KIP-38: DAO Funding Request for H2 2023

Hugh

Myself and the team will be available to answer questions over the coming days.

Car54

Hugh Is there anyone left that’s not part of the team?

Sure, might as well give you more money at this point, all the other value has been drained.

syzygy

Speaking for the Product and Engineering team, we greatly appreciate the continued support and trust placed in us by the community as we build the critical infrastructure required to scale the global digital carbon market.

We've been hard at work building since launch and have doubled down on our commitment to open source by including the recently launched Carbonmark in our public KlimaDAO monorepo.

As always, you can view our development activity and code in GitHub:
https://github.com/KlimaDAO/klimadao/pulse/monthly

sugarslam

I am fully supportive of the efforts so far, which have been commendable, and there are still important tasks ahead.

jengajojo

Thanks @Hugh and core for continuing to relentlessly build thru the current market conditions :

I was wondering if there is some sort of financial dashboard or reporting being done to predict the current runway given this burn rate?
Aside for the main strategies listed here, is there appetite to engage in yield farming to make the stables go a little further?

Hugh

jengajojo

Hey Jenga,

We talked briefly about this on Friday, but just for the benefit of others reading this forum post

re your first question, I updated the forum proposal last week with a breakdown of operating expenditure by team and expense category over the first half of this year. Following on from the DWG "working in public" initiative, we are also going to start sharing monthly reports with the community via our public notion page. More will be shared about this over the coming weeks.
re your second question, we performed a deep exploration into this earlier in the year, and the team agreed that the risks outweighed the benefits. Having said that, Maker's updated DSR has certainly piqued interest again in this topic, so we may revisit the conversation again. The economic analysis needs to look at the likelihood that our position goes to 0 (in the case of a hack or something) versus the upside over the holding period (i.e. the interest we could get from yield generating activities). It's a tough one, but we err on the side of caution here.

AndrewSaul

Whilst I'm broadly supportive of this, I'd like to see the team shift the marketing strategy.

From personal experience at multiple companies, conferences and community events are a low ROI. Whilst necessary to some extent, and I'm not discounting these entirely, I have never seen these ever work out in the short to medium term (which where we are now) to grow a product or project. Least not if that project was reliant on actual earned revenue and not entirely funded by grants.
The grant hamster wheel is to be avoided in my (limited) experience.

What we do have in defi is a still vibrant ecosystem that is looking for more utility for the tools that are being built.

What is the team's plans to tap into the defi and web3 ecosystem for revenue growth?

For example we're starting to see projects spring up that enable protocols to run a validator on a network (aka Marinade Finance's Directed Stake on Solana https://marinade.finance/blog/introducing-directed-stake-with-mSOL/) and harness their crypto community's existing assets to grow the protocol and return value to their participants.

There is definitely a desire amongst the broader public to utilise carbon credits. The genius of KlimaDAO has been to offer a way to participate in that isn't a 100% cost. There's a longer term investment element here via staking. Staking makes a lot of sense to non-crypto people; it's easy to understand.

Is there a roadmap as to the broader adoption of sKLIMA across the defi ecosystem as a defi primitive?
Is there anything on the roadmap planned to expand the functionality of sKLIMA as yield bearing token?

I would be supportive of proposals to provide liquidity incentives to help speed further adoption. Partnership with up-and-coming web3 gaming and social dapps (Lens Protocol is soon to go open access for example and it's already on Polygon POS) I think should be a key point on the marketing and user acquisition roadmap.

Hugh

Hi AndrewSaul, thank you for your comments and questions.

Re. conferences and events, you raise a great point, and we've had several conversations internally about how much we should be allocating toward events and conferences, and how we can track their success. Where we have landed is that in order to generate activity across both sides of the marketplace on our infrastructure, we need to build trust and develop relationships. The VCM is an industry entirely built on trust and relationships. When thinking about our relationships with registries, developers, traders and retailers, the ROI of attending a conference is very hard to assess - though it is essential to our success.

