Ep. 19 Financing Impact with Maex Ament of WithEarth.xyz

In order to make change, I think we cannot be too radical. And it pains me to say that because I'd love it to be different. But in order to make a difference and have an impact, we need the fucking governments to move and we need corporates to move.

Welcome to Refi Generation, the podcast that talks to experts and leaders in the new frontier of regenerative finance to examine how blockchain technology is creating the next generation of environmental and humanitarian initiatives. I'm your host, Cash Upton. In today's episode, we talk with Maex Ament of Centrifuge and WithEarth, .xyz. Having vast experience leveraging technology to fundraise and create positive impact, Maex is a bridge between Web3 and the climate space. Centrifuge tokenizes real-world assets and puts them on-chain. Some examples are invoices, music royalties, mortgages, consumer debt, and all the way into carbon credits and carbon forwards. Maex gives a thorough and nuanced explanation of what tokenization of real-world assets can allow for. One such example is democratizing the access to liquidity. Max shares his thoughts on how the immutability of smart contracts on the blockchain allows developers to build on a stack that is both philosophically and technologically unstoppable. We discussed the Real World Asset Summit in New York City this fall, as well as real world asset summits happening in Dubai and at ETHCC. We finished the conversation with Max giving some thoughtful feedback on how the refi space can evolve in order to green pill institutional investors, and governments. I thoroughly enjoyed this conversation with Max. I hope you do too.

Hey Max, how you doing today?

Cash doing great. Thanks. How are you?

Doing well. So I was really glad to have you on after seeing you speak at the Flow Carbon event at Ethereum Denver. So I wanted to talk a little bit about kind of a recap on the broader stuff that you guys are talking about, how you got into regenerative finance and what you're involved with at Centrifuge, and kind of the broader question of how is Centrifuge helping to fix finance and how regenerative finance can be a tool in the fight against climate change. Why don't we start with just a little background on you and how you got into sustainability and regenerative finance?

Yeah, happy to do that. So I mean, I think it, it, in all seriousness, it started at, uh, about 4-ish years ago. I found it Centrifuge, which is a tokenization of real-world assets protocol. So we bring shit from the real world onto a blockchain. Why do we do that? Not just for fun, but to make those things on blockchain and more liquid, provide financing. Um, and the classical examples are financial instruments like consumer debt on-chain, finance it easier. Mortgages, uh, houses to take, like, real, real-world assets. And, and a few years ago, uh, we came— I came across a gentleman called Phil Fogel, uh, one of the founders of Flow Carbon. It's more than 3 years ago, I think. And, uh, he came with that idea: is there a way of doing what, what Centrifuge does but maybe looking more into, uh, the carbon world, the carbon space, carbon credits, carbon offsets. I obviously was familiar with it, but not deep into the topic. But the beauty then was that we started discussing carbon credits in the context of what I understood, real-world assets and tokenization. And that, that was a little bit of starting point for me when this intersection of climate and blockchain started to make sense. I looked for a way into the climate space for years always felt it too hard, not my superpower. And then when actually this intersection happened, and it wasn't called refi back then, but I think a year later we started calling it refi, regenerative finance. It was exciting for me because I could apply this Web3 knowledge to the climate space and then expanded myself from there. But that's a different story.

All right. Yeah. And it's interesting that you start out more than carbon, right? Because so many people talk about carbon tunnel vision right now. But for the longest time, you were doing more, like you said, mortgages, other real-world assets. And so, um, why blockchain, I guess? So I think you mentioned it, but let's, let's dive into that a little bit more. It's a liquidity factor, right? So like, how does blockchain be a tool?

