{
  "documentType": "rewards-distribution",
  "locale": "en",
  "title": "Rewards Distribution Policy",
  "version": "2.0",
  "lastUpdated": "2026-10-28",
  "reviewedAt": "2026-10-28",
  "markdown": "**Version 2.0 — October 28, 2026**\n\n## Overview\n\nThe Rewards Distribution Policy defines how the proceeds from [credit](/docs/protocol/credits) **purchases** are distributed among participants and the network. When a buyer purchases a **quantity** of credits (e.g. 10 metric tons), that quantity is fulfilled by allocating from one or more [certificates](/docs/protocol/certificates), each backed by [MassIDs](/docs/protocol/mass-ids). Proceeds are split across the underlying MassIDs proportional to the value of the credits drawn from each, then distributed according to the percentages below. The policy is designed to maximize participation in the network, accelerate recycling rates across geographies and fund new capacity where it does not yet exist.\n\nThe 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.\n\n**Across every waste type, at least 80% of each credit sale (recycling or carbon) is allocated to Carrot Network participant categories, before any [reward discount](#reward-discounts).** The remaining 20% is a fixed set of network allocations, identical for every waste type:\n\n| Allocation                                                        | Share   | What it funds                                                                                                      |\n| ----------------------------------------------------------------- | ------- | ------------------------------------------------------------------------------------------------------------------ |\n| [dMRV](/docs/protocol/dmrv) and Integrity Component               | 12.5%   | [Foundation Treasury](/docs/glossary#foundation-treasury): protocol development, digital MRV and network integrity |\n| [Growth Pool](/docs/glossary#growth-pool)                         | 3.5%    | Accelerating the market, on every sale                                                                             |\n| Distribution Fee                                                  | 2.5%    | Transaction handling, settlement and payout of rewards                                                             |\n| [Program & Registry Fee](/docs/glossary#program-and-registry-fee) | 1.5%    | The crediting program and registry under whose rules the credit is issued and recorded                             |\n| **Total**                                                         | **20%** |                                                                                                                    |\n\nThe Growth Pool share is part of every sale, so every credit purchased funds both the work that already happened and the capacity that does not exist yet. Where a reward discount applies, part of the participant share is also redirected to the Growth Pool or the [Impact Pool](/docs/glossary#impact-pool) instead of being paid out. It stays inside the network and never accrues to a private party.\n\nThese percentages apply to sales completed on or after October 28, 2026. Sales completed before that date follow the version of this policy in force at the time of sale.\n\n## Payment currency and withdrawal\n\nRewards are paid in [USDC](/docs/glossary#usdc) (a traceable digital currency pegged to the US dollar). Participants can withdraw their rewards in fiat or stablecoin. Fiat payouts are fulfilled via integrated payment providers, while USDC withdrawals draw directly on the participant's balance held on the public registry. Using USDC as the settlement currency gives participants **stable value** without exposure to market price volatility, keeps protocol settlement consistent across the public registry, 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](/docs/protocol/rewards-distribution).\n\nThe Program & Registry Fee, when paid to an external crediting program or registry, is settled under the terms agreed with them (currency, invoicing and timing) and is not subject to the 90-day claim window that applies to participant rewards.\n\n## Participant categories and network allocations\n\n| Key  | Category                            | Description                                                                                                        |\n| ---- | ----------------------------------- | ------------------------------------------------------------------------------------------------------------------ |\n| G    | Waste Generator                     | Produces waste and performs source sorting                                                                         |\n| WM   | Waste Manager                       | Coordinates and directs waste destination without taking physical custody                                          |\n| BC   | Bin Custodian                       | Manages the collection bin or drop-off point where recyclables are deposited before they are collected             |\n| H    | Hauler(s)                           | Transports waste between locations                                                                                 |\n| P    | Processor(s)                        | Sorts, accumulates, and pre-processes materials                                                                    |\n| R    | Recycler                            | Performs certified recycling or biological treatment (also serves as Processor when it records the sorting events) |\n| I    | Network Integrator                  | Data provider for supply chain tracking                                                                            |\n| A    | MvF Author                          | Creator of the methodology framework (MvF)                                                                         |\n| D    | MvA Developer                       | Developer of the MvA (software that implements the