Single.Earth has minted the first tokens from the work nature does to owners of lands in Brazil and Europe, and has started to roll out MERIT tokens to the market, co-founders Merit Valdsalu and Andrus Aaslaid said in this special episode of the NatureBacked podcast.
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Tarmo Virki 0:06
Welcome to the NatureBacked podcast of Single.Earth. In this special episode, we are talking with Single.Earth founders Merit Valdsalu, and Andrus Aaslaid, my name is Tarmo Virki. Enjoy the show.
Merit Valdsalu 0:18
It has been a very exciting year for us. I think mostly because a lot of the bets we've made into the future kind of are starting to realize now. So we started by making a huge assumption that we're able to digitally show the world what nature is doing in the physical world. And it sounded at first like a crazy idea. So it was like, I think a year or two ago when we first came up with the idea that why don't we describe the entire planet? And why don't we just describe everything that nature does? And then if somebody as a landowner wants to join us, we already have ecological value and the assessments and all of that there. And at that point, we clearly didn't have 100% confidence that it was doable. We can actually pull this off. Whereas today, we now have actually already succeeded in - so we have the first digital twin ready, we have the land management platform where these landowners can come in, create an account, upload their lands, and learn about the carbon sequestration in this particular area there. And then by that, we have kind of validated that we can solve this, this problem of, of the lack of financing, going to landowners, we can solve this with a platform like this. So I think this is the most exciting part. We've also, in addition, to onboarding the landowners and creating this platform; we have also minted the first tokens. So that is like point two that we have already validated. So that was like the second crazy idea that we at some point came up with, like, why don't we actually roll this the tokens that we're minting out as a currency? Can we create an actual nature-backed currency for the world? And again, we can say that, yes, we can. The world now has the first nature-backed currency, which is called merit. And it has been minted on the Solana blockchain already, and the tokens are there. We minted them to the first three landowners, which also proves that it's possible to tie that to the real physical world, mint a currency based on the work that it does, and issue it to the actual land owners.
Tarmo Virki 2:46
Sounds very little, but a lot of work has been going on in the background, right?
Merit Valdsalu 2:52
There's a lot of work that has been put into this. So I think starting from the science part, because as we understood when we started the journey like we expected that like we know how nature works like we obviously must have this information somewhere. But to our big surprise, that was not the case. We have a lot of satellites; we have a lot of satellite data; we have a lot of research that has been made in terms of like how the forests work, or how wetlands work. But nobody has ever put them all together in a unified in one, central place where everybody can just go in and see what the ecological value of a particular forest, for example, is. So I think that was like a huge surprise to us. And then a very obvious thing that we understood that although this is something that the world needs to have, like, if we don't know the ecological value of, of nature, then obviously, we're not going to be able to value nature for everything that it does. So it's just started from there. In addition to the science team, which consists of ecologists and data scientists that we have in-house, they have put a lot of work into making this happen. There's obviously a lot of work that has been put in from the technical side to make this scalable because while tokenizing or describing, first of all, the entire planet's nature is not something that's like very easy to do. Like it requires a lot of scalable infrastructure, and the technology has to enable and support all of this on quite a big scale. So these things are working so that there's a lot of effort that has been put into that. And also, as we are playing in the financial field and market as well, then obviously, there are a lot of legal regulations, and these are things that we have also been working on to make sure that we are compliant with all the necessary regulations. So it's like I think that the entire team has put in immense loads of work to pull this off. And then it's, it's quite satisfying to see the results. And it's all coming together.
Tarmo Virki 5:11
Tokenising the world nature sounds like, you know, a massive undertaking, specially Andrus for the technology side. Is it as bad or as big a challenge as it sounds?
Andrus Aaslaid 5:27
Well, yeah, I look Hello from my side as well. Well, I was going through my old notes from the last year, just yesterday, looking at what state we were one year ago, and what did we plan and where have we gone with all this. Like one of our data scientists once said, everything is simple as long as you don't start implementing. So I think last year has been very interesting and challenging because pretty much everything that we have launched for now - and what we're about to launch - has been there for more than a year in the pipeline. But the devil is in details; with quite fast growth, what we did with hiring in eight months, 60 plus people and putting them all work on the product in the different teams. I think that the biggest, not even a challenge, but the most complicated thing has been to have the teams themselves validate the aspects of what we initially proposed, sometimes more than two years ago already, because we have been hiring people who have degrees literally on topics for what the company is trying to achieve. And then what we are putting on the market. And it's not always very simple to turn around every rock to look at what's behind it or underneath it so that you would have a solid proposal that holds the criticism of the scientists, environmentalists, and IT industry and also reflects where the market of the sustainability and company's direction and environmentalists direction of how we save the planet, where all of this is going simultaneously. So it's been a tremendous work of organizing that chaos into a product which, which looks much like we postulated year, year and a half ago, when we were still seven people, not 70. But we are finally there. So it's been a hell of a journey.
