In Day 17, we broke stablecoins into three big buckets: fiat‑backed, over‑collateralized crypto, and algorithmic. Check it out here.
Since then, a fourth pattern has kept showing up in comments and DMs: regenerative / impact‑backed stablecoins. These still behave like “on‑chain dollars” for users, but they’re collateralized by real‑world assets (RWAs) tied to things like carbon credits, green bonds, and renewable energy. AZUSD from Azos is one of the clearest examples of this idea actually running, not just living in a whitepaper.
Today’s note on Day 42 is less “here’s the final answer” and more “here’s how I’m starting to file these in my mental model of stablecoins, RWAs, and ReFi.”
Quick rewind: the three buckets from Day 17
Very quick refresher of the mental model from Day 17:
Fiat‑backed – the bank vault
Tokens like USDC/USDT aim for 1:1 backing with cash, treasuries, and money‑market instruments in traditional accounts. You’re trusting an issuer, their banks, and their attestations.Over‑collateralized crypto – the on‑chain vault
Designs like DAI and LUSD lock volatile assets and mint a more stable asset against them, with liquidations and oracles keeping the system solvent. Here, trust shifts from banks to smart contracts and collateral ratios.Algorithmic / reflexive – the incentive machine
Mechanisms that lean more on incentives and expectations than hard collateral, which is where some of crypto’s wildest experiments and failures have lived.
All three mostly care about price stability and liquidity. They don’t really have a strong opinion about what the backing assets are doing in the real world.
The new question: what is your stablecoin balance funding?
Impact‑backed designs sneak in an extra question on top of “is this redeemable?”
While your stablecoin sits in a treasury somewhere, what is it actually funding?
In practice, the pattern looks something like this:
Peg stays familiar Most still target a USD‑like peg, so the user mental model doesn’t have to change.
Collateral becomes opinionated Instead of just cash or volatile crypto, you get a basket of tokenized RWAs — green bonds, verified carbon credits, renewable energy projects, other climate‑linked instruments.
There’s a regenerative loop
More demand for the stablecoin → more demand for those RWAs → more capital into regenerative projects → stronger backing and narrative if it’s designed well.
From the outside, your wallet shows “100 stablecoins.” Under the hood, the treasury is quietly taking a stance on where capital should flow.
AZUSD and Azos – an impact‑backed stablecoin in the wild
Azos describes AZUSD as an “impact‑backed stablecoin” that uses a diversified pool of climate‑positive RWAs as collateral. The idea is that you hold something that behaves like a dollar on‑chain, while the backing is pointed at decarbonization and regenerative infrastructure instead of generic yield.
A few pieces of how they approach it, in plain language:
Climate‑positive collateral The treasury allocates into renewable energy projects, green bonds, and carbon‑linked assets that are meant to generate both yield and measurable climate impact.
RWA‑driven stability The peg leans on a portfolio of income‑producing real‑world assets, not just crypto collateral or bank deposits.
A built‑in regenerative flywheel If AZUSD adoption grows, the protocol needs more impact assets as backing, which can finance more projects, which (in theory) strengthens both the story and the collateral base.
For someone sending or swapping AZUSD, none of this complexity has to show up in the UI. It still feels like “I’m using a stablecoin,” but the answer to “where does my money sleep at night?” is very different from a normal cash‑backed design.
Why “stablecoins × RWAs × ReFi” is interesting
This fourth bucket intersects a few threads we’ve already touched in this journey:
- Stablecoins as the everyday bridge asset for DeFi and payments (Day 17).
- Real‑world assets slowly getting tokenized and plugged into on‑chain rails.
- Early ReFi attempts to route capital directly into climate and social outcomes.
Putting them together, impact‑backed stablecoins give you:
Stability with a thesis You still target dollar‑like behavior, but the reserves are explicitly wired to renewable energy, carbon removal, or similar projects rather than just “whatever yields the best number.”
Native rails for regenerative flows Instead of climate impact being a separate donation or “offset” step, it can ride on top of normal stablecoin usage: payroll, remittances, DeFi positions, treasury management.
Composability with meaning An AZUSD‑style token can still plug into DEXs, lending markets, and yield strategies like any ERC‑20. The difference is that the collateral and yield story points to something tangible in the real world.
It’s still early and messy, but I like the direction: programmable money that encodes where capital should flow by default.
The fine print: new design and risk questions
This “fourth bucket” doesn’t automatically fix the usual stablecoin worries. It just moves some of the complexity into new parts of the stack:
Valuing and liquidating RWAs Carbon credits and green bonds live in markets that can be thin, fragmented, and noisy to price. That makes peg management and redemptions more complex than “sell highly liquid treasuries.”
Verifying the impact Someone has to check that a given credit or project is actually doing what it claims — removing carbon, funding specific infrastructure, meeting the “green” criteria it advertises. That pulls registries, auditors, and standards bodies into your stablecoin design.
Regulatory overlap Impact‑linked RWAs can look like securities, environmental instruments, or derivatives depending on where you operate. So the compliance surface is wider than “just a payment token.”
Teams like Azos end up juggling three questions at once:
Is the peg robust, are the RWAs liquid and properly structured, and are the impact claims credible over time?
That’s a very different design brief than “keep dollars in a bank and publish a monthly attestation.”
Where this sits in my Day‑42 mental map
For this 60‑day journey, I’m not treating impact‑backed stablecoins as “the final boss design,” just as another important bucket to understand.
Right now I’m filing them as:
- Same UX goal as the earlier buckets: tokens that feel like stable dollars on‑chain.
- Different collateral story: reserves that are explicitly climate‑positive RWAs instead of neutral yield instruments.
- New default question for users and builders: “what is my stablecoin balance quietly funding while I’m not looking?”
If you’ve been following since the stablecoin intro on Day 17 and the ZK day where we talked about proofs for trust and compliance, this RWA + ReFi layer feels like the part of the stack where “finance infra” starts touching “real‑world outcomes” in a more direct way.
I’m still early in my own understanding here, so if you’re building in ReFi or experimenting with impact‑backed designs, I’d genuinely love to hear how you think about the trade‑offs.
If you’re on a similar Web3 learning path
This note is part of my public 60 Days of Web3 journey — one concept per day, explained in human terms, with all the confusion and course‑corrections left in.
- Read the journey on Medium: @Ribhavmodi
- Check the dev‑friendly versions and comments on Future: Ribhav on Future
- Join the community on Telegram: Web3ForHumans
If something here feels off, incomplete, or sparks an idea, reply, quote it, or write your own version. I’m learning in public so you don’t have to do it alone.
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