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  • RFC: Carbon Project Development Initiative

Very impressive - great range of carbon types and first-class partners. Fully support.

I support this initiative and I couldn't be more proud of KlimaDAO. To put this in context, the treasury has 6.2m idle usdc, not including klima/usdc and bct/usdc liquidity. 1.5m for such a grand investment makes sense.
Greater diversity of credits onchain will lead to more choices and more demand.
KlimaDAO will be supporting both the demand side and the supply side of the onchain VCM.

Very good. It appears you do not miss with delivering key insights and partners.

This all sounds great! Nice to see a range of top quality partners coming together for something that provides a social good, shows the utility of the Refi space, can be pointed to when people ask for "real-world" benefits of Refi, and seeding the growth of a pipeline of DAO-sponsored projects.

From zero to here in a year!

My main question: What is the value accrual for Klima holders? So the total expediture is $1.5m, which is about 3% of the total treasury, correct? And do I understand correctly, it's not used to fund liquidity pools, but to "exchange" USDC and BCT from the treasury for other carbon tokens that are currently in development? (Meaning that these will go into the treasury at an equivalent $-value?) So in other words, the funds are used as a loan for financing the new carbon tokens. I see that the risk mitigation consists of due dilligence plus the promise of receiving like-kind-credits in case of a delivery shortfall. However, is there still a risk of not getting back the full funds? If so, would it be fair towards the Klima holders, in form of the treasury, which I consider as the "promise of value accrual through rebases", to give out these loans with an interest? Or do you rather see the benefit of a growing on-chain VCM being enough value accrual for Klima holders? I personally would argue for the former, because in my opinion the true value accrual comes with rising carbon demand, while an increased and diversified supply is only an enabler that itself should come with an actual business model. Finally, it would be great to see a distribution of the $1.5m worth of USDC or BCT into the individual new pools and the related obtained CO2 tonnages.

    Fantastic initiative. Thank you for connecting the dots between the proposal itself and the bigger picture.

    Of course as an engineering lead at KlimaDAO my bias is towards protecting our runway and my ability to keep paying the amazing contributors I work with. But with 6m idle USDC not yet earmarked, I think this is well worth it. Being able to pay in part with BCT would be even better!

    Funding cutting edge, high-impact future-carbon projects is a worthy endeavor on it's own. On top of that, demonstrating that we can do so as a DAO and navigate the risk, complexity and partnerships to integrate new carbon into our ecosystem is fantastic. And even beyond that, deploying three new high-quality pools is an obvious win for the protocol and will help us expand Klima Infinity's reach as our sales team's efforts continue to ramp up.

    And I hope this gets in front of some eyes at Verra or other registries who should soon realize how primed and ready the on-chain VCM is, and how much value we as a DAO can bring to it.

    Our goal has always been to facilitate and strengthen the VCM, and while it may be hard for journalists and idealists to understand, this includes both the top and the bottom of the price curve. We launched with BCT, expanded with UBO and NBO-- now let's show everyone what we can really accomplish now that we have established ourselves as serious players with game-changing infrastructure.

    Heck yeah! Great to see Klima roll up their sleeves and get a little more hands-on and directly involved with the available on-chain carbon projects... this should bring continued growth in diversity and quality of the overall ReFi ecosystem.

    Klima never stops. Love this, and the thought of greater diversity in quality credits on chain. This may beget more scrutiny, and more attention, which may elevate conversation, which further heightens standards, and thus increases quality, and thus attracts more such projects to come onboard. Wondrous!

    Dionysus Brilliant, this is a step to reducing our reliance on Verra and growing our footprint

    rrrmmmmm This is indeed to fund future liquidity pools. Forward carbon & project development are the most economic means the DAO has at securing carbon for future liquidity (i.e., it's likely the carbon will be worth more on the spot market once credit issuance occurs than the price paid to secure it).

