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An interview with Owen McCall from TREECYCLE

An interview with Owen McCall from TREECYCLE

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Tags: Electronic commerce, Sustainability

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Cryptocurrency, Bitcoin, and blockchain have been all over the news recently. In 2021, an analysis by Cambridge University suggests Bitcoin uses more electricity annually than the whole of Argentina. This "power-hungry" feature of mining cryptocurrency has exposed it to massive criticism of ecological inefficiency and negative environmental impact. However, is that necessarily the case for all virtual currencies? The rise of a Switzerland-based investment company, TREECYCLE, has provided an optimistic answer to this question. TREECYCLE is managed by Global TREE Project (GTP), which sells asset tokens that are tied to actual eucalyptus trees growing in Paraguay.

The asset tokens called "TREE." Each TREE sold generates 100 currency tokens, of which 70 go to the TREE holders. As a hybrid token offering, TREECYCLE will offer a maximum supply of 10 million security tokens designated as TREE tokens, with a base cost of $23 each, for a maximum of $230 million raised. To support sustainable development, 40% of the revenue generated from each harvest is distributed proportionately to TREE holders, while 50% is reinvested in purchasing land and seedlings to grow eucalyptus trees in Paraguay, ensuring TREE is a passive growing asset.

In this interview, we talked to Owen McCall, a marketing director from TREECYCLE, who introduces the history and current stages of the project, how the asset tokens work, and the social and sustainability goal of the project.

XRDS: Nice meeting you, Owen. Let us start by asking, from the company's perspective, what motivated you to start this project, and what inspired you to work in the industry of sustainability?

Owen Mccall: First of all, Global TREE Project, which is the mother company, was founded in 2018 by a group of experienced reforestation engineers, financial experts, and sustainable infrastructure specialists. The big thing with these guys that ties them all together is that their backgrounds complement each other. They have financial experience, on-the-ground reforestation experience, and sustainable infrastructure [experience]. The goal of the whole company-wide project is based on the idea that business can be done better. In the past, investors and people who are looking to join a company as employees or take part in the market, are often forced to choose between project and planet. The idea of the global tree project is that we can create projects that satisfy both needs. That can be quite difficult at times. So in that way, the mother company, Global TREE Project, is dedicated to developing real sustainable project solutions that maintain a strict commitment to ecological preservation and sustainable development. Again, it brings together projects and companies the ideas that make physical and economical sense and are aligned with ecological preservation, etc.

XRDS: Is there anything special about the eucalyptus trees?

OM: It is a good question. Eucalyptus has some positives and some negatives in its idea. With the TREECYCLE project, which was called "TreeCoin" before, we looked at the opportunity in Paraguay. There's a real need there—an economic need and a market need for this eucalyptus wood. It's used in many different industries across Paraguay. There's a lot of energy requirements as well in Paraguay and a lot of the infrastructure there isn't so well developed. Commericla wood is one of the biggest uses for reforestation in the area, so that's a huge demand. On the energy side, this is burnable fuel. With the eucalyptus trees, there's a couple of different angles here. In general, GTP and TREECYCLE use a specific hybrid eucalyptus tree. It's really interesting for a couple of different reasons. Number one, it's the fastest-growing hardwood tree in the world. It grows five to seven meters per year; it's a low oil eucalyptus. Some eucalyptus species have a high oil content. This is what you'll see, koala bears chewing on this kind of Australian eucalyptus tree that has a high oil. It's great for koalas, but it can be damaging to the soil. In the case of wildfires, it's really dangerous because it means that the trees combust much faster. We use this one because it's a specialized hybrid. It grows fast and the cool thing is that it can grow in areas that are called "fallow lands." Fallow lands are like old farmland, unused pieces of land. Usually what happens is like a company or a farm will come in and they'll either raise cattle or soybeans in the area. These are two major crops there and they just overuse the soil back-to-back, crop to crop, meaning that they give it no time to regenerate itself. They do this so much that the soil becomes barren. It becomes almost unable to grow anything to sustain life. The cool thing with the TREECYCLE project is that the only place that we deploy our eucalyptus is in these fallow lands. So here's the thing. If you were going to start a reforestation project and what you were doing is you were buying up pieces of the fertile wildland where native trees are growing, this would cause massive damage to the ecosystem and it makes absolutely no sense. That's pure profit-driven, not thinking about sustainability whatsoever.

