# 3. Dynamic Carbon Tokens: Driving Market Innovation

Carbon credits serve as the currency in the carbon market, each representing one ton of reduced or removed carbon dioxide or equivalent greenhouse gas emissions. When used to offset emissions, these certificates become carbon credits, helping to balance anthropogenic emissions with removals elsewhere. This mechanism incentivizes emission reduction efforts and promotes investment in carbon sequestration projects, thereby driving progress toward net-zero emissions.

### **3.1 What are Dynamic Carbon Credits?**

Dynamic Carbon Credits (DCCs) are a modern type of  carbon credits, but unlike traditional credits, which are typically fixed and issued based on past measurements or projections, DCCs adjust in value or quantity based on real-time data. Alethia's DCCs are unique for the following reasons.

#### **3.1.1 Real-Time Monitoring and Adjustment:**

DCCs rely on real-time data collection, through advanced Eddy Covariance sensor technologies. These sensors monitor greenhouse gas (GHG) fluxes, and the credits value can be updated dynamically based on the latest data, offering more accurate and up-to-date reflection of a project's carbon impact.

#### **3.1.2 Blockchain Integration:**

DCCs are built on blockchain platforms, leveraging blockchain’s transparency, security, and immutability to ensure that all transactions and updates are verifiable and traceable. This helps address issues of fraud and double-counting in traditional carbon markets.

#### **3.1.3 Increased Transparency and Accountability:**

With continuous data updates, DCCs enhance transparency by giving stakeholders a clear, real-time view of the emissions reductions or removals they represent. This allows for more reliable reporting and verification, potentially reducing the time and costs associated with traditional auditing processes.

#### **3.1.4 Flexibility and Responsiveness:**

The "dynamic" aspect of these credits means they can adjust for changes in project performance. If a project underperforms or exceeds expectations in terms of GHG reductions, the number of credits or their value can change accordingly. This creates a more responsive system that reflects the actual impact of a project rather than static, pre-issued credits.
