Proof-of-Authority

Proof-of-Authority (PoA) is the fundamental mechanism that ensures data integrity and trust in the Carrot Network’s recycling and carbon credit issuance system. Validators along the supply chain establish PoA through their role in confirming waste mass, chain of custody, and data accuracy. However, this authority is ultimately overseen by Carrot Fndn Auditors and auditing models to prevent abuse and ensure compliance.

Self-Policing and Economic Incentives

Since economic rewards are tied to validated waste tracking and credit issuance, every participant has a vested interest in maintaining the integrity of the system. MassIDs serve as both the chain of custody tracking tool and the mechanism for distributing rewards. If a MassID is flagged for suspicious activity or identified as containing inaccurate data, it is disqualified from inclusion in Tokenized Recycling Credits (TRCs) or Tokenized Carbon Credits (TCCs). This financial penalty affects all participants linked to that MassID, reinforcing self-policing throughout the ecosystem.

PoA thus acts as the backbone for ensuring that all actors, from Waste Generators to Recyclers, are incentivized to uphold accurate reporting and prevent fraudulent behavior.

Audits, Suspensions, and Penalties

The Carrot Fndn Auditors have the authority to suspend or permanently remove Participants who attempt to manipulate the system. A suspension means that any MassID involving the flagged Participant in its chain of custody will be prohibited from inclusion in TRC or TCC issuance. Every affected entity within that MassID’s custody chain will be notified, facing financial loss from an unrealized credit sale.

If any irregularities are found, the Carrot Fndn or a homologated third-party auditor may request further information from all involved Participants. A failure to respond can result in permanent exclusion from any Carrot Network credit issuance.

Fraud and Permanent Disqualification

In cases of confirmed fraud:

• The Participant permanently loses their homologation.

• Prior-issued credits associated with the fraudulent activity will not be sold until the issue is resolved.

• Legal actions may be pursued by the Carrot Fndn against the responsible parties.

Furthermore, any evidence of intentional harm to local communities or ecosystems is grounds for permanent exclusion from the Carrot Network and all associated methodologies.

PoA is not just about validation—it is a self-regulating system ensuring that every Participant in the recycling and carbon credit ecosystem remains accountable, reinforcing trust and economic stability in the circular economy.