framework)                                                      |\n| DF   | Distribution Fee                    | Covers transaction handling and the settlement and payout of participant rewards                                   |\n| PRF  | Program & Registry Fee              | Remunerates the crediting program and the registry under whose rules the credit is issued and recorded             |\n| GP   | Growth Pool                         | Accelerates the market; see [Destination funds](#destination-funds)                                                |\n| dMRV | digital MRV and Integrity Component | Feeds the Foundation Treasury and sustains protocol development and network integrity                              |\n\nThe [**Program & Registry Fee**](/docs/glossary#program-and-registry-fee) is resolved per methodology, as the MvF Author and MvA Developer shares already are. It remunerates the **crediting program** (the organization whose rules govern the credit: it owns the methodology requirements, approves verifiers and authorizes issuance) and the **registry** that issues and maintains the credit and certificate records. It replaces the separate Registry allocation of previous versions of this policy.\n\n- Where the Carrot Foundation acts as crediting program and registry (for example, BOLD Recycling, and BOLD Carbon while no external program applies), the Program & Registry Fee is directed to the Carrot Foundation. For BOLD Carbon, the Foundation intends to transfer this role, and the fee with it, to a future program manager once a methodology is designed for small and medium-sized companies, with the intent to scale using digital MRV (dMRV).\n- Where a credit is issued under an external crediting program and recorded on an external registry, the Program & Registry Fee is paid to them.\n- When credits of different types are sold together (for example, a recycling credit and a carbon credit in one package), each credit carries its own Program & Registry Fee. An external program or registry receives it only on the credits issued under its rules.\n\nThe Program & Registry Fee is a fixed percentage, published in this policy, applied equally to every sale and paid at the moment of sale, not at issuance. It is charged as a percentage of each sale because program and registry managers must also become responsible for the methodologies they produce, on integrity, market adoption and scalability, so that everyone is incentivized to generate value, measured by the size of the market and the use of the methodologies. It replaces only the per-credit fee; any other fee charged by an external program or registry (account, project registration or protocol development) is agreed by contract, outside this policy.\n\nThe [**Bin Custodian**](/docs/protocol/supply-chain) manages the collection point where recyclables accumulate before a [Hauler](/docs/protocol/supply-chain) 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.\n\nThe [**Waste Manager**](/docs/protocol/supply-chain#waste-manager) is contracted by the Waste\nGenerator to coordinate waste destination without transporting, sorting, or treating the material.\nFor organic waste, its 4% share applies only when both the Waste Manager and Waste Generator have\ncompleted onboarding and confirmed their relationship. A one-sided declaration has no effect. If\nmore than one Waste Manager is confirmed, they divide the category share.\n\nWhen a Waste Generator changes Waste Manager, it notifies the Carrot Foundation at\n[operations@carrot.eco](mailto:operations@carrot.eco) so the relationship record can be updated.\n\n[**Program Owners**](/docs/protocol/credit-ecosystem-roles#program-owner) and\n[**Network Developers**](/docs/protocol/credit-ecosystem-roles#network-developer) are ecosystem\nroles, not reward categories. They receive no protocol rewards and do not appear in the percentages\nbelow; any remuneration for their services is contractual and outside this policy. A Program Owner\ncoordinates the construction of a credit program with Carrot and is not the crediting program that\nreceives the Program & Registry Fee.\n\n## Distribution by waste type\n\nParticipant shares differ by material, reflecting each participant's contribution to that supply chain. Network allocations are the same for every material: DF 2.5%, PRF 1.5%, GP 3.5%, dMRV 12.5%.\n\n### Organics\n\n**Composting of mixed organic waste:**\nG (30%), WM (4%), H (9%), P (9%), R (18%), I (8%), A (1%), D (1%), DF (2.5%), PRF (1.5%), GP (3.5%), dMRV (12.5%)\n\n**Composting of sludge from waste treatment plants:**\nG (25%), WM (4%), H (4%), P (9%), R (28%), I (8%), A (1%), D (1%), DF (2.5%), PRF (1.5%), GP (3.5%), dMRV (12.5%)\n\n**Composting of tobacco industry residues:**\nG (25%), WM (4%), H (4%), P (9%), R (28%), I (8%), A (1%), D (1%), DF (2.5%), PRF (1.5%), GP (3.5%), dMRV (12.5%)\n\nThe Waste Manager's 4% comes from the Hauler (1%), [Processor](/docs/protocol/supply-chain) (1%), and\n[Recycler](/docs/protocol/supply-chain#the-role-of-the-recycler) (2%) categories; the total remains\n100%. If no confirmed Waste Manager exists for the asset's process, those percentages return to\ntheir source categories.\n\n### Paper and cardboard\n\nG (20%), H (20%), P (15%), R (15%), I (8%), A (1%), D (1%), DF (2.5%), PRF (1.5%), GP (3.5%), dMRV (12.5%)\n\n### Metals (aluminum and steel)\n\nG (20%), H (20%), P (15%), R (15%), I (8%), A (1%), D (1%), DF (2.5%), PRF (1.5%), GP (3.5%), dMRV (12.5%)\n\n### Glass (cullet recycled at bottling plant)\n\nG (25%), H (10%), P (20%), R (15%), I (8%), A (1%), D (1%), DF (2.5%), PRF (1.5%), GP (3.5%), dMRV (12.5%)\n\n### Plastics (PET)\n\nG (25%), BC (3%), H (12%), P (15%), R (15%), I (8%), A (1%), D (1%), DF (2.5%), PRF (1.5%), GP (3.5%), dMRV (12.5%)\n\nThe Bin Custodian's 3% comes from the Hauler's share (15% → 12%); the total remains 100%. When no Bin Custodian is involved, that 3% is redirected to the Hauler.