On the other hand, as we think about commercialization activities, the focus over the past six months has been on three main areas:

Speaking with customers to de-risk product and marketing decisions (e.g. our Web2 API)
Building real-world integration use cases (e.g. SushiSwap) to showcase the solution and its benefits
Educate the market on these use cases and how companies can leverage it to their advantage

Attending conferences with the goal of finding potential users of our technology does have ROI, and we are now hitting a point where we are going beyond POCs to real B2B sales deals. The sales cycle in our industry is typically long, at least with respect to an integration. This means that meeting decision-makers in-person at these events can often be a really important part of building the relationship and closing the deal.

Re. crypto versus VCM conferences, the team had a conversation last night about this topic in fact, and we are going to be prioritizing attendance at the largest commercial crypto conferences going forward, including Consensus (which we were at earlier in the year) and TOKEN2049, amongst others. This will be in addition to some of the larger carbon market / environmental conferences and events, e.g. the S&P Global Carbon Markets Conference. It is important to remember that the market opportunity in the broader VCM is ~ 1,000x larger than the current size of the Digital Carbon Market. However, we also recognize that being a DeFi project and our relationships with other builders in the space is a key capability that we'll continue to leverage going forward. Staying close to the latest developments in DeFi, as well as exploring opportunities to partner with others in the ecosystem (e.g. Polygon and others) will certainly continue going forward.

Of course, we would always welcome any warm introductions you could provide with contacts in your network from other projects in Web3/DeFi.

Re. our plans for tapping into Web3/DeFi and plans for broader adoption of sKLIMA, I will defer to @Cujo or @MarcusAurelius on the protocol / tokenomics side to explain their thinking.

MarcusAurelius

AndrewSaul thanks for these comments and your continued support

Totally agree re: grant hamster wheel, thankfully KlimaDAO has clear levers for capturing value from its products and services (e.g. liquidity provider fees, bonding, retirement aggregator convenience fee) so we aren't reliant on grants, but adoption of digital carbon for a diverse set of use-cases is critical to drive activity through those systems.

Historically we've worked with a variety of DeFi and broader web3 projects to compensate for their historical and ongoing emissions using KlimaDAO's digital carbon market infrastructure, such as Goldfinch, Alchemix, and Polygon PoS itself. This is definitely an important area to continue to focus on, but ultimately is a pretty small segment of global emissions.

In terms of integrating sKLIMA as an asset into other DeFi protocols, KLIMA isn't a network-specific gas token like SOL - it's designed as a liquid medium of exchange for environmental assets and the governance token for managing the KlimaDAO protocol and treasury. So, I'm not sure the analogy with liquid staking tokens like mSOL or rETH is super relevant - curious to hear what specific kind of integrations you have in mind.

For instance, there has long been a borrowing/lending pool that includes sKLIMA on market.xyz: https://polygon.market.xyz/pool/5

We've also led the market in developing climate positive NFT strategies, some of which involve sKLIMA, as outlined in this blog post: https://www.klimadao.finance/blog/climate-positive-nft-guide

In terms of integrating KLIMA and carbon credit retirements into other on-chain services like gaming and social, definitely on the radar. For instance, I've been trying to get a carbon credit retirement Collect module added to Lens Protocol since last year - it took them awhile to figure out their process for enabling community-contributed modules, but I worked with a hackathon team at ETHPrague last week to get a proper Lenster integration built out, and look forward to that module being accepted by the Lens Protocol community.

That said, I'm not sure staking is "easy to understand" for non-crypto people. In my experience, technical terms like "stake," "wrap" and "bond" tend to confuse non-crypto users, so we've limited those interfaces to the KlimaDAO dApp and moved the more "user facing" functionality for buying and retiring carbon credits to a separate application, Carbonmark, that is more user-friendly and less crypto-focused.

Hope that addresses your questions, happy to discuss further

Alanos86

Klima team is doing a good job. Just keep on building the business. It needs work to educate the market and achieve credibility. You will do it!

jengajojo

Hugh

Thanks for the clarification. The risk of a position going to 0 is a valid concern, however, I suggest evaluating this risk for the entire treasury which includes the LP positions. If we are confident about keeping tokens in sushi and quickswap, then this should be used as a benchmark for evaluating risks for any other platforms or positions we want to make. I'm happy to discuss further about this and make a proposal if you all agree.