Paying out rewards on stakes

Companies may choose not to participate in a system in which they need to stake - effectively lock up their funds - in order to participate. Their rationale for this may take many forms - they do not possess enough funds, they view it as a potential loss, it creates a strain on cash flow/capital lockup costs. For this system to work, however, staking is crucial, and thus cannot be removed, even in light of these valid concerns.

The heavy-handed approach to this would be coercion, for example through legislation by the state or territory, which is less than ideal. A system works best when participants in it are self-motivated, while implementing a coordinated global legislation of the different actors to enforce coercion is hard.

A better approach would be through incentivisation. In the system described, staked amounts are earned back by honest participants. To incentivise participation, some form of interest, competitive with respect to risk-free placements, could be provided. This makes the act of staking itself rewarding, and can be modelled using bond curves with interest rates.

However, the additional funds to pay for these extra amounts need to come from somewhere. There are many possible options for this, and what those are are left as a discussion for the readers and implementers of this system, as different specifics will work for different consortia, and different industries. Accurate data reporting is an activity that generates high positive externalities (indeed, it is the basis of any form of concerted action and the first design principle of Ostrom's commons management). We thus advocate the use of climate-specific funds (e.g., carbon offsets) to invest and reward honest participation in the system.