"You’re looking for a mispriced gamble. That’s what investing is. And you have to know enough to know whether the gamble is mispriced. That’s value investing."

Charlie Munger

The RealValue of Natural Capital framework shows us that nature is both undervalued and mispriced.

Only time will tell whether or not investing in it is a gamble or not. Frankly, it is hard to call it a gamble when our very lives, livelihoods and well-being depend on it.

As an investment, Nature is a hard one. It does not fit into the PE, VC, RE, debt or equity boxes. Intact nature is a public good and historically an externality with the exception of capturable resources like food, energy, materials and to a certain extent water.

With the risk of privatization and capture being so high in traditional investment models, excluding philanthropy or public investment, how can we make nature investable?

Core to BASIN's mission is to bridge the $1T annual biodiversity funding gap.

To do this, we have devised three ways to invest in nature:

1) Real Assets

2) Certificates

3) Currency

All of these are of course are derived from the Natural Capital Stocks: the ecosystems. One is from the Natural Capital Flows: the core benefits nature provides. And the last is exposure to both the Stocks & Flows of Natural Capital.

Our blended finance model gives anyone, regardless of how they relate to nature, a way to invest in and get exposure to the most precious and valuable asset. The model is regenerative: the action of one, motivated by their own interests, benefits the whole.

Before we dive into the details of each way to invest in nature it makes sense to do some framing.

We could show you some pretty pictures of nature. Or a compilation of ecosystems that need conservation and restoration. Or a collage of all the benefits nature provides. Or even what we call the Treasury of Treasures.

But, at the risk of over-simplification, we will use the diagram below.

Real assets are the underlying of the BASIN Protocol. Ecological Ensurance makes the real assets investable as natural capital while protecting the ecosystems within the real asset and ensuring the benefits they provide in perpetuity.

Underneath everything in BASIN are real assets. The real assets contain the stocks and flows of natural capital. Real assets are the most capital intensive of almost any asset but when compared to the natural capital value they produce they look like bargains.

Real assets can be thought of as the anchor or foundation of the protocol. The natural capital flows and the subsequent certificates and currency issued are derived from and tied to the underlying quality and condition of the ecosystem stocks within the real asset.

Exposure to real assets in the BASIN Protocol can be gained in three ways:

1. Certificates of Ensurance

2. Fractional

3. Whole Asset

Certificates of Ensurance, discussed below, enable the real asset to be protected from day one and permanently conserved at the end of the Ensurance Policy.

Fractional shares, as US Reg D and Reg S securities offerings, attract real asset investors based on yield and asset value alone. Fractional shares also allow for BASIN members to own partial interests in the underlying.

Whole assets are available in two ways:

a) In-Protocol: real asset and fixed income investors can be "place-holders" as part of an Ensurance Policy. As placeholders they get market or above market IRR's during the hold period while ensuring the asset goes into permanent trust at the end of the policy period.

b) Out-Protocol: real asset investors can buy BASIN identified assets outside the protocol and do as they please without an Ensurance Policy. However, there is a 10% premium paid to the protocol for the real asset to exit.

Key points: BASIN real assets are for traditional real asset and fixed income investors as well blended finance investors. The BASIN Protocol has a carried interest in all real assets.

Certificates of Ensurance ensure the RealValue of Natural Capital in perpetuity. Certificates of Ensurance fund the underlying real asset costs via an Ensurance Policy. The Ensurance Policy can be calculated on any time horizon (i.e. now, 2030, 2040, 2050) to fund the real asset in lump sum purchase or spread cost out over time. Certificate holders receive protocol rewards and flows pro rata to the amount and type of Certificates they hold.

There are two types of Certificates of Ensurance: Common Pool and Specific.

Common Pool Certificates are tied to a general place or purpose. i.e. ecosystem type, core benefit, bioregion, watershed, species, cause, etc. The funds from sales of these are directed to dedicated BASIN accounts to be used for funding specific real assets and land stewards.

Specific Certificates are issued based on the RealValue of the flows of natural capital from specific real assets. (i.e. the property level) Only the dollar amount of the Ensurance Policy needed to restore or conserve the asset is released for sale. The remainder certificates are distributed (flow) through the protocol to BASIN accounts. Furthermore, ecological data from the real assets flow to the specific certificate holders and give the holder the right to make pro rata claims on that environmental data.

Key points: Certificates of Ensurance are for those who have either direct or indirect nature-related risk and dependencies as well as philanthropic funders and collectors. Certificate holders are eligible for protocol rewards. Ecological data flows pro rata to certificate holders allowing impact claims to be made.

$ENSURE is a nature-based currency. The fungible currency represents a) the stocks and flows of natural capital, b) the underlying real assets, and c) other value accrual within and from the BASIN Protocol. $ENSURE can be used to buy Certificates of Ensurance, can be held, sold or traded, and/or used in DeFi protocols and dApps.

Key points: $ENSURE is a quick and easy way to get exposure to and invest in nature as it is representative of the entire BASIN Protocol including the underlying real assets and natural capital. Note that only certificate holders, not currency holders, are eligible for protocol rewards and ecological data claims.

Buy $ENSURE here or here.

We are working on mechanisms to incentivize certain behaviors related to each of the three nature investment types but we expect there to be inherent arbitrage opportunities. The arbitrage opportunities, include but are not limited to, NAV (net asset value) of the real assets v. floor price of Certificates v. price of $ENSURE. There will also be pricing arbitrage between different Certificates based on scarcity and rarity as as well as currency exchange rates of the denominated currency.

If we have done our jobs right, members of the protocol will make tons of impact (and money) while ensuring nature and the benefits it provides for current and future generations.