With the TREECYCLE project, look, we're purchasing land. Our entire project grows this eucalyptus tree only in these areas where the land is already damaged beyond repair and can't sustain life. That's where we deploy these eucalyptus trees, as I said, very fast growing. They can grow in these poor soil conditions and still produce high-quality wood. We look at this business opportunity as a harm reduction model. The demand in the market is not being met. When this happens, bad actors in the market will step in, taking down the native rainforest and this is where you see a ton of destruction in that capacity. That's our huge focus, but we want to avoid this and find an alternative solution. Because, you know, if you look at Paraguay and this is really why we chose Paraguay in general, the country's lost something like 80 or 90% of its forest land in the last 50 years or so. This aggressive deforestation, it's ripping apart the native rainforest, of course. Here's where we look at this problem. You know, there's a market demand that can't be avoided. The practices now mean that there's not enough supply to meet it.

We come in. We feel the need for a product that does the least harm possible. On top of that, what we try to do is what we're committed to and every piece of land that we purchase and every place that it edges on an existing rainforest, we protect all of these things. We would never chop down an existing tree or area filled with trees to replace it with eucalyptus. That just goes against everything that we stand for. We pick these spaces that are already unused, destroyed. We plant our crops there to fill this market need in the best way possible. In the way that we harvest, everything is focused on sustainability. We don't just grow and come in and chop everything down. We utilize a sustainable harvest cycle. That's the focus there. To sum up, there's a market need that we need to address and we've been able to find a hybrid tree that fits the needs very well and fills the requirements and can be used in a way and in a method that doesn't do further damage to the environment. Those are the key elements.

XRDS: It is cool that you are growing those high-demand, low-oil eucalyptus trees in the fallow lands of Paraguay. Considering the amount of land that is involved, you may have to work closely with the local government. Did you meet any difficulties, or have they been supportive of the project?

This is a legally recognized financial contract in digital form, secured on the blockchain that entitles someone to a longer form financial contract.

OM: Yeah, it's a really good question, actually, with the project, we have been really lucky in that the government has been very supportive both in Paraguay and we've also been able to involve the Paraguayan ambassador to Switzerland. She's aware of the project. And we've been able to have some great meetings and sort of come together on both the public and the private side. They're very supportive of what we're doing. Also, Paraguay is open for business. It's looking for outside capital injection as well. The local and national governments are very supportive of foreign businesses. And, you know, we're working in concert with them. We haven't really run into many difficulties because I think we sort of come on the same page of looking to preserve the native beauty of the country. That's often not a hard sell to get them on board with that. We've been pretty lucky on that side. I would say there's been a lot of cooperation. We've got a lot planned for the future as well. Just focusing on human welfare down there with some of the disadvantaged groups. We've got a big network of charities that we support down there and also some of the technological infrastructures that we're developing for this project.

We're also hoping to be able to offer certain capacities to local populations there because a big problem is they don't have access to banking infrastructure. And a lot of these areas in the more rural areas, there's a big gap. You've probably seen this phrase "the unbanked populations." That's kind of a big buzzword. There are these people, many of them don't have access to banking infrastructure, but they all have cell phones. And so we're also developing a cryp-to-based economy that's lightweight. It can work on cell phones down there. And hopefully, with some luck, we'll be able to build out an economy like an alternative sort of fairer ecosystem. We've made some interesting partnerships in Paraguay already. As I said, we're close with the government. We're also close with some professional sports teams down there and also supermarkets in this kind of thing. We're now sort of working together to see if we can do something for the digital economy down there. That's exciting.

XRDS: You raised a really interesting point here. Jiayi was traveling in Peru before the pandemic. One thing she noticed was, due to the under-developed infrastructure, many individuals in South America do not have stable access to bank infrastructure. The way you set up the business should be beneficial to the local economy.

OM: As I said, there are sort of a lot of moving parts with this project and this sort of building out this accessible digital economy for some of these populations—that's a passion project of the company. But it's a longer-term project, of course. It's really interesting because banking infrastructure is inaccessible to a lot of people. And then with that comes uncertainty when it comes to payments. A lot of these people are dealing with, you know, fluctuating work situations— maybe they're laboring on different farms or plantations, ones that don't care so much about human rights and things like this. It's unclear where the paychecks are going to come in. And once they have it, I mean, there are massive inflation concerns —this be a very concerning issue in the area, for sure.

XRDS: The payment tokens are available in the stores in Paraguay. In some areas, these coins are circulating in addition to the local currency. Could you elaborate on that?

