• Proposals
  • KIP-9: Protocol Maturation and APY Alignment

Sirob More specifically, the assets we do bond will be cheaper in KLIMA terms. The protocol will, in essence, be getting a better deal on our open market operations.

This opens up a lot of interesting Policy doors, like potentially allowing us to redirect previously existing sell pressure (higher reward rate) to new sources of revenue...

So a decent analogy to boil it down is kind of like this: instead of a highly inflating token backed by the same sized pie; we strategically redirect those emissions toward making the pie bigger for everyone.

    Rene Will people invest in a Klima that isn't sustainable and without ability to redirect capacity towards integrating more carbon types?

    You could make an analogy to climate change - we need to make some very serious corrections to how we handle things there, but since the measures seem so harsh to us now, we are constantly pushing them into the future - but in a way that means it'll be exponentially harder to implement and will feel exponentially worse in reality, due to the less workable baseline we will be if postponing it.

    I'm not sure everyone had the chance to attend the informa policy chat that was also a sort of 'vibe check'
    https://www.notion.so/klima-dao/Informal-Policy-Chat-12-January-b3b437b3ef7c4890a3d059f690784155
    https://cdn.discordapp.com/attachments/841609815817060393/930890734087856229/KLIMA_PolicyTalkJan12th2022.mp3

    Here are links to recording and rough transcripts, they follow through at much greater length than the how the reasoning is presented in just the OT above.

    Brian33 Why would we agree to a reduction that’s not in alignment with KIP-03? Stay the course and build the value. Too many changes confuse the average Klimate.

      If I am not missing some gigantic piece of information, a lot of what is being aimed on this KIP rides on demand not getting lower as a result of it. However I can not see any guarantees for this.

      I mean this would have been easily made into a shit sandwich like; "Here is our shiny new website online! Oh by the way we are poroposing to lower the APY a bit early in light of recent developments. And here is our new marketing campaign to keep demand up." This would have made all this much more palatable.

      As things stand a lot of people will feel you are asking too much of them, and I fear this will create the opposite effect of what is being aimed here.

      grap Hello fren, really appreciate the measured response and valid points you raise. To address these:

      1) It is less about falling KLIMA price, and more about efficient use of emissions. When we reduce reward rate, the assets we do bond will be cheaper in KLIMA terms. The protocol will, in essence, be getting a better deal on our open market operations.

      2) We certainly want to put ourselves in the best position to sustain integrations. Reduced reward rate will definitely make new bond incentives cheaper to sustain for the protocol. Also, intaking new assets aids in decoupling KLIMA & BCT price correlations - which will stabilize our volatility over time.

      3) No. We don't have any official sKLIMA or wsKLIMA LPs so IL is a minimal concern here.

      Lastly: regarding 'aligned with framework' - It's important to note this scale is exponential, not linear.

      Hopefully this shined a light on some of your questions!

        I believe it is too early to reduce the APY given the massive drop in price. I have not sold any KLIMA, I have only been accumulating. Even with DCA, and KLIMA growth, my average price is still around $350. While the earliest of adopters got in extremely low, those of us that came in after several weeks to support the Carbon initiative of KLIMA have paid and paid dearly to be part of this with NO signs of breakeven, forget profit for many months to come. I really don't like the attitude of some the earliest acquirers of KLIMA, it's basically I've got mine, too bad for you. Not really the spirit-ethos you should want to have! At some point people will abandon the project and that's will NOT insure success irregardless whether early adopters have theirs. I will say it again, it is too early to reduce the APY given price drop, desire to have a wider adoption, and ability to incentivise participation. So I am voting NO, whether I am whistling in the wind or not. Thank you for allowing us to express our opinions!

          SeaDawg thanks for taking the time to give your input SeaDawg.

          To clarify: this is in alignment - APY will scale down exponentially, not linearly. I hear you that a lot is developing, and things happen fast - it can be confusing. To be absolutely clear: This is us staying the course and building value for all Klimates.

