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description: What are first vs. second-order assets?
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# First vs. Second-order Assets

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**First-order assets**, such as carbon credits, are directly tied to specific environmental projects and are considered place-based. In contrast, **second-order assets** derive their value from these underlying first-order assets and are designed to enhance market liquidity, mitigate risks, aggregate and diversify investments, and meet the specific needs of institutional investors.&#x20;
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In order for green crypto to scale effectively, the integration of both first-order and second-order assets is crucial. **First-order assets**, such as carbon and biodiversity credits, generate tangible environmental impacts and are prominently listed on the Regen Atlas. However, their place-based nature can present challenges, including difficulties in scaling and issues with liquidity and stability.

**Second-order assets** address these challenges by deriving their value from underlying first-order assets, thereby offering enhanced liquidity, reduced risk, and stable returns. Examples of second-order assets include:

* Green stablecoins, which maintain value through backing by green assets (e.g. [Azos](https://azos.finance/)).
* Green indexes, which track a portfolio of first-order green assets.
* Green perpetuals, which are indefinite instruments providing ongoing returns, yet substantailly enhance market liquidity.
* Green yield tokens, which combine yield-generating instruments with sustainability.

Additionally, the introduction of second-order assets allow for even more innovative concepts to emerge, such as agro-parametric insurance governed by global farming coalitions and memecoins who, through their exchange, automatically retire carbon.&#x20;

These second-order assets will also be featured on the Regen Atlas, which, **by aggregating first-order green assets and their stakeholders, helps create an environment conducive to second-order asset development and growth.**

<figure><img src="https://884739866-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2Fy5GN21FJBVSUYYd35pCH%2Fuploads%2F2tWlm3J97J9DyqdlHbpY%2Fff.PNG?alt=media&#x26;token=b8d68445-1649-4995-bebd-16d4b36f140a" alt="" width="400"><figcaption><p>The creation of these second-order assets, by meeting the needs of institutional investors, has the potential to generate a positive feedback loop. This loop will encourage further innovation in the utilization of place-based assets and deepen stakeholder collaboration within the green crypto ecosystem, ultimately driving the sector’s growth and its impact on addressing the climate crisis.</p></figcaption></figure>