So I mean, there's two answers, a million answers to that, I think, but two answers. So why did we choose blockchain? So, and that goes back years, uh, before there was regenerative finance, years before there were carbon credits on-chain, um, So about 8 years ago, my co-founders and I had the idea to make a process that is very big, very selective, and more transparent. What I'm trying to say here is we had a startup before Centrifuge. That's the company we founded about 8 years, 7 and a half years ago. We had a startup, quite successful one, in the traditional financing space. The company called Taulia. Where we Web2-style fintech, we helped suppliers to get financing. So if I'm a small medium business, I could access liquidity through Taulia platform earlier, faster. And there were a couple of problems. Company was very successful. We sold it to SAP, big German software company eventually. So great outcome for everybody. Nevertheless, we weren't quite satisfied with how we did things at Taulia and how Taulia scaled. The first thing was that we built Taulia obviously on a Web2 stack. We built it even more so on a Web2 stack, if you want. We were reliant on this big SAP company that we built on top to actually allow us to do the shit that we needed to do. And at one point, SAP, the big company with all the beautiful data inside, decided to make our life a little bit harder. So they changed some rules, some APIs, whatever. And it was pretty hard for us to continue doing the business that we want to do at this company called Taulia. So one of the things when I heard about smart contracts and unstoppable blockchains was like, wait a moment, maybe the next company should be built on a stack that is at least philosophically and from a technical perspective as well is unstoppable. That's the word that came up then. So this was number one. We want to build something where a middleman couldn't just cut us out or off. The number 2 was that financing is always limited. So if I'm a small medium business, I'm at the mercy of the financing partner to, to support my country, to support my credit rating, to be— currency needs to fit in a million other things that I not necessarily can control as a small medium business. So we wanted to democratize that access to liquidity. So those 2 things together led us to let's build something on-chain fixes the problems we had at Talia first. And we started with invoices because that's the shit we knew— factoring invoices. Um, and then from invoices moved into music royalties, mortgages, um, consumer debt, inventory, and eventually— and now we're back at Climate— finally, uh, went into carbon credits, carbon forwards.

Okay, cool. Yeah, the music royalties is a really interesting one too. Um, because there's just so much that artists are not reaping of their own art, right?

Yeah, I mean, think about it. If I'm— and I might get the numbers wrong— but if I'm an artist, first of all, it's pretty fucked up for them generally to be on Spotify, to make, I don't know, a billion streams you need on Spotify. But that's not a battle I can fight with the music industry. Someone else got to die on that hill. But What I probably can help with, or what we try to help with, is, well, if I have this streaming and there's a few thousand bucks, a few hundred thousand bucks if I'm a larger artist, that Spotify, Apple Music, or whoever owes me, well, I got to wait 90 or 180 days till Spotify pays me. Although the data is already there, Spotify will pay that artist. Guess what? If we can use that data as a backing to advance the money, So that was one of the use cases together with a partner we did as one of the first pools in Centrifuge, with Music World, for exactly that reason.

Oh, interesting. And doing advances integrated with data.

Exactly, exactly. I mean, that's what everything is about, right? I mean, at the end of the day, same for Carbon Forward. What is it? You know there's a carbon credit, it will materialize in a year when the tree is grown, when— pick your favorite carbon credit, it will happen. Well, you underwrite the risk, which is nothing else than data. You underwrite the risk and accelerate the payment. And that's what the financing is about, to simplify here.

Right. And if blockchain can make it quicker, more liquid, it can help solve climate change quicker as well.

A lot of things on that one. Look, I mean, starting with on a blockchain, you can tap into the beautiful world of DeFi for trading, for building financial instruments. That's number 1. Number 2, since there's less— ideally, no, but let's be realistic— less middlemen taking less of a cut, you don't need as large facilities to do something. If you go today to Goldman Sachs and you want a debt facility or something, if it's less than $150 million, they just don't even answer your email. Well, $150 million is not what a project developer in country XYZ needs. They need to start with a few million to plant the trees, a few million for a first solar project. And that's with the middlemen are cut out, things are more operationally efficient, streamlined. You can start with smaller facilities if you don't have that many people that take a cut. So that's number 2, smaller facilities, getting money easier into the space. Transparency. I mean, remember a year ago, like we're still recovering from the Guardian article. The huge fuck-up that actually whatever percentage of our beautiful carbon credits are actually bullshit. Yeah, guess what? It's right. Um, I'm not saying here again, uh, blockchains or Web3 is the silver bullet here, but it's another ingredient where if we would know that this tree would have been planted, if there's another fucking picture a year later that this tree is growing, um, and those are things are linked, uh, and visible on a public blockchain, or at least the hash against that shit, I think it helps to get confidence back into the space. So this is another thing, and there's a few more elements, but I, I keep it with that.

I love it. Yeah, the, the holding greenwashing accountable, um, is a really powerful one. And, uh, and then you kind of touched on the MRV side, the measure, report, verify. If you can have extra data and guarantee that that tree was still there, that carbon sequestration project was happening, it can add a lot more legitimacy to the space.

