Rewards Distribution Policy
Policy governing how rewards from credit purchases are distributed across participants.
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Overview
The Rewards Distribution Policy defines how the proceeds from Tokenized Recycling Credit (TRC) and Tokenized Carbon Credit (TCC) purchases are distributed among participants. Buyers purchase a quantity of credits (e.g. 10 metric tons); that quantity is fulfilled by allocating from one or more certificates, each backed by MassIDs. Proceeds are split across the underlying MassIDs proportional to each MassID's weight in the allocation, then distributed by participant category according to the percentages below. The policy is designed to maximize participation in the network and accelerate recycling rates across geographies.
The policy was established by the Carrot Foundation in consultation with market participants, advisors, and data scientists. Over time, the Foundation will progressively expand community participation in these decisions.
Payment currency and withdrawal
Rewards are paid in USDC (a stablecoin pegged to the US dollar). Participants can withdraw their rewards in fiat or stablecoin — fiat payouts are fulfilled off-chain via integrated payment providers, while stablecoin withdrawals use the on-chain USDC balance. Using USDC as the settlement currency gives participants stable value without exposure to market price volatility, keeps protocol settlement consistent on-chain, and allows participants to choose how they receive value (fiat or stablecoin) according to their needs. For full claiming mechanics and privacy-preserving distribution, see Rewards Distribution.
Participant categories
| Key | Participant | Description |
|---|---|---|
| G | Waste Generator | Produces waste and performs source sorting |
| BC | Bin Custodian | Manages the collection bin or drop-off point where recyclables are deposited before they are collected |
| H | Hauler(s) | Transports waste between locations |
| P | Processor(s) | Sorts, accumulates, and pre-processes materials |
| R | Recycler | Performs certified recycling or biological treatment (also serves as Processor) |
| I | Network Integrator | Data provider for supply chain tracking |
| A | MvF Author | Creator of the methodology framework (MvF) |
| D | MvA Developer | Developer of the MvA (software that implements the framework) |
| DF | Distribution Fee | Covers transaction handling and the settlement and payout of participant rewards |
| RG | Registry | Covers issuing and maintaining the records of credit and certificate issuance |
| dMRV | digital MRV and Integrity Component | Feeds the Foundation Treasury and sustains protocol development and network integrity |
The Bin Custodian manages the collection point where recyclables accumulate before a Hauler collects them for recycling. Its share recognizes the costs of enabling collection at the source — acquiring the bin, deploying and retrieving it, cleaning, maintenance, access control, and energy, among others. Bins may be offered free of charge or under contract, in public or private locations, broadening collection points and network participation. Where a Bin Custodian share applies (currently PET collection, per the distribution table below) and no Bin Custodian is involved in the asset's process, that percentage is redirected to the Hauler.
Distribution by waste type
Each waste type has its own distribution percentages, reflecting the relative contribution of each participant in that material's supply chain.
Tip
Use the Credit Calculator to see an illustrative distribution breakdown for a given waste type and volume.
Reward discounts
The reward distribution is calculated at the moment of sale. Two discounts can apply, and both feed the network's destination funds rather than any private party.
Supply chain digitization incentive
When the Waste Generator is not identified in the chain of custody, a digitization discount applies and is directed to the Community Pool:
- The Waste Generator's 100% share is redirected to the Community Pool.
- All other logistics and service providers (Haulers, Processors, Recyclers, and the Network Integrator — and the Bin Custodian where applicable) receive a 25% discount on their payout, also directed to the Community Pool.
This applies to all waste types and geographies, serving as an incentive for further supply chain digitization. See Rewards Distribution for the full mechanics.
Waste Generator discounts
A 50% discount on the Waste Generator's share applies in two cases:
- Large Business — Waste Generators classified as Large Businesses (revenue exceeding USD 4 million in the prior calendar year) receive 50% of their allocated share; the remaining 50% is directed to the Impact Pool. This calibrates incentives proportionally while preserving participation motivation.
- Onboarding not yet completed — because the distribution is calculated at the moment of sale, a Waste Generator that has not completed onboarding cannot be classified as a Large Business or not, so the 50% discount is applied automatically. The discounted half is directed to the Impact Pool, and the generator's remaining 50% is held, claimable only after the generator completes onboarding. The held rewards follow the standard reward expiration window: if the generator completes onboarding and claims in time, they receive their share; if the rewards expire unclaimed, that half is directed to the Community Pool. This keeps the policy uniform while registration verification remains pending and incentivizes completing onboarding.
Destination funds
Apart from the Distribution Fee and Registry, which cover network operations, what is not paid directly to participants is directed to one of three purpose-defined funds, depending on the mechanism it comes from — so it is always clear what each unit of value funds. These funds are financed transparently by design rather than at the operator's discretion.
- Foundation Treasury — the Carrot Foundation's operational resources, funded by the digital MRV and Integrity Component of each sale.
- Community Pool — a discretionary fund for open-network growth (onboarding, expansion, marketing, events, competitive grants, ecosystem support). It is not a donation fund; value that would otherwise sit idle is recycled into ecosystem growth.
- Impact Pool — a pure-donation fund for socio-environmental and circular economy projects in the country where the recycling took place.
What feeds the Community Pool
Beyond the digitization discount above, the Community Pool is fed by the network's own integrity and incentive mechanisms:
- Unredeemed rewards — rewards not claimed within 90 calendar days of the sale date, reinvested into network growth instead of sitting idle.
- Self-policing penalties — rewards withheld when the Carrot Foundation determines that bad or fraudulent data was submitted. Withholding is not automatic: for good-faith quality errors, a three-step process applies — (1) notice and acknowledgement, (2) a formal warning describing the failures and the required changes, and (3) a penalty notice withholding rewards if the failures are not corrected. In cases of fraud (deliberately false data), the penalty is absolute and applied directly, without the steps above.
- Forfeited collateral — where structured, collateral forfeited by participants who commit violations may be directed to the Community Pool.
What feeds the Impact Pool
The Impact Pool's main source is the share redirected from Large Business Waste Generators (revenue exceeding USD 4 million) and the discounted half of generators whose onboarding is incomplete. This ensures credit buyers are not funding rewards to large corporations and channels that value into local impact.
Learn about rewards distribution · Learn about the supply chain