\n\n> **Tip**\n>\n> Use the [Credit Calculator](/docs/standard/guides/credit-calculator) to see an illustrative\n> distribution breakdown for a given waste type and volume.\n\n## Reward discounts\n\nThe reward distribution is calculated at the moment of sale. Two discounts can apply to the participant share. Both feed the network's [destination funds](#destination-funds) rather than any private party, and both are in addition to the fixed Growth Pool allocation.\n\n### Supply chain digitization incentive\n\nWhen the [Waste Generator](/docs/protocol/supply-chain) is not identified in the chain of custody, a digitization discount applies and is directed to the [Growth Pool](/docs/glossary#growth-pool):\n\n- The Waste Generator's **100% share** is redirected to the Growth Pool.\n- All other logistics and service providers (Haulers, [Processors](/docs/protocol/supply-chain), [Recyclers](/docs/protocol/supply-chain), the [Network Integrator](/docs/protocol/network-integrators) and, where applicable, the Bin Custodian) receive a **25% discount** on their payout, also directed to the Growth Pool.\n\nAn unidentified Waste Generator cannot be associated with a confirmed Waste Manager relationship\nfor the asset. No Waste Manager share is distributed in this case; its 4% returns to the Hauler,\nProcessor, and Recycler categories as described above.\n\nThis applies to all waste types and geographies, serving as an incentive for further supply chain digitization. See [Rewards Distribution](/docs/protocol/rewards-distribution) for the full mechanics.\n\n### Waste Generator discounts\n\nA **50% discount** on the Waste Generator's share applies in two cases:\n\n1. **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](/docs/glossary#impact-pool). This calibrates incentives proportionally while preserving participation motivation.\n2. **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](/docs/glossary#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 [Growth Pool](/docs/glossary#growth-pool).\n\n## Destination funds\n\nApart from the Distribution Fee and the Program & Registry Fee, 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.\n\n| Fund                                                      | Purpose                                                                                                                | Main sources                                                                                                       |\n| --------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------ |\n| [Foundation Treasury](/docs/glossary#foundation-treasury) | The Carrot Foundation's operational resources                                                                          | dMRV and Integrity Component (12.5%); Program & Registry Fee where the Foundation acts as program and registry     |\n| [Growth Pool](/docs/glossary#growth-pool)                 | Accelerating the market for the network's credits                                                                      | Fixed 3.5% of every sale; digitization discount; unredeemed rewards; self-policing penalties; forfeited collateral |\n| [Impact Pool](/docs/glossary#impact-pool)                 | Pure-donation fund for socio-environmental and circular economy projects in the country where the recycling took place | Large Business discount; discounted half of generators with incomplete onboarding                                  |\n\n### Growth Pool\n\nThe Growth Pool (formerly the Community Pool) exists to accelerate the market for the credits the network produces, including methodologies, audit processes, marketing, and general market and project development. Every credit purchased funds both the work that already happened and the growth of the market around it. The Growth Pool is administered by the Carrot Foundation.\n\nThe Growth Pool is **not a donation fund**. The Foundation publishes, at least once a year, how much the Growth Pool received, from which sources, and what it funded.\n\n### What feeds the Growth Pool\n\n- **Fixed allocation**: 3.5% of every credit sale, for every waste type.\n- **Digitization discount**: as described under [Reward discounts](#reward-discounts).\n- **Unredeemed rewards**: rewards not claimed within **90 calendar days** of the sale date, reinvested into network growth instead of sitting idle.\n- **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.\n- **Forfeited collateral**: where structured, collateral forfeited by participants who commit violations may be directed to the Growth Pool.\n\n### What feeds the Impact Pool\n\nThe 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.\n\n## Version history\n\n**2.0 — October 28, 2026.** Changes from the text previously published on this page, last revised in September 2026, which declared no version and is not archived:\n\n- The Community Pool is renamed the Growth Pool and receives a fixed 3.5% of every credit sale, in addition to its earlier sources.\n- The Growth Pool is administered by the Carrot Foundation to accelerate the market for the network's credits, where the Community Pool was a discretionary fund for open-network growth.\n- The Program & Registry Fee (1.5%) replaces the separate Registry allocation (1%). The policy now sets out how the fee is resolved per methodology and how it is paid when the crediting program or registry is external.\n- The dMRV and Integrity Component goes from 16.5% to 12.5%.\n- The participant shares by waste type, the Distribution Fee (2.5%) and the 20% total of network allocations do not change.\n- The Foundation publishes a yearly account of what the Growth Pool received and funded.\n\nArchived texts of earlier versions are listed in the [document history](/docs/standard/policies/rewards-distribution/history).\n\n[Learn about rewards distribution](/docs/protocol/rewards-distribution) · [Learn about the supply chain](/docs/protocol/supply-chain) · [Credit Ecosystem Roles](/docs/protocol/credit-ecosystem-roles)",
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