          CronosZ

          CronosZ
          posting links here again to the scheduled Informal Policy AMA where policy lead did a vibe check and polled people bout the idea before posting it to the forum. I found the argument more fully laid out there:

          optima So the effect is that the market premium ($Klima - $BCT) will increase? Could you please translate your point in a numeric example - thanks a lot 🙂

            At this point in time and space I erased all numbers. Voting with only my heart and trust for Klima 😉

            optima without the “financial incentive” you have got nothing more than a “well meaning dream” After all the reason behind the establishment of KLIMA was to provide financial incentive to increase the cost of carbon. Those that have chosen to back that dream deserve the same consideration.

            grap in conjunction to what @optima said , the drop seems significant because the reward rate is projected over a course of a year. Its a much smaller value then actually is felt.

            Brian33 This is equivalent to:
            A 0.35% Daily Reduction.
            A 1.87% Weekly Reduction.
            13 more days to double your sKLIMA balance.

            At current emissions, it is very much a hard task to keep metrics up as time goes on, and we are feeling that pressure today. I've been reading a lot of suggestions, and I've been taking them to heart. One of them is to reduce the reward rate when the market or metrics are significantly better, but there's been a lack of discussion on how we get to that state. The most optimal way to get it, outside of variables policy can control, is really through reducing emissions. Increasing capacity does work to an extent, but comes with its own set of problems (most notably a larger distribution of rewards to bonders rather than stakers). Increasing capacity with the higher reward rate also harms us more as we have to constantly pay more compounding rewards as time goes on.

              Taking a moment to write this out: I know that the market conditions hasn't been the most ideal for all of us, and many people have suggested deferring the reward rate reduction later down the road when metrics are better, or to give more rewards to the holders today.

              Ironically, the problem we see here is very similar to the problem that caused climate change. Many of us are aware that we must make a change in how we care for the environment in order to prevent global warming from being unsolvable, yet we see in many industries and companies this lax mindset on fixing it, as it doesn't effect our day to day life's too much. We fear by the time everyone is motivated to fix it, It will be too late to be solved. The same thing is occurring here. By deferring the reward rate later down the road, it makes it significantly harder in order to retain the metrics we see today.

              For those who see that a reduction of reward rate is a hit for your own value, the success of the protocol, treasury, and your own tokens are heavily tied together. One's success isn't seen without the other. What's best for the protocol is what's best for the user, and vice versa.

              Creating the carbon market on-chain is no easy task, much less rebuilding it from the ground up with KLIMA as the centerpiece of it all. Lows and highs will be felt through this journey. We'll always do our best to make this idea a reality.

                Klima will end up being a force for good in the world. The protocol needs to survive any bear market. Reduce the APY and communicate clearly to the community that this is a long term hold.

                  Brian33 For those who see that a reduction of reward rate is a hit for your own value, the success of the protocol, treasury, and your own tokens are heavily tied together. One's success isn't seen without the other. What's best for the protocol is what's best for the user, and vice versa.

                  Easy to say if you have paid 10 DAI difficult to impossible to accept if you have paid $3500
                  Do not expect those who have paid those sorts of high prices to see the dream in the same manner as the IDO participants
                  The first group are looking at this from deep underwater whilst the IDO group have their rose coloured glasses firmly on and are now protecting their position at the expense of the others. Selfish actions indeed. And tell me again what reducing the APR did for Ohm's price

                    Is there any chance to have some kind of whitelist for wallets that bought at very top so thous could get like premium discount if they choose to bond more? Although I know that every body should know the risks involved in cryptos and trading but that wold be just a nice thing to do. Im wondering this and thinking of Klimas "ESG" values since these apy reductions have great impact on early adopters and in quite short notice.

                    What about proposing some fee/revenue producing projects like KLIMA Swap to earn trading fees, or KLIMA Bank to earn borrowing fees? Maybe do something that helps offset the APY and bring it in to balance if not become deflationary? Could be a win-win for the project and it's investors...