IU Incubator Funding Projects for Ecologically Enhancing Agroforestry Systems with Security Tokens (STs)

Study on the economic feasibility of enhancing marginal and agricultural/ land in Germany in terms of carbon sequestration and biodiversity through re-cultivation with an initial focus on planting hedgerows and other suitable agroforestry systems.

The study assumes the acquisition of land and/or long-term land leases/user rights financed through STOs (Security Token Offerings). HedgeToken investors will be given the opportunity to contribute to the environment together with achieving sustainable returns from the sale of carbon credits with the chance for additional returns from potential biodiversity rewards in the future.

A co-operation with respective landowners through select agricultural and forestry faculties at German universities  has been established and a pilot project has been identified.  HedgeToken will provide a financial and commercial master plan for the project. The project plan will then be discussed with the group of landowners who are part of the project. This pilot plan shall subsequently serve as a blueprint for other future afforestation projects both in Germany and internationally.

The project is broken down into the following five research modules dealing with the (1) economical, (2) legal, (3) commercial (4) technical feasibility examination of HedgeToken and (5) the examination of the future tradability as a liquid asset class of the tokens and its prerequisites around these topics:

Q1: Is it economically feasible to tokenize equity and usufruct of a company, holding assets for such purpose?

• Availability of marginal farmland for purchase or lease

• Cost of marginal farmland

• Cost of renaturation especially when land is dispersed over the country

• Alternative to purchase of land: creation of user rights for land

• Annual ongoing maintenance cost • Additional cost of audit/certification

• Cost of various forms of tokenization

Q2: Where is it legally feasible to tokenize equity and usufruct of a company, holding and selling assets for such purpose?

• Domiciliation of legal entity/special purpose company

• Legal structure of token • Documentation requirements (prospect)

• Legal compliance and investor and issuer jurisdiction • Eligibility of issuance of tokens

• Outlook on future legal developments, will token to be considered securities?

• Can the future project owner issue their own carbon offset credits?

Q3: Is it commercially feasible to tokenize equity and usufruct of a company, holding assets for such purpose?

• Which mechanisms do exist today for carbon offsets in Europe and beyond?

• What are the rewards currently paid for VCOs and what are expected developments?

• What projects are currently pursued in Germany for voluntary carbon offsets?

• How does the market function?

• What is the size of the market and growth rates?

• Are there standards for accounting, auditing, and compliance of the projects?

Q4: Is it technically feasible to execute the project in a carbon neutral way?

• i.e., blockchains use significant amounts of energy

• What can be done to mitigate the projects’ carbon footprint?

Q5: Is it feasible to create a token that is liquid and can be traded in a secondary marketplace? Assessment of current and future state of trading platforms for security/value token:

• Token structure either in the form of equity token or in the form of debt as bond with fixed coupons

• Assessment of existing and future token markets and their trading volumes

• Emergence of central versus decentralised markets

• Emergence of market makers and research (replication incumbent financial markets model)

• Inclusion into ESG compliant asset classes