Despite the benefits inherent to scaling distributed energy resources to form a more decentralized energy system, the market fails to value them correctly. This is because of a classic coordination problem - distributed energy resources create significant societal value in aggregate, but the investment decision is an individual one.

This coordination problem results in higher prices for distributed energy resources with lower returns on investment. The market failure hampers the growth of decentralized energy at scale.

DeGEN solves this coordination problem using the most powerful tool available: onchain economies. By issuing a new currency to fund distributed energy upgrades, and anchoring the ability to read (data) and write (control) those devices to a single open-source protocol, we can overcome the coordination failure and subsidize growth in distributed energy resources.

Energy companies and app developers can interact with a protocol’s underlying energy capacity and proprietary energy data to balance power grids, hedge volatile power prices, or build novel applications on top of this unified energy data.

Tradable credit schemes have been integral to the energy sector for decades, providing market-based solutions to address inefficiencies and promote sustainable practices. These systems offer a way to correct market failures, such as the underpricing of carbon emissions and the underinvestment in renewable energy and energy efficiency. Many different tradable credit schemes exist or have existed throughout power markets, including:

• Renewable Energy Credits (RECs) & Tradable Green Certificates (TGCs)

• White Certificates (Energy Efficiency Credits)

• Carbon offsets

• Cap-and-Trade Credits

• Financial Transmission Rights (FTRs)

While most credit schemes have been pioneered by governments, DeGENs take an alternative approach - creating tradable credit programs for distributed energy capacity, pioneered by communities from the bottom up.

Daylight: Decentralizing the Grid Onchain

Daylight Energy is helping to make this shift possible by building the infrastructure needed to bring the energy industry onchain. Through a combination of onchain tooling (tokenized assets, smart contracts, and decentralized governance), and actual hardware, Daylight Energy is working to make power generation more transparent, programmable, and efficient. Our approach is not just about generating power but creating a decentralized economic system to fund a coordinate distributed energy at scale.

Here’s how Daylight Energy's stack will work to change the industry:

1. Bootstrapping an energy currency: the Daylight protocol will bootstrap a programmatic energy currency, collateralized by flexible energy capacity, that creates new market incentives for deploying and coordinating distributed energy and electrification resources. 

2. Proof of Capacity: Utilizing the novel Proof of Capacity mechanism, Daylight ensures that energy generation and consumption are accurately recorded, verified, and rewarded onchain.

3. Community Governance: Decentralized governance models enable communities to have a say in how their energy is produced and managed, ensuring that the benefits of decentralization are shared by all.

Visualizing the Future: Why Decentralized Power Matters

The future of energy isn’t just decentralized—it’s decentralized, onchain, and tokenized. By bringing the energy grid into the web3 era, Daylight Energy and others in this space are helping to create a more equitable, sustainable, and efficient energy system for everyone. Imagine a world where energy is as liquid and tradable as Bitcoin, where your home energy devices are an income-generating asset, and where power is truly in the hands of the people.

It's time for degens to embrace DeGEN.

The future is bright
And the DeGEN movement is just getting started.