    Our advisory board of VCM experts is growing and we will work closely with them to ensure the individual commercial arrangements for each project are completed in a way to maximally reduce risk. Additionally, the community will have a chance to view each of these arrangements and discuss them, vote on them, etc. As a DAO, our strength comes from the myriad skills and experience of our members. This must and will be leveraged when considering opportunities and where to deploy capital from this Carbon Project Development Initiative.

    A dynamic on-chain carbon market benefits KLIMA holders in multiple ways:
    -As the largest holder of carbon liquidity, we benefit from trading.
    -As an infrastructure provider for accessing the market, we benefit from retirements. (via our retirement aggregator + integrations with it).
    -Via bonding, we grow our treasury with tokenized carbon assets --> expanding the types of assets in our treasury helps diversify our holdings and provides greater surface area for value accrual.

      Really interesting and very cool that Klima is contributing in projects that are directlt impacting the climate while giving the VCM a boost! I can imagine that pre-project funding and expertise especially can really give life to some cool initiatives.

      I wish the upcoming projects the best of luck.

      Super exciting development. Extremely well thought out RFC.

      5 days later

      Dionysus Thanks for your response.

      For a retail investor, or non-contributing DAO member, it's hard to understand the inner workings for these decisions. From the optimistic viewpoint, this looks like a good opportunity to invest in order to grow the on-chain VCM, enable supply and demand and thus to ensure the long-term investment return for Klima holders. Also, I totally agree that being active is the right way, in contrast to just sit and wait for the surrounding on-chain VCM environment to emerge. From the pessimistic viewpoint, however, this may just as well be a way to fund on-chain projects with easy money from the Klima treasury, aka the Klima investors, without making the true relationship between the involved players, aka Klima core team, advisors and other DAO teams transparent. The danger in that pessimistic scenario would be that the Klima treasury, or Klima investor money, would just be drained in the long term without building something that is truely successful as a VCM and yields no return to Klima investors. While I don't subscribe to the pessimistic view, I think it's indeed important to make the real benefit for Klima investors as transparent as possible. Even if it's just to avoid the possibility that such accusations could emerge from other parties in the wider ReFi space.

      Having said this, an alternative way to fund the projects, or more precisely, the liquidity pools, would be via LPB auctions, as was done with Klima, where different assets like USDC, Klima, BCT, NCT could be used. This way, every investor could decide directly for themselves instead of being part of a vote. Of course, as a downside, this may generate lower funding than using the Klima treasury. But has this alternative approach been considered and do you see pros and cons therein?

      18 days later

      rrrmmmmm I support the idea of having interest in the loans that KlimaDAO gives or some other mechanism to compensate the risk. I think we should use our funds to deliver on our strategy and I think funding development of new Carbon tokens was not part of the strategy. Or have I missed something? I think we should focus our resources and not start experimenting in areas that supposed to be handled by other players of onchain market.

      2 months later

      Strongly supporting this. We need to keep supporting players who are working closer with the legacy markets but also support the development of the future carbon credit programs.

      Where legasy markets have gained a more stable position for providing carbon credit flows, future credits would also help them to experiment with new kind of CO2 projects. Some might also want to speculate on the prices of credits and some might want to support for local carbon economys to emerge. I see that Klima tokens could be used as a insurance for those future carbon tonnages.

      Example like one project would do carbon sequestration by growing a forest. Investors want those specific carbon credits from that project but nobody knows if the project would fall for numerous reasons. Maby the forest burns down before reaching it's maturity. In case of fire, those locked klima tokens could be retaired and beneficiary would be the investor and those issued future carbon credits would be burnt as a worthless.

      If the project delivers, the investor could swap those future carbon credits more mature ones (Fulfilled/ delivered once?), unlock the klima used as insurance for the project with the AKR provided yelds.

      This insurance utility could drive more demand for the liquidity of klima and Klima could be used to pool those future carbon credits. 👍

      IMO Future carbon credits are essential tool for growth of this space. So many wants to support this space but don't know what projects would actually deliver quality credits. That's why we need good research and analytics about risks and insurance on top of that. Legacy markets going to be essential for providing those quality CCs so let's don't forget them either on this.

      Money in our hand is a tool, let's put it to work.

      7 days later
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