Verified public data. It's somewhere lying. Everybody can access it. The proof either is a hash or something or zero-knowledge proof, hopefully sooner or later. So I can actually— I don't have to trust the middleman that like Vera or whoever, like it's a real tree, it's a real solar panel that produces. No, I just have the data that I can verify that myself. And the last look before we move on, I mean, another one is scaling. Projects as well. I love the possibility of incentive mechanisms that a blockchain provides, where you can incentivize a bunch of people to do something which is meaningful. Um, that is harder in the Web2 world— not impossible, but much harder. Um, you can incentivize people to collect trash, you can incentivize people to take probes, to take pictures of trees— again, back to the trees. So there's ways that companies like Simplex, Open Forest Protocol, Empower do those things with the power of blockchains and incentives.

Yeah, that was a good one. I learned about the Litter token picking up trash. Let's just go down that road a little bit. What other non-carbon related DeFi projects do you know of that you'd kind of direct us to?

I mean, there's beautiful ones on the, on the Celo blockchain. Just throwing a— like Plastics is exactly the one I think where you might have thought of. Plastics.io, I think they're based in Barcelona. A company we're a little bit more involved with is Empower. Similar concept, right? You incentivize the setup of collection stations, of collectors. They work with big companies. I think they work with companies like Dow and BASF. But in the backend, this is This is a smart contract-based, it's blockchain-based. And then resulting out of that are plastic credits coming out of that that then are sold not as carbon credits, but plastic credits on the blockchain, and then can be retired or used. So that's the whole circular economy play. And there's more in that space that we can talk about. Then biodiversity as a little of a cousin of carbon credits, maybe. Even more than a cousin, either as a contributor for the quality of carbon credits. I love what the folks— and I was a little part of that— but the folks at the Ecological Benefit Frameworks did. And I think an event that we shared where Marcus presented about that one, I love how then a carbon credit is not just a carbon credit, but it has like 6 or 7 ingredients, co-benefits. So carbon credit is just a benefits object, if you want. Um, that is, that is fascinating. And again, I think blockchains are the mechanism to, uh, to hold those and distribute those and validate those. Um, biodiversity by itself is a big topic, uh, whether this is again the incentivization of people to collect crops, to do certain actions, take pictures, um, and then as well getting them into hopefully biodiversity credit. The region network, again, the event where we had been, the region network launched a couple of those on-chain. That's the biodiversity area. I don't know how deep we should go. I mean, there's other areas outside of carbon that I like, but those are maybe the main ones.

Yeah, you hit on the main ones that I'm thinking of too, especially the ecological benefits framework, looking at water and soil and air and cultural stuff. Do you have any opinion on carbon credits versus renewable energy credits? Because I know that you are a little bit in the solar renewable energy space with what you do.

I don't, I don't, I don't, I don't have an opinion on where those— I think they're both meaningful, needed. Uh, there's companies like Jasmine, uh, doing great things in the tokenization of renewable energy credits.

No, yeah, in a few weeks.

Exactly. Yeah. Okay, so I think there's, there's work to be done. I like what they do. There's a few other players in that space. Um, uh, no, I don't, I don't, uh, have a strong opinion what is needed. Both are needed, I think, is the answer to, to, to the question. I, I'd like as well We did an investment in that space, a small one. I like as well everything where Bitcoin mining is used. Actually, counter to the narrative of the media, Bitcoin mining is used for, uh, yeah, for climate good, which is like fucks with people's mind. Um, but that's why I love it so much. It, it— well, besides the fact that we have the societal benefits of Bitcoin and the majority of Bitcoin is already produced with renewable energy. Let's park that. That's, uh, that's the, the, the, let them fight on it. I, I love the, the idea of using the mining itself when there's excess, uh, energy from solar panels, from wind, from whatever it is, from, from flares of oil companies. It doesn't matter to me, um, to actually use that excess energy to mine Bitcoin. More so, I like it on the renewable energy piece because then it brings the prices down. I'm not losing that energy that I cannot put back in the grid or store in a battery. I mine Bitcoin, bring it company that does some cool stuff there. As one example of many is Anadro, where they use the Bitcoin mining rig. They throw pretty much solar panels and the battery for free on your house, and then you get a heavily discounted price for electricity because they put a Bitcoin mining rig under your roof. Simplifying here, but this is the play. And yeah, there's some tweaks to be done, but love it. It's awesome.

Was that the San Diego company? The company in San Diego, what are they called?

Another— A-N-A-D-R-O.