Tarmo Virki 7:57
In the middle of July 2022 - what's new, why we're doing this special episode on Single.Earth?
Merit Valdsalu 8:10
Why we're doing this special episode is because, as we mentioned that we have already made the first tokens now, I think the next question I would assume a lot of people might have is like, when can they start purchasing these tokens? And when can they start to give back to nature? And the answer is that we are actually rolling the first tokens out to the market over the summer, including July; we start from over-the-counter deals and transactions, meaning that we don't have a public web where people can just come in and buy the tokens, mostly because we want to learn from every single transaction that we make. We want to talk to the people we want to learn about their motivation, their expectations, and all of that. And for that, we are doing this on a very limited scale. But also based on variable...
Andrus Aaslaid 9:10
Cammon Merit, you are being too modest. We're doing this special episode because we are finally coming to the market full-stack.
Merit Valdsalu 9:20
We are going to the market full-stack. And I think that's the point that first of all, the first target audience that we start talking to is companies. So we've received a lot of interest from the companies that want to start giving back to nature. And they literally don't know how to do that. They don't have any instruments for that, especially those that don't actually have a negative impact on nature directly. So we're not just talking about carbon, and we're also talking about biodiversity and ecosystem in general. So if there's a company that doesn't actually have a huge negative impact on, for example, biodiversity directly, but they still want to do their part in making sure that the ecosystem stays intact. And they want to have a very verifiable and accountable way of doing that, then they kind of feel that they don't have the instruments. So we decided that we would start, first of all, talking to them, and to understand how the merit tokens that we've issued fit under the ESG requirements or their ESG plans and strategies so that if somebody wants to make nature positive impact, then how can they quantify that with the help of Merit tokens? So that is, that is the first part that we start with, then obviously, the next thing is that, well, what if somebody doesn't just make a contribution but wants to keep holding the token because making a contribution means that we take the token out of circulation, it can't be traded anymore. Now, there's a huge audience for people who are also interested in holding the tokens. So that is the second segment that we start talking to, so we have a community of people around us already who are excited to do that. So we start with them, and we make the first transaction with them. And this is how we gradually roll everything out over the summer. And if everything holds, and we kind of validate all these aspects as expected, then in autumn, we will already have a more of a public launch, so that the people can just come in and on their own make the purchases. Right now if there's anybody who wants to also be a part of the first patch, then they can directly reach out to us, and we will share the information on how to get involved right now as well.
Tarmo Virki 11:55
Holding the token sounds very little to the people who are, you know, betting for things to go up and down and trade on a continuous basis. When can they trade them?
Andrus Aaslaid 12:19
Yes, well, this over-the-counter phase of the trading takes place, and then we gradually launch it to the public market. So, how it works is that we are doing a totally new instrument that never existed before, which means that we don't want to issue it to the public trading market immediately. Otherwise, a lot of things could happen, good and bad. So, how we do it is that with the current landowners what we have onboarded and we have a quite substantial amount of land in Portfolio already the tokens which we generate from those lands, so the ecosystem services, we are putting over the counter market for the companies directly with a fixed price. And basically have those tokens appearing in the company's balance sheets as an ESG instrument.
Then we gradually launch it as a semi-market from that on, which is a controlled market entry mechanism where the first of the tokens for public access will be launched off as an auction-based mechanism. So landowners will be sort of doing a reverse auction, or you almost have like an eBay of instruments. And then the third phase would be once the merit token has established itself on the market as a crypto instrument, then we will open it to the public cryptocurrency markets for public trading as well. The timeline of that is something that we measure in quarters rather than in months at the moment because each step needs to be calibrated against the previous one. But with a full market launch, we are going to be on the public markets somewhere in Q4 2022.
