Demand-Side Market

Scaling the carbon and recycling markets requires understanding that these are demand-side markets, meaning most of the value and challenge come from one side of the market, in particular the credit buyer. Andrew Chen, in his book “The Cold Start Problem: How to Start and Scale Network Effects,” calls this the “Hard Side” of the network. However, once the hard side is solved, supply is virtually unlimited. Such is the case with the recycling markets. Service providers work with very thin margins, and the volatility in price for recycled content constantly puts businesses at risk of failing. Any additional capital changes the P&L of these businesses completely. Demonstrating to the supply side of the market that there is demand for credits drives the onboarding of partners on the supply side (Recyclers, Haulers, Processor, Waste Generators and the Network Integrators).

Thus, understanding how to create value for the Credit Buyer becomes the key component to unlocking the growth of the market and the Carrot Network itself, which is the subject of this entire product section of the white paper. More information on the Credit Buyer specifically can be found in the Producer (Credit Buyers) and Product Roadmap sections, but first let’s understand the smallest network required to begin generating credits and drive adoption.