A few years ago, moving carbon credits onto the blockchain looked like the next big thing in climate tech. Then the wider carbon market hit a wall.

The voluntary market, where companies buy credits by choice rather than by law, wrapped its best year ever in 2021 with nearly $2 billion traded. Investigations into credit quality followed, confidence sank, and by 2024 reported transactions were down to roughly $535 million.

The crash tells only half the story, though, because demand never disappeared. Retirements, the moment a credit is used and permanently taken out of circulation, held steady at around 182 million tonnes. And buyers became far pickier, paying a 381% premium for carbon removals over standard reductions and 217% more for credits from the past five years.

In other words, the market grew up, and buyers began asking for proof.

Proof, as it happens, is the thing blockchain does best. The projects trying to deliver it, though, look very different today than they did three years ago, so this story deserves a proper retelling.

First, a refresher: What are carbon offsets?

Carbon offsetting lets companies and individuals compensate for their emissions by funding projects that reduce or remove carbon dioxide from the atmosphere, whether that's reforestation, renewable energy, or direct air capture. For every tonne of CO2 emitted, one credit stands in for a tonne reduced or removed somewhere else.

Elegant in theory. In practice, the voluntary carbon market has long been a bit of a black box, with fragmented registries, over-the-counter deals at prices nobody sees, and verification cycles that stretch across years. Buyers, in turn, have few ways to confirm that the credit they bought represents a genuine, one-of-a-kind climate benefit.

All of this came to a head between 2022 and 2024, when journalists and researchers raised hard questions about entire categories of credits. Once trust collapsed, the market spent the years that followed rebuilding around integrity frameworks like the ICVCM's Core Carbon Principles. That benchmark for high-quality credits now visibly shapes what buyers will pay.

Where blockchain fits in

The basic argument has aged well, and if anything, the market's turn toward integrity has made it stronger. A tamper-proof public ledger like a blockchain is a natural home for the life story of a carbon credit, from issuance through every transaction to final retirement.

Think of it as swapping the market's locked back room for one with glass walls.

Take double counting, the classic failure where the same credit gets sold or claimed twice. When a credit's full history lives on a public blockchain, anyone can audit where it came from and where it went, so two parties can't unknowingly claim the same tonne. And a retirement becomes a permanent public record rather than a line in someone's private database.

Smart contracts, enabled by blockchain, take this further. They can retire a credit automatically at the moment of purchase, release payment only once verified reductions are delivered, and route revenue transparently to the people doing the work on the ground.

The first wave, and why it broke

Back in 2021 and 2022, Toucan Protocol pioneered carbon tokenization at scale. Its Carbon Bridge moved over 20 million Verra-issued credits via cryptocurrency rails, linking each one to a unique token called a TCO2.

On top of that foundation, KlimaDAO built a token economy aimed at "sweeping the floor" of cheap credits so that polluters would have to pay more for the good stuff.

Did it work? On its own terms, yes: in Toucan's first six months, more than a quarter of all Verra credit purchases flowed through its bridge. The trouble was what got swept up, because much of that supply was old, low-quality, and tied to long-dormant projects.

So in May 2022, Verra, the world's largest carbon standard, banned the tokenization of retired credits altogether. The first phase of crypto carbon ended almost as quickly as it began.

As it turned out, the lesson had less to do with the technology than with the supply. Tokenizing broken credits doesn't fix them, and the registries who verify climate impact need to be partners rather than obstacles to route around.

Gone, refunded, or reinvented

The years that followed were a brutal filter, and the failures shaped this market as much as the survivors did.

Flowcarbon was the highest-profile casualty. Co-founded by WeWork's Adam Neumann and backed by $70 million from investors including Andreessen Horowitz, it never managed to launch its carbon-backed Goddess Nature Token. By 2024, Forbes revealed the company had been refunding token buyers behind closed doors, citing market conditions and pushback from the registries.

Nori, a Seattle marketplace that used blockchain to track carbon removal credits from regenerative farming, closed in September 2024 after seven years. The team pointed to a stagnant voluntary market and a tough funding environment. As for the consumer wave of carbon-backed NFTs from 2022 and 2023, it faded without much of a goodbye.

