Integrating IoT-Driven Dynamic Asset Tokenization and Zero-Knowledge Proofs for Verifiable, Privacy-Preserving Carbon Offset Trading

• Abey Litty

  Texas University

  Author

The global carbon offset market faces a fundamental trilemma: maintaining transactional transparency while protecting sensitive corporate emissions data and ensuring the verifiable authenticity of traded carbon credits. Traditional carbon trading systems rely on centralized registries and manual auditing processes that are susceptible to double-counting, greenwashing, and operational inefficiencies. This research proposes and validates an integrated framework combining IoT-enabled real-time emissions monitoring, dynamic asset tokenization on blockchain infrastructure, and zero-knowledge proof (ZKP) cryptography to enable verifiable, privacy-preserving carbon offset trading. The framework leverages IoT sensor networks for continuous emissions data acquisition, converts verified emission reductions into dynamic digital tokens representing carbon credits, and employs zk-SNARKs to cryptographically prove compliance and ownership without exposing proprietary operational data. Experimental evaluation demonstrates that the proposed system achieves 89.4% reduction in verification latency compared to traditional auditing methods, maintains transaction throughput of 1,247 trades per second on a permissioned blockchain network, and successfully preserves data confidentiality while enabling regulatory oversight. The findings establish a replicable technical architecture for next-generation carbon markets that balances transparency, privacy, and verifiability, with direct implications for policymakers designing digital carbon trading infrastructure and enterprises seeking to participate in voluntary carbon markets without compromising competitive advantages.

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Copyright (c) 2026 Abey Litty (Author)

This work is licensed under a Creative Commons Attribution 4.0 International License.