I recently had my mind blown by studies establishing the role of fungi networks in providing crucial underground trade routes between trees in forests. These trade deals between plant and fungal partners for natural resources are supremely insightful.
The associations between roots and fungi are called mycorrhizae. These symbiotic arrangements have been found in about 90% of all land plants, and have been around for approximately 400 million years.
The fungus penetrates into plants root and forms a tiny structure called an “arbuscule” (Latin for little tree), which functions as the “stock exchange” or physical interface where primitive resources are swapped. See the following diagram:
From the top left: the sun is the source of all life. Plants are uniquely capable of generating energy in the form of “sugar” using atmospheric carbon dioxide, photosynthesized sunlight, and soil water. In order to thrive as a collective, trees need to ensure their shadowed neighbors maintain good health, and require a way to equitably rebalance energy and nutrients supplies. This is where mycorrhizae networks seized the opportunity to establish a primordial natural resource exchange.
Plants require a variety of nutrients including nitrogen and phosphorus, some of which they could inefficiently absorb through their roots. Mycorrhizae networks are highly capable of capturing and transferring a variety of natural resources, and actually hijack the plants root cells! This connects the plants root to a vast fungal network with access to a range of important nutrients. See this alternate illustration of the above diagram, where the fungi network is depicted as a city subway or metro map of various resource trade routes.
And believe it or not: the carbon-cost of the “orange” nutrient probably differs between these two trees! With no discernible “brain” or cognitive abilities, the mycorrhizae moves resources and prices carbon-to-nutrient trades knowing that tree B has a higher demand for the nutrient than does tree A. This is essentially nature’s version of “arbitrage” trading, as implemented on all financial markets.
Though it may seem predatory to exploit a resource shortage in a particular part of a forest, mycorrhizae allows plants crucial access to nutrients far from their vicinity. This “liquidity” is what powers the undergound “soil economy”, where plants are free to swap their carbon (Eth) to a range of nutrients (tokens) or water (stablecoins). After 400 Million years, I doubt either the plants or fungi would complain:
So what’s in it for an individual tree? If all plants have access to the same stockpile of natural resources, why not just collect the equivalent of forest-carbon-social-security and retire? With no brain or database, the mycorrhizae instinctively maps a network with trees of varying species, age, contribution, and perhaps even trading volume. So “lazy trees” would be penalized by the fungi’s instinctive accounting system.
I believe we can learn a great deal from mycorrhizae when designing novel financial and governance structures around natural capital and sustainability. As DeFi continues to refine the roles, responsibilities, and incentives of Liquidity Providers or Stakeholders, perhaps we can draw inspiration from natures original liquidity provider.