Even Toucan, the infrastructure layer that started it all, changed shape. In 2025 its team handed the protocol to the community as an open-source project and moved on to a new venture called Cedar, which builds AI tools for corporate sustainability teams. Their farewell post was refreshingly candid: they had combined the carbon market and crypto "perhaps too early."

Before that shift, the team had leaned into carbon removals. It built a two-way bridge to Puro.earth, a standard for carbon removal credits, letting biochar credits settle onchain with the registry's blessing rather than behind its back. The bridge later fed CHAR, which Toucan called the first onchain pool of carbon dioxide removal credits.

Who's still standing

KlimaDAO relaunched as Klima Protocol in February 2026, rebuilt from the ground up and now running on Base, a low-cost network built by Coinbase. The redesign, known as Klima 2.0, requires identity verification, a direct answer to years of feedback from traditional carbon market players about money-laundering risk. And while the team has kept shipping since launch, today's protocol operates at a far smaller scale than the token mania of 2021.

Its history still counts for something, though. More than 17 million tonnes of carbon credits were retired through KlimaDAO's infrastructure during its original era, and its marketplace work lives on as Carbonmark, a standalone company connecting buyers to tokenized credits via API.

Regen Network never played the legacy-registry game in the first place. It runs its own ecological registry on a purpose-built blockchain and develops its own methodologies, particularly for regenerative agriculture, where traditional standards have limited coverage. It has also stretched beyond carbon into biodiversity credits, including a pilot that funds jaguar habitat protection across 10,000 hectares of Ecuadorian jungle.

Clearly, the projects still standing know who their users are, and they work with the registries rather than around them. The speculation is mostly gone, replaced by practical tools for buying, tracking, and retiring credits.

The registries came onchain themselves

The first wave tried to bring carbon to the blockchain from the outside. These days, the flow runs the other way: the institutions are bringing the blockchain to carbon. If you'd told us in 2023 that the biggest adoption story would be led by the organizations that once resisted it, we might not have believed you.

Yet here we are.

In 2025, Verra partnered with the Hedera Foundation to integrate the open-source Hedera Guardian platform into its Project Hub, aiming to digitalize more than 20 methodologies. No major carbon standard has gone deeper into blockchain integration.

Then in 2026, Verra approved its first credits issued under a digital monitoring, reporting, and verification (dMRV) pilot. The pilot, a solar project in the Comoros, can now receive credits as often as monthly rather than waiting years between verifications, with every data point recorded immutably.

Traditional finance has come knocking, too. In mid-2025, JPMorgan's blockchain unit Kinexys announced a partnership with S&P Global and carbon registries to tokenize credits directly at the registry level, while Gold Standard is piloting digital verification for select project types.

No matter what, carbon markets need transparent, tamper-proof, machine-readable infrastructure before anyone can fully trust them. Now, the institutions that once banned crypto tokenization are building exactly that.

The future of onchain carbon credits

Today, Verra is extending its dMRV pilots beyond solar to project types like clean cookstoves and carbon capture and storage, which should mean faster issuance and fresher data across more of the market.

Demand, at the same time, is shifting toward compliance. National carbon schemes and Article 6 of the Paris Agreement, the framework that lets countries trade emissions reductions with each other, now take up a growing share of the market.

Both trends call for credible, machine-readable infrastructure, which is exactly where all of this has been heading.

So where does this leave us? Three years ago, the promise of blockchain in carbon markets was mostly promise. Today the picture is more grounded, and honestly more interesting.

Most of the first wave didn't make it, and the projects that did survived by becoming less like crypto experiments and more like market infrastructure. Meanwhile, the registries and banks that once kept their distance are adopting the underlying technology on their own terms.

None of this means the original problems are solved. Double counting, opaque pricing, and slow verification still cost the climate money and trust every day. But the tools to fix them are no longer hypothetical, and because they're being built hand in hand with the institutions that govern the market, they have a far better shot at sticking around.

It's a slower path than the one the 2021 bull market promised, and in our view, a much better one