Proof-of-Stake blockchain protocol Algorand will implement a smart contract that will automate the compensation of the network’s carbon emissions.
In a recent announcement, Algorand revealed that a new smart contract will take a portion of each transaction fee within its blockchain network and automatically process it to purchase verified carbon credits in the blockchain-based carbon offset marketplace ClimateTrade.
According to Stacey Warden, CEO of the Algorand Foundation, the move will allow the network to scale even though it is carbon negative. Warden told Cointelegraph that smart contracts will ensure that their blockchain remains environmentally friendly in the long run, and expects other companies to do the same.
“We hope this will encourage our partners and other blockchain protocols to reduce their carbon footprint,” Warden said. She explained that all tech companies have a responsibility to help create a sustainable future, and her team is pleased that they are able to provide a blueprint on how to achieve this.
The CEO also praised the efforts of the blockchain industry to be more eco-friendly. The warden said that:
“The industry is moving in the right direction by adopting Proof-of-Stake as the preferred consensus mechanism. While there are certainly legitimate criticisms against bitcoin and proof of work, the future is bright.”
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In early 2021, the Algorand team pledged to become a carbon-negative blockchain. Through its partnership with ClimateTrade, Algorand was able to log its on-chain carbon footprint and hold an equivalent amount of carbon credits in Green Treasury.
Meanwhile, in an effort to combat the effects of climate change, insurance firm Lemonade partnered with blockchain companies to create a decentralized autonomous organization (DAO) that aims to help protect African farmers from the effects of climate change. . The DAO, called the Lemonade Crypto Climate Coalition, provides climate insurance to farmers and allows them to be compensated if they are ever affected by natural disasters.