# Reimagine AMM Carbon Finance

# Background
A carbon credit is a permit that permits credit holding entities to emit a certain amount of carbon dioxide, though could be scaled to other greenhouse gas (GHG). Carbon Air Tokens (CAT) are representations of a right to emit that carbon. Carbon credits act as the “currency” of carbon markets,though the market is disjointed globally. Companies are allowed emission allowances targeted at meeting international reduction agreements. Those companies that are able to operate below their allowences are allowed to sell their credits to companies that dont.

# Research Points
* Market Stability Reserves(MSR), can these be leveraged for the goals of this research?
* Price & Supply Adjustment Mechanism(PSAM),can these be leveraged for the goals of this research?

# Balancer Research - Universal Carbon Token Design

# CarbonSDR(CSDR) Main Features:
* Reimagining carbon finance is automated market maker (AMM) solution to support convergence of carbon credits globally
* Pool of pools AMM design to optimize price convergence of carbon credits across disparate jurisdictions and currency areas.
* Creation of a carbon denominated Special Drawing Rights (SDR) based on the SDR formula and weights distributions under the remit of the International Monetary Fund (IMF)
* Redemability of a global carbon SDR (CSDR) against member state Paris Accords committments could support financing for the Sustainable Development Goals (SDGs)
* Non-Fungible Tokens representing Carbon Reduction Unit (CDU) projects could be tokenized and integrated into global carbon reduction scheme.

# Research Modeling
* TEST - Carbon SDR in line with the GHG Protocol and standardized accounting methodology for calculating carbon optimized using AMM solution for globally synchonous CAT markets with minimized impermanent loss for effective and efficient .
* cadCad modelling of AMM design using 100 days of prior data using IMF FX data and publicy available carbon market data based on GHG Protocol (e.g. standard supportive of token fungibility )
* Calculating impermanent loss on individual pools as well as pool of pools using Balancer methodology
* Test Markus's suggestion of by-passing the nested pool approach.
* Test Sebastian's "designed in California, assembled in china and carbon neutralized by ...?" balancing model. This relates to article 6 of the Paris Climate Accord (Internationally Transfered Mitigation Outocomes)

# Theory of Change - Discussion
Are AMM an optimal model for carbon markets using Special Drawing Rights weights for price convergence?

The Paris Agreement state that the global temperature increase should be kept well below 2°C above pre-industrial levels and that efforts should be pursued to limit the temperature increase to 1.5°C above pre-industrial levels.

The Globe has a carbon budget of 420 GtCO2. (1 GtCO2 = 1 billion tonnes (metric tons) CO2.) To make sure that the carbon budget is not overrun, net zero emissions must be achieved before the budget runs out.

Policy alignment is intended to utilize a basket of carbon AMM pools in various jurisdictions with disparate carbon markets to align price of carbon so that incentives for offsets and green technology are fairly consistent, especially as the carbon budget reduces through redemption of Carbon SDRs.