Tarmo Virki 14:27
When talking of tokens, there's a lot of fuss about the different ICOs we should kind of make clear there is no classical ICO for Single.Earth, right.
Andrus Aaslaid 14:39
ICOs are instruments where cryptocurrencies launch as mint coins put to market and often for fundraising purposes. What merit token is nothing we mint out of thin air or cryptography algorithms or something but...
Tarmo Virki 14:58
I think thin air is a really appropriate comparison here, right?
Andrus Aaslaid 15:05
What we mint it from is actual models of nature, which reflect the work that nature does underneath. And this means that we will not be able to do a large-scale ICO saying that here be your ten trillion tokens, and let's now have them having one euro each. And then everybody has given us money, and we now have 10 trillion. We are minting tokens from work that landowners' lands are doing. And the majority of this money, which is going to be collected from selling those tokens, is going back to the landowners. So it's not a classic ICO mechanism. It's an initial offering. But not in classical ICO terms.
Tarmo Virki 15:54
The other word which has gone on through the discussion a lot is the ESG. In the previous episodes of NatureBacked investors, opinions of ESG have varied quite a lot. Some of them have been really, really skeptical, some of them have been saying that you know, some of those elements have to be definitely there for the company to be successful in their businesses. What's Single.Earth's take on ESG?
Merit Valdsalu 16:23
I think ESG as a concept and as the goal of what it's aiming to achieve is obviously right; we need to take into account the environmental, social, and governmental aspects of running a company. And as long as it doesn't just stick to just reporting on an annual or quarterly basis of like, what's your footprint or the results of your actions, then, but instead tries to actually start pushing this towards a better situation, then I think it actually serves the purpose. I think there's a lot of confusion on the market right now around that. So I think this is kind of it will take some time for companies to adopt this. And for these principles to become a natural part of every people's already or company's daily businesses. So I think this will, first it will, kind of feel like something additional that they have to do. But obviously, the environmental, social, and governmental aspects are already a part of every business. And it only makes sense to take these into account as well. However, what is always the danger is that companies still continue working as they do and try to find ways how to kind of account for things differently and show them as better than they are or kind of like, quantify things from a different angle, and then still try to keep doing business as usual. And this is why we also are putting a lot of thought into what it is that we actually offer to the companies. And I think the most important part is that we don't just offer them just one particular instrument. We actually offer them a journey that finally takes all businesses to a completely sustainable nature-based economy; we also understand that it's a journey that's going to take time. And we have to divide this into phases. And this is why we start from something that already applies to the frameworks that they're already working with. But obviously, we don't just want to give them a way how to just contribute back to nature. But we want this to kind of pave the way to make nature conservation a part of their like daily transactions. So this is literally what we're doing when we're creating this nature-backed currency; then, our goal is to roll this out as an actual currency. So everything that you can do with your money today, you will be able to deal with merits as well. Another thing is that we can't switch to this overnight, so it's going to be a transition period. So, Phase One can be just contributing to nature through MERIT tokens. The next phase can also be for companies to just hold the tokens. And then after that, we will see a lot of interesting transactions that will start to happen once the company starts to, you know, accept merit tokens as a payment currency. Or pay this out as a salary to go to their employees or maybe to pay for their expenses. So I think all these opportunities are kind of waiting for us down the line once we're able to start from the same level where companies are today. So I think this is the reason why we start from what companies are already doing today, and we take them together with us on this journey that will end eventually with a fully sustainable nature-based economy.
Tarmo Virki 20:05
And how long does it take before Single.Earth will be paying the salary in MERIT tokens?
Andrus Aaslaid 20:14
We have no problem doing it today. Okay. You're welcome to get your salary in MERITtokens.
Tarmo Virki 20:22
I wonder what the Estonian taxman would say about that? But I think it's an interesting proposition.
Merit Valdsalu 20:29
It is, and I think like, it kind of like, for some people, it still sounds like something that is very far away that people will start actually paying and receiving payments in cryptocurrencies. But let's be honest, if you look at the investments that have been made into developing the web3, the crypto payments space within the last year and two years, then obviously, we will see a lot of change and very fast developments happening in that space in the coming year because all of these investments are now kind of starting to come to life. And we will see a lot of these new solutions, which will make this market more mature and these solutions more scalable. So I think the crypto payments becoming an everyday transactional solution is not that far from us, like there are so way too many companies working on that, to kind of feel that this is still just, you know, utopia. I think it's going to be a part of our daily lives very, very soon.