OM: This is exactly part of the economy that we're talking about. So what we're doing there is we're setting up some pilot projects with some local supermarkets. And what we're going to do in the first run is we're going to provide the individuals that work in the tree nursery and on the plantations and farms of the TREECYCLE project with these payment tokens. We're going to do a trial run giving these guys some of the first TXC tokens to start using in this alternative economy. And so what we've done is we just set up, as I said, partnerships in the area with some local businesses as well as supermarkets. And we're, just, like I said, doing this pilot project now, setting them up with the infrastructure that allows them to transact on both sides with the cryptocurrency, in this case, the payment token. We're just in the middle of setting these things up and providing some incentives as well for these local businesses to accept payments here. We're using these pilot projects as a sort of proof of concept, working out how everything is going to function, and also getting feedback from these users themselves. As you said, you know, there can be differing levels of education when it comes to digital interfacing and that kind of thing. So it's going to be looking forward to the learning curve there and getting some feedback on what we can improve on.

Global TREE Project is dedicated to developing real sustainable project solutions that maintain a strict commitment to ecological preservation.

XRDS: Great, let's go back to the two-token system that you mentioned. Can you tell us more about how the assets are being managed?

OM: Absolutely. So, as you said, we have a dual tracking system. Both are built on the Ardor blockchain, the actual chain that we use as a daughter chain called the Ignis Blockchain. We have a security token and a payment token. I'll start with the security token. Basically what we have here is a Swiss-based digital asset linked to an underlying physical asset. Token holders of the security token are entitled to a 40% share of dividend profits over a 22-year period. This is a legally recognized financial contract in digital form, secured on the blockchain that entitles someone to a longer form financial contract. It's treated in the same way as a security firm in the traditional sense. And we're really lucky in Switzerland because the regulatory situation is quite clear. Switzerland's a leader in the crypto economy and Industry 4.0, and has been so since 2015, 2016—and now I mean it's even more robust. But even in those earlier years, Switzerland has led the charge with a lot of the regulatory stuff.

Then moving to the payment token. This is a cryptocurrency. The difference here really is that with the treaty security token, there is an underlying asset that's attached to it, whereas with the payment token in the same way as Bitcoin, its value is market-driven. And so this is called a payment token, our cryptocurrency, depending on what sort of ideas the regular regulators are using. So with this one right now, what we're doing with the TXC, the payment token, is we're providing it as a bonus, as a gift on top when you purchase the TREE token itself, because, as I say, the alternative economy idea, this is a longer-term project. We know it's going to take us some time to develop it. So right now, we're launching, as I said, in Paraguay, the first pilot projects there to use it in an economy and also globally for our investors. We're also building a tree store. It's going to have just sustainable products. And here is where we're going to begin the experiments with digital payments online for the rest of the world. So that's the two major differences there.

XRDS: Yeah, it's cool that you're doing this social impact project with blockchain techniques. How does it compare to the more "traditional projects" in sustainability? And more specifically, what role did blockchain play here?

OM: Excellent question. I'm going to take it from two different ways. First, let's think about charities in general and where blockchain applications can help there. With social projects or charities in general, the big problem has been transparency. This is the case in this scenario with used correctly, deployed properly, if you have a system underpinning donations or underpinning where certain assets are allocated, that's cool. I think you can see that a lot in the boxing world in general. There's a lot of sites that are opening up just to sort of allow this to happen, social giving sites that focus on transparency. Maybe you've come across some yourself. I've come across a few that are focused on this. Maybe you guys know about the DAO-like decentralized autonomous organizations in the blockchain. In a DAO, community votes focus on or decide where the projects go. This is something that I think is cool in the market, this transparency and letting the community dictate where projects it's going to go—it's interesting stuff.

For TREECYCLE, our use of block-chain technology provides us the means to ensure transparency, security and access—the three points here. So again, in the same way that we're opening up this asset class through this technology use, leveraging this to open it up to the general investor and the public, it's going to be very clear and transparent. On the social impact side as well, we're exploring the technological implications and opportunities with our plans with the TXC payment token and economy. This is where this idea will come to fruition, where it becomes very transparent, where donations are going, how things are going to work like that. In a nutshell, the answer, how does blockchain impact social projects? I think the overarching thesis of what hopefully can change is increased transparency into where the funds end up and the capacity to link together multiple international parties directly.

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Jiayi Li is a Ph.D. student in statistics at the University of California, Los Angeles. She has a B.Sc. in mathematics from the Stony Brook University and the University of Hong Kong. Her research focuses on the fundamentals of machine learning, including generalization, non-convex optimization, and manifold learning.

Yingfei Wang is a Ph.D. student in the Quantitative and Computational Biology (QCB) department at the University of Southern California. She is also pursuing a master's degree in computer sciences. She received a Bachelor of Science in statistics from the University of Hong Kong. Her research work includes applying machine learning and deep learning methods to understand the physical properties of DNA, genome organization, and gene regulation.

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