# Business Model & Financial Transparency

_When creating our fee structure, we thought deeply about the incentives behind issuing credits and how to best align ourselves with the climate impact associated with carbon credits. We decided on a simple flat rate captured when credits get issued through our platform._

_The OCP serves as a registry, not as a marketplace, sales platform, or project developer. Sales are conducted through direct agreements between the project developer and the buyer. Our role is to issue credits using our rigorous methodology and issuance process. The responsibility for how these credits are marketed and sold lies solely with the project developer._

**Fee Structure**

* There is a 2% fee on the sale of credits through the Open Carbon Protocol.&#x20;
  * (Fee = 2% \*price \* #credits sold)
* There are no additional registry platform fees.
* No costs to project developers to write or revise methodologies.
* No additional upfront costs to project developers.&#x20;
* Project developers pay for validation of their projects.&#x20;

**What do the fees cover?**

* _Expert Review Process:_ The Open Carbon Protocol provides expert consultation in developing the methodologies. In doing so, we have no say over whether or not the methodology passes and take on the risk of it not passing.
* _Fast project development:_ Because of our external expertise, we can develop multiple methodologies simultaneously so that project developers can get their projects off the ground within a few months rather than years.&#x20;
* _High-quality assurance:_ Project developers can be assured that their projects are created based on scientific peer-reviewed methodologies— signaling a uniquely high degree of integrity.

**Why?**

* We came to this decision after researching the other registry fee structures and responding to market concerns regarding incentives for registries.
* Relying on and paying for external experts to review methodologies proposed on our platform ensures an extra layer of independence. We do not have a say over whether a methodology gets passed, reducing conflict of interest and misaligned incentives.&#x20;
* The fee based on credit sale links our revenue to the demand for impact.&#x20;
* Alternative fee structures are often overcomplicated and consist of costly upfront costs that limit the ability for small project developers to get off the ground. The OCP allows project developers to start issuing credits and reducing carbon faster.

**How do credits get priced?**

* The project developers price their credits based on market dynamics and their project costs. Some project types will have higher prices due to the technology used.&#x20;
* The OCP is sector agnostic and relies on the public to propose methodologies, thereby distancing ourselves from only publishing methodologies that will lead to higher prices.&#x20;

In the spirit of aligning incentives, we want to be transparent about how we spend our profits. Nothing has been decided, but we are thinking of creative ways to reinvest our profits.

* This could take a few different shapes:
  * We purchase a portion of the credits issued through the OCP, which exist in a pool of credits that we can either add to the OCP ledger or move/control as we see fit.
  * Create a fund structure with excess profits to invest in innovating MRV solutions to cut costs for project developers.