Okay, cool. Yeah, because I work in solar in California and the energy metering laws that changed makes it very unprofitable to just send excess solar back to the grid. And then like we also have the duck curve over excess of solar production during the day. So yeah, how can you, how can you use that and for something with meaning, and to Bitcoin mine is a really exciting use of that. What's your quick elevator pitch when someone says, why do we need Bitcoin in the world?

I mean, we need Bitcoin in the world. There's many, many countries where we're not as comfortable with money, and money is not as stable as the euro or the US dollar, which who knows, that shit might change as well. So having something which is a store of value, maybe it's not the payment mechanism that Satoshi envisioned, but it's a store of value that holds, that cannot be easily taken by the government, is a fantastic use case by itself, period. So I don't need actually more of Bitcoin. I'm quite excited, though, about all the other things that happen around the Bitcoin ecosystem. I'm not a purist there. So whether it is L2s and Bitcoin Virtual Machine, and then it happens. But the core use case of just allowing people all over the world to hold something that is stable against their own currency, against the peso in whatever country, against my local currency, is super powerful. That alone the world needs, deserves.

Absolutely.

Yeah.

We are very fortunate in Europe or the United States to not have that drastic swing in value. And yeah, people in Argentina and a lot of places in the world don't have that stable control over the issuance. And yeah, people fleeing Ukraine took, you know, their wealth in Bitcoin, you know, when they were fleeing the war. So yeah, it's a really strong tool for anti-authoritarianism too, I think.

I agree. I agree. And look, and we're not going into the counterarguments, but when I hear like it's used by criminals and all that bullshit, Like, it's a fucking public blockchain. I'd be the stupidest criminal ever if that is my main mechanism. Uh, I think the main mechanism to, uh, to money laundering is still Deutsche Bank. Let's be honest. I mean, it's not nothing else.

Yeah, well, and someone made a joke one time, if you try to put, put a bill past Congress to issue this untraceable paper currency called cash, they would never let it, you know, be existing right now. Um, but it's, it's our right to privacy And yeah, I think that argument, people use cash for lots of very shady things all over the world. So, one thing I wanted to ask about you, Centrifuge, you guys are having a real-world asset summit in Dubai, right? Coming up in April.

Yeah. So, we have our main conference once a year. We had it last year, I think in October in New York. This year again, but a little bit later in November, I think, in New York. That's our main event. This time, 2 days in New York. But we decided— our CMO, she's running that— she decided that it would be a great idea to have it in other cities, countries, continents all over the world. And the first of those spin-offs is in Dubai. That's right. So Token2049, we just announced it, I think yesterday or so. And there will be one— I hope I don't steal any thunder— but there will be one at ECC in Brussels. Some sort of side event, and then we see what else we do. So, but we want to bring the real-world asset to other countries, maybe in a slightly smaller format, but yeah, still meaningful and impactful.

Regarding real-world assets, um, we, we touched on a little bit, but I just want to kind of hone in on them a little bit more, um, because I think it is a really incredible use case of not just these like ethereal what-can-blockchain-do, but like active tokenization of real-world assets has the benefit of a lot of what you talked about, liquidity, investment, all that. But I'm wondering, have you heard of BasinDAO or the tokenization of commercial real estate or that? How have you seen that kind of develop in refi for regeneration of land or regeneration of property? Do you have any takes on that?

I, I'm not sure if it takes in that. I, I know the Basin Project, uh, I know the founder, spoke for a while. And we come from the finance, like, really pure existing financial instruments and bringing them on-chain. That's, that's the use case so far. Why do we bring them on-chain? Just to reiterate, well, for several reasons, but the main two reasons are to give crypto folks access to them. There's one thing, I'm a DAO treasury, I sit on hundreds of millions I don't want to get exposure to real-world assets, but I don't want to leave my, my crypto ecosystem. So wouldn't it be nice to be able to invest in very boring treasury bills? Sure, you can with your stablecoin. That's one use case side. And the other use case side is to allow more traditional investors— so we bring in those real-world assets on-chain and then allow any kind of investor to access them, which in the traditional world, because of size, because of the a variety of things is not as easily possible. I think those are the two extremes, and there's a lot in the middle. When it now comes to what BasinDAO and a few others actually do, I think it's very novel, very innovative, slightly different thing than what Centrifuge does with existing real-world assets. It's actually creating something new that the world doesn't have yet. It's a piece of land, a piece of real estate that is spiced up with some criteria and make it a financial asset and use Crypto Rails, um, to, uh, yeah, to tokenize it and to make it available. Great use case. I'm not sure the world is ready yet. The world is not ready yet for T-bills on-chain. Not— I mean, that's, that's already a tough one. So is the world ready for, uh, this next wave? I don't know. At one point it will. I don't know if it's the next month, next year, or in 10 years. I'm rooting for next month, but likely not.

