Reserve $1.5M USDC from the Treasury to fund 2023 DAO operating expenditure
Over the past 12 months, KlimaDAO has facilitated the market for on-chain carbon and helped thousands of organizations and individuals offset their emissions through our infrastructure.
Project contributors were essential to getting us here, and they form a key part of our business strategy. Since launch, a combination of full-time, permanent part-time and contract-based (or bounty) contributors have been drawn on to accelerate KlimaDAO’s efforts across a variety of areas.
Challenge to funding sources
In May 2022, KIP-24 was proposed to enable the DAO to utilize reserve USDC from the Treasury to fund payroll and other OPEX (with contributors being paid 50:50 USDC and KLIMA), up to a total of $1.5M USDC. Since then, the pausing of tokenization and bonding - the mechanisms that would normally fund the DAO wallet with KLIMA - changed these initial burn rate assumptions, and meant that we needed to increasingly rely on USDC to fund OPEX.
In response, the DAO accelerated efforts to improve cost controls and performance management processes across the board. Between August and November, the DAO re-prioritized a number of workstreams and reduced OPEX by 40% (from ~$257K/month to ~$155K/month, representing an annualized reduction of ~$1.1M/year) all while maintaining strong momentum.
It has been 7 months since KIP-24, and of the $1.5M earmarked, ~$300K is remaining. The treasury currently holds $9.8M USDC, which largely comes from dissolving the remaining liquidity from the USDC:BCT pools after KIP-25.
Request for USDC allocation
To continue to fund project development and commercialization, the DAO is requesting that an additional $1.5m of the Treasury’s reserves be earmarked for payroll and other OPEX. Alongside our existing cash balance, this will extend runway by approximately 9 months under a burn rate of $170K/month (assuming no additional cash inflows) with a buffer to increase to $200K/month should Core & Stewards feel it appropriate.
Use of funds
1) Product: The DAO will continue to invest heavily in product (engineering, design and product management) to iterate on the foundational infrastructure KlimaDAO built over the last 12 months. New features will improve the accessibility and utility for both on and off-chain market participants (fiat-to-retirement is a recent example of this), and the design team will go deeper into customer discovery and UX design to deliver high conviction product features and improvements.
2) Growth: We will also be looking to ramp up revenue generating activities like inbound marketing and outbound sales. In both areas, we are nearing the point in which we can scale these activities up and repeatedly capture value (e.g. we are able to build an effective content-driven marketing funnel, and then convert leads into paying customers).
3) Business: Further work will be required to mature the organization itself. This includes improving the structure and governance model for the DAO and associated entities, building and maintaining high quality finance and accounting systems, and working with teams to increase performance, transparency and accountability.
4) Supply: Finally, we will continue our collaborations with the registries and other industry stakeholder groups to ensure new tokenized carbon supply can be brought onto Polygon and into the KlimaDAO Treasury. Beyond the registry consultations, the funding will also help pay the salaries of those exploring direct carbon procurement and pool creation opportunities - see our recent RFC on this topic here - as well as developing partnerships with inventory holders to secure future supply.
Reserve $1.5m of the ~$9.8M USDC in the Treasury’s reserves to fund DAO operational expenditure, with the focus being on supporting product development, revenue growth and business maturity.
The informal forum poll begins now and will end on December 12th. Assuming in favor, this vote will go to Snapshot.