Tarmo Virki 21:33
Putting the cat on the table, Or what's the English expression for that? We're talking about cryptocurrencies and launching new tokens in July of 2022. Something happened in the crypto market a few months ago, and many people are still thinking about how alive this market is. What's the kind of view from Single.Earth on today's market situation around us?
Andrus Aaslaid 22:03
Well, we are going through a second largest crypto winter, and then depending on what you count as a crypto winter, there had been even before that couple of cycles on it. What happens to those markets is that you will be seeing a correction of the instruments, which probably should have never been there in the first place. So people have been speculating the hell out of everything on the crypto market, and a lot of that money has now vanished from the market again. So compared to where we started, when the Single.Earth was established two and a half years ago, almost three now that the crypto market's total market cap was substantially lower than it is today after the crash of spring 2022. yes, it has lost a lot of its value, but it's also known to be cyclic. And each cycle filters out the instruments that are somewhat important for the world other than just for speculation. And let's look at the last crypto cycle, 2017-2018. We see that a lot of instruments that were relevant there survived the winter and came back as a basic infrastructure component in the current cycle. Then I'm pretty sure that many instruments from that cycle will also see the next wave happening. We've been probably entering that sort of maturity period with the crypto now where we will be seeing it more as an infrastructure rather than just something which allows you to get rich quick because the gains are 1000 fold per month. Then you sell it, then you'll find your new coin to invest in than to have 100 times return there and then sell it and, and basically you jump from instrument to instrument just for the sheer speculation value of this. We see a lot of money that has been made in the crypto market disappearing to the super yachts and very expensive cars and houses. But we also see a substantial amount of that money going to develop that infrastructure. So there are still a lot of people who have conscious on the crypto market who will put the money collected from the ICOs and then going launches and NFT launches, to develop it to be something which we have now seen everybody promising that it's going to be the future of FinTech, it's going to be the future of the data management and data verification or integrity, we're going to see it playing the bigger and bigger part because the web3 was introduced just at the very end of the crypto cycle where people all of a sudden started to realize that the infrastructure which cryptocurrencies and blockchains are providing us, gives us a huge opportunity as a very secure and very distributed layer of making very secure transactions without actually having anybody intervening them or taxing them as a central hub. And taxing not in terms of governments but taxing NGOs in terms of fees and all kinds of service charges. So, I think, despite the fact that crypto has lost more than two-thirds of its total market cap today. I think the underlying tech is in quite a good state, and everybody is now looking forward to capitalizing on it.
Tarmo Virki 26:13
You both visited in June, one of the biggest crypto conferences out there Consensus in the US - it was still a big crypto party, right?
Andrus Aaslaid 26:25
It was a killer event in the sense that the crypto was crashing literally during the same days the Consensus was taking place and a few were in the bubble happening in Austin. We didn't notice it there; there were no people jumping out of windows or crying silently in the corner or smashing their laptops trying to, trying to sell whatever was left to sell there. Everybody was talking about infrastructure use-cases, DAOs was making a big pick up - different distributed sort of decentralized organizations based on blockchain was a big thing. Everybody was, of course, talking about the Terra Luna and how stablecoins that are built algorithmically are not really stablecoins. And then a lot of it was almost clinical, not emotional there. Which kind of gave us an idea that the industry is pretty serious about.
Tarmo Virki 27:36
So maybe wrapping it up, what's the kind of next big thing for Single.Earth?
Merit Valdsalu 27:44
The Next Big Thing is rolling the tokens out. So we've figured out the supply side, and now we're bringing this to the market and saving the world. So I think the next big thing is making the first transactions. But again, it's just a small step towards the big vision that we have, which is building a nature-based economy where the currency is literally emitted from nature, so we have the currency. But rolling this out as an actual payment method is going to be quite a long but very exciting journey because we already see the huge impact that it has the potential to create. So I would say the next big thing is making the first transactions and getting the first people to start holding MERITs, the currency of the future. And that alone is already very exciting.
Tarmo Virki 28:42
Merit Valdsalu 28:43
Thank you for having us.
Tarmo Virki 28:47
Thank you for listening. If you liked the show, please share it with your friends so they will find us too. We will be back next week. Turn on to the NatureBacked podcast.
Transcribed by https://otter.ai