Yeah, I appreciate that sentiment. People are not quite there yet, and that's why I love having people like you on to talk about the nuances and help kind of bridge that gap. Yeah, one thing Timo said when he was on last from Basin is people get really kind of like it's a third rail issue to talk about putting nature on the balance sheet, but if you actually give nature its own balance sheet, then there could be a lot of regeneration happening or just extra say that this piece of nature can have a stake at the table because it has its own bank account or it has its own assets. It has its own assets to then perpetuate its self-sovereignty or something like that. So a little further down this questioning is like any critique for the refi space, or how do you see it evolving and needing to further improve and evolve to further climate change issues?

So the first thing I'd say, we— in order to make change, I think we cannot be too radical. And it pains me to say that because I'd love it to be different. But in order to make a difference and have an impact, We need the fucking governments to move and we need corporates to move. It doesn't matter if 3 dudes somewhere on an island do X. We need Shell, Vodafone, Deutsche Telekom, and pick the other Fortune 500 or Global 5000. We need them to do something. And the more extreme or the weirder we are with language, with all the things, the less a CEO or chief sustainability officer will look at it. I hate that it's the case, but it's the fucking reality. So I need the refi space to some extent. We want to continue the experiments, but we need a part of refi to grow up— is the wrong word— but to mature here and understand what corporates can and will do and what is possible and not put freaking blockchain and Web3 on the front and center. I think we learned that lesson. At least every pitch deck was hiding it for the last 24 months. And I think when it comes to pitching it to corporates, we got to put blockchain where it belongs to. It's a tool. And if then more comes out than a tool, that is amazing. But we want to start and get adoption. So I think a little less idealistic, a little bit more simplified, streamlined in our language and our pitches goes a long way. We don't want to be stuck in innovation departments that just play with us for the sake of playing.

Yeah, we need to be grounded in existing mechanisms that can then be further utilized with blockchain, but not shove it down people's throats. Yeah, I think you're right there.

I mean, kudos to everybody that's still in refi, although the term is a little bit not in fashion anymore. But kudos because they survived the last 18 months and many of those projects learned that lesson and are actually kicking ass right now. I know of conversations of refi players, uh, selling millions and millions of credits, of carbon credits as one example, to Fortune 500 companies. It happens. So I'm optimistic that we learned our lesson here and got a little bit, uh, more realistic.

Absolutely. I think, um, the hype leaving crypto for a little bit helped ground refi projects a little bit more too. But yeah, we're seeing a lot of funding in the space coming back around.

I'm a little bit— so there's one concern I have, and it's out of our control. Uh, glad the, the bull is back, um, but the bull is back with the meme coins, with AI, uh, in crypto. The bull is back on some tech stuff, which is amazing, whether it is EigenLayer, ZKs, and, and all that, and rollups and all that good stuff. Mean that as important as climate refi is within crypto, it takes the backseat right now, and that's very sad. So I'm actually hoping that the bull plateaus a little bit soon and we can get back to working on things that really matter.

Yeah, get back to the build market instead of the bull market.

Yeah, in climate specifically. Yeah.

Max, this has been an awesome conversation. I think just to kind of finish up my line of questioning is anything we didn't kind of finish touching on that we should? And then how can folks kind of support Centrifuge and get involved with what you guys are doing?

Yeah, so I mean, people want to, want to reach me, um, on Twitter, Maex Ament, uh, creatively spelled with the AE in the middle, Maex Ament. Uh, that's where you find me, uh, on Telegram for that matter. And Centrifuge, check out our pools, centrifuge.io. You get from there to the, to the forum, to the governance. Um, and, uh, if you, uh, want to learn more about what Philip and I do in the, in the Investing World, Earth, or, um, we find us at withearth.xyz.

Okay, yeah, we'll, we'll direct our listeners. I'll put a few links in the show notes. And really appreciate you coming on, Max. I think, um, your nuances and kind of where you stand in, in the space as the bridge is, uh, really important right now. So really appreciate your time and coming on.

Thanks so much, Cash.

Thanks to Matthew Patrick Donner for the Refi Generation production, including the music, mixing, and editing.

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