Summary
Reserve $1.2M USDC from the Treasury to fund H2 2023 DAO operating expenditure.
Motivation
Context
KIP-30, which was passed in December 2022, allocated $1.5M USDC from the Treasury to fund operating expenditure for the DAO. This injection of capital enabled us to deliver several projects that continue to position KlimaDAO as the market leader in digital carbon globally.
- With the launch of Carbonmark, we have delivered key technologies covering the entire value chain for digital carbon, from tokenization and trading through to retirement and analytics.
- Through our webinars, reports and direct engagement with industry bodies, we have improved credibility and educated the market about the benefits of digital carbon.
- Through our solutions and sales efforts, we have directly (and indirectly) retired tens of thousands of tonnes of carbon from companies and individuals around the world
The DAO Treasury currently holds $8.3M in USDC, and it is anticipated that by the end of June 2023, the DAO wallet will hold $125K in USDC (and 44K $KLIMA). As per our current policy, the DAO will continue to utilize USDC as the primary payment token for all operating expenditure for the foreseeable future.
To continue to fund project development and growth, the DAO is now requesting an additional allocation of $1.2M USDC from the Treasury for H2 2023 (July to December 2023).
Mission and strategy
The mission of KlimaDAO is to build the transparent, neutral, and public infrastructure needed for the Digital Carbon Market to accelerate the delivery of climate finance on a global scale. Our key business objective is to maximize the throughput of Digital Carbon through protocol-owned infrastructure (in terms of supply creation, trading and retirement volume), in order to expose the carbon markets to the benefits of our infrastructure. Maximizing infrastructure throughput yields two broad benefits: (1) increasing climate finance delivery to carbon mitigation and removal projects; and (2) increasing the value of $KLIMA through governance and future accrual streams.
To deliver against our mission and business objectives, KlimaDAO aims to coordinate its efforts and resources across four key areas:
Pursue an integration-led go-to-market: Drive demand for KlimaDAO’s digital carbon credit inventory through building end-points and integrating those with retailers and other sources of consumer demand. Continue to improve the value proposition to forward thinking demand aggregators through product innovation and deep, bespoke integrations.
Improve access and grow the ecosystem: Remove frictions for accessing our technology, showcase real-world utility, and build strategic relationships across the carbon markets to support adoption. Position KlimaDAO to be a catalyst for growth in the VCM.
Educate the market on KlimaDAO: Continue to educate the market on the role that KlimaDAO, the tech, and the $KLIMA token plays in unlocking transparency and accessibility for the VCM. Position KlimaDAO as a “public good” for the VCM.
Organize ourselves to build trust: Improve relationships with VCM stakeholders, regulators and influencers through re-thinking our structure and ways of working. This will involve taking steps to decentralize the project and optimizing our legal structure to interface more easily with the real world.
Note, more detail on our strategy can be found in the following document.
Progress made in H1 2023
Over the past six months, the DAO has been instrumental in delivering critical infrastructure, products and partnerships that support the project’s overall mission and strategy. Below is a selection of achievements across commercialization, product development, ecosystem growth, marketing and branding, and policy.
Product development: Launched Carbonmark.com and introduced key enhancements, including improved project descriptions and imagery. Migrated the /buy and /retire aggregator functionality to Carbonmark, streamlining our retirement process. Incorporated a Retirement Trends page in the Carbon Dashboard, offering detailed insights by pool, token, chain, and beneficiary, while also ensuring data pipeline fault tolerance. Developed a web2 API and invoicing solution, and advanced an integration with SAP S/4HANA for transactional offsetting.
Commercialization: Acquired several new Carbonmark clients across aviation, finance, e-commerce, logistics, and web3. Developed an extensive pipeline of organizations considering Carbonmark for their next retirement purchase. Held 150+ appointments with prospects, driven largely through cold outreach (2,000 leads with a 6% response rate) and the On Set Webinar series. Conducted extensive customer research, which validated our Web2 API product and led to the successful onboarding for our first business user.
Ecosystem growth: Partnered with two of the largest carbon project developers to secure new carbon supply for KlimaDAO, allocating $500K from the Treasury toward projects in Ghana and Bangladesh. Partnered with Circle to provide digital asset custody services to Carbonmark users, enabling them to more easily hold and manage digital carbon assets themselves.
Marketing and branding: Launched and established the Carbonmark brand, used by major companies like FlyAir, Meetmagic, Rioz Global, and others to show proof of climate action. Expanded our global reach through the On Set Webinar series, drawing over 1,750 registrants from over 85 countries across governments, corporations, registries, universities, consultancies, and developers. Reached over 2 million viewers on Twitter and over 100,000 visitors to our website.
Policy: Introduced Retirement Bonds, enabling efficient large-scale carbon retirements that accrue value to the DAO and decrease $KLIMA supply. Implemented the Aither ARBO and StarCB EEIMP initiatives, providing future liquidity and delivering 62.5K tCO2e of digital carbon for the years ahead.
Note, more information on product and engineering updates can be found in our Release Notes and GitHub Activity channels on Discord.
Breakdown of operating expenditure in H1 2023
By the end of June 2023, the DAO will have spent $1.27M on payroll and other expenses year-to-date. This includes ~$400K on R&D (Engineering, Product and Policy); ~$500K on S&M (Sales, Partnerships, Marketing, Community and Creative); ~$250K on G&A (Operations and Legal); and ~$100K on expenses (events, travel, accommodation and software licensing). A detailed breakdown month-by-month for spend can be found below.
Proposed funding for H2 2023
The DAO is now requesting an allocation of $1.2M USDC from the Treasury to fund operating expenditure for the second half of 2023. Alongside our existing cash balance, the H2 budget request will extend the runway for the DAO until January 2024. This includes ~$188K/month for payroll, and $12K/month for other expenses (e.g. travel, accommodation, events, software, etc.). Note, this runway calculation excludes any future inflows of $KLIMA or $USDC from the sale of digital carbon, trading fees, retirement bonds or traditional bonds.
Use of funds
We propose the following deliverables and workstreams for H2 2023.
Product (Engineering, Product, and Design)
- Upgrade Carbonmark with complete core trading and offsetting features
- Speed up implementation of user-driven features, performance, and UX enhancements
- Expand offerings for integration and automation partners, including APIs, SDKs, and data analytics
Growth (Sales, Marketing, Creative, and Community)
- Acquire new Carbonmark customers through coordinated sales and marketing efforts
- Drive volume by engaging, educating, and deepening relationships with existing customers
- Update brand and launch no-code website to drive funnel performance for KlimaDAO and Carbonmark
- Gather and share customer insights to support marketing campaigns and product development
- Enhance moderation and support, amplify engagement, and implement systems to drive loyalty
Ecosystem (Partnerships and Policy)
- Nurture relationships with VCM and DCM participants, focusing on integrating carbon registries into KlimaDAO
- Collaborate with supply-side stakeholders to diversify carbon supply and align technology stack
- Represent KlimaDAO in carbon-focused industry groups to establish presence and drive the conversation
- Calibrate bond capacities, manage liquidity, and oversee treasury assets for alignment with goals
- Translate strategic objectives into actionable policies, focusing on stability, efficiency, and carbon bonding
Organization (Operations and Legal)
- Enhance performance visibility through metrics and tracking for informed decision-making
- Drive efficiency via financial management, automation, and resource optimization
- Implement DWG recommendations to drive transparency and accountability throughout the organization
- Manage legal and compliance risks and advance our go-to-market from a legal perspective
Detailed breakdown for the use of funds of each department can be found here.