RWAs), particularly sustainable projects like CE farms that offer consistent yields. Investors purchase Ownership Tokens from farmers to access these yield-generating RWAs.
Auditors - Each project undergoes assessment based on historical(if any), current, and future earning potentials, along with legal and financial considerations. Auditors, typically local institutions working in a domain and well-versed in web3 technology, play a crucial role. They aid in contract creation and data gathering for these projects, ensuring the network's security and reliability for all participants.
The process starts with farm onboarding by auditors on the Protocol. Auditors process the farmers' loan application and perform the legal and financial due diligence. Once qualified and approved, farmers commit to the loan terms via a legal contract. This legal contract is represented as an NFT on-chain and backed by the underlying asset.
In exchange for this NFT, farmers receive equivalent Ownership Tokens that they sell to investors for their capital needs. The farms' earnings as per the contract are then deposited in the Earnings Pool. Yield from the farms is paid to Ownership Token holders in the form of Yield Points daily. Each Ownership Token generates 1 Yield Point per day in perpetuity for its owner.
Yield Points represent the yield generated by the farm pool and its price is determined based on the Earning pool value and total Yield Points. These Yield points can be exchanged for USDT via an internal exchange. Investors can claim their farm yield in Yield Points and convert it into USDT at any time.
If a farmer wants to exit the obligation, they must buy back the Ownership Tokens they originally received. Once the Ownership Tokens are returned to the smart contract, the NFT commitment will become void.
What is the $NEWR Token?
$NEWR tokens are the native tokens of the New Earth Protocol. Their price is driven by the overall performance of the New Earth Protocol. Here is how the NEWR token is linked with the protocol:
NEWR holders get the governance right to propose and vote on the protocol level changes, updates and more.
NEWR holders are rewarded with some percentage of the protocol’s revenue on staking their NEWR Tokens. This attaches NEWR tokens with the performance of the New Earth Protocol.
NEWR holders can participate as Auditors. As discussed earlier, auditors onboard and validate new projects on the protocol and receive some percentage of the financing fee as a commission. Additional conditions apply to become an auditor.
NEWR holders have the option to stake their tokens for earning platform fees as rewards.
NEWR tokens are limited in number and a total of 1B tokens will be generated. This hard cap is set to safeguard against endless inflationary token devaluation.
What is an Ownership Token?
Ownership Tokens are yield-generating tokens that allow investors to participate in climate financing via the New Earth Protocol. As mentioned earlier, Ownership Tokens are minted when a farmer stakes their NFT in the protocol. Farmers then sell their tokens to raise capital.
These tokens are liquid and can be traded externally. If someone stakes 1 Ownership Token then he is rewarded with 1 Yield Point daily which amounts to ~365 Yield Points per year. Ownership Token holders can then exchange their accrued Yield Points for USDC at any time, allowing them to realize the yield generated by the underlying sustainable RWA projects.
Importantly, the total size of the Ownership Token staking pool on the New Earth Protocol fluctuates dynamically based on the active projects integrated into the system. Each time a new project is onboarded, an equivalent number of staking options are added to the overall pool. Conversely, when a project's tenure concludes and it no longer contributes to the earnings pool, the corresponding staking options are removed. This ensures the staking pool size remains directly correlated to the active, yield-generating RWA assets on the New Earth Protocol.
An open position is created whenever a token holder unstake his Ownership Tokens partially or fully. Once this open position is created anyone holding Ownership Tokens can stake to close this open position and generate YP tokens for himself. The duration for which this position will last depends on the project in which the open position was created.
Furthermore, an open position is created whenever an Ownership Token holder unstakes their tokens partially or fully. Other Ownership Token holders can then stake to close this open position and generate Yield Points for themselves. The duration for which this position remains open depends on the specific project associated with the unstaked Ownership Tokens.
What is a Yield Token?
Yield Tokens represent the yield generated by the farm pool. 1 staked Ownership Token will generate ~365 Yield Tokens per year which can be reimbursed as USDT. Its price is determined based on the Earning pool value and total Yield Points. Yield points exist only on the New Earth Protocol and will not exist outside it.
What is the vision behind the New Earth Protocol?
New Earth Protocol is on a mission to make affordable to everybody and become the leading on-chain protocol to address the climate change-related financial challenges in the world.
The world requires $102 trillion over the next 30 years to prepare for climate change and agriculture alone necessitates nearly $1.2 trillion. The existing approach to these challenges has proven inadequate, showing no positive results in the past 15 years.
The New Earth Protocol advocates for a people-cooperative structure, a successful model from the last century. Enhanced by Blockchain, this model can now be implemented globally with diverse participation, addressing contemporary challenges.
Agriculture, like other industries, grapples with climate-related production and consumption issues. To foster a substantial and positive impact, the focus should be on making climate-friendly products accessible to everyone globally, not just a select few. The goal is to enable the masses to conveniently purchase quality, affordable food.
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