Algorand plans to convert network transaction fees to carbon offsets

Proof-of-stake blockchain protocol Algorand will implement a smart contract that automatically compensates the network for its carbon emissions.

In a recent announcement, Algorand revealed that a new smart contract will take a portion of every transaction fee across its blockchain network and automatically process it for purchase on ClimateTrade, a blockchain-based carbon offsets marketplace. Verified carbon credits.

According to Algorand Foundation CEO Staci Warden, the move will allow the network to scale while remaining carbon negative. Warden told Cointelegraph that smart contracts will ensure their blockchains remain green in the long-term, and hopes other companies will do the same.

“We hope this encourages our partners and other blockchain protocols to reduce their carbon footprint,” Warden said. She explained that all tech companies have a responsibility to help build a sustainable future, and their team is excited that they can provide a blueprint for how to get there.

The CEO also praised the blockchain industry's efforts to be more environmentally friendly. Warden said:

“The industry is moving in the right direction by adopting Proof-of-Stake as the consensus mechanism of choice. While the criticisms of Bitcoin and Proof-of-Work are certainly valid, the future is bright.”

Back in 2021, the Algorand team committed to becoming a carbon negative blockchain. Through its partnership with ClimateTrade, Algorand is able to record its on-chain carbon footprint and deposit an equivalent amount of carbon credits into green vaults.

At the same time, in order to combat the impact of climate change, insurance company Lemonade has partnered with blockchain companies to form a decentralized autonomous organization (DAO) aimed at helping African farmers from the impact of climate change. The group, called the Lemonade Crypto Climate Coalition, provides climate insurance to farmers and allows them to be compensated if they are affected by natural disasters.