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  • RFC: Separate Carbonmark from KlimaDAO and fund expansion strategy

If this passes, would Carbonmark be able hold stocks, bonds and shares of other legal entitys although it self doesn't have shares to be shared? If so this might open more opportunities to do deals with other companies like Limenet.

Also would like to know what the treasure of Carbonmark would look like in the beginning. Would it have any klima tokens for participating into KlimaDAOs decision making?

Would there be two seat problem if there is voting regarding situation where result of voting is more favorable for KlimaDAO or Carbonmark since same people are on both teams?

    equalizer

    Conversation tends to be an integral part of a voting based system. Whilst you make a strident and valuable point (and pragmatic summary); the conversation and engagement (as well as the opportunity to engage) makes voting more meaningful as people can start to gather and understand what they will be voting upon. That community buy in is valuable in the face of a seasonal and volatile set of unknowns in the future.

    TheLawyer
    Thanks for clarification.

    I’m not sure what structure I’m in favour of, and I was spitting out ideas - and appreciate the dialogue here.

    In some ways decentralisation can be harmful which is why I see merit in a centralised and purpose driven vehicle, which carbonmark may benefit from being. I think the loan or equity makes sense if carbonmark is spun off in terms of governance and/or is clearly defined as an entity. I understand the lack of clear impact of a loan arrangement if the entities are inextricably linked. Ideally an entrepreneur might grab such opportunities themselves in the future; but there would be no guarantee of utilisation of Klima digital credits. For this reason and others I can see why there are clear shared interests. I await any further definition in entity and purpose between the two brands, KlimaDAO and Carbonmark alongside the continued dwg process before commenting on or fully understanding nuances. In principle I agree with the stated approach.

      vishkap

      Taking a step back to analyze the entire situation, one must recognize a fundamental difference in the approach between the contributors team where you were also part of (or general opex) and CarbonMark (CM).
      The contribs never sought a loan, thus it becomes challenging to understand the reasoning behind expecting CM to take one. Venturing into the realm of loans would obligate CM to devise a structured repayment strategy. If this strategy does not encompass the utilization of Klima and its carbon from its inception, then the entire exercise would prove counterproductive, rendering no tangible benefits for the community.
      Think of it this way: if CM took out a loan, they'd be on the hook to find the best way to pay it back. But if that method isn't using Klima from the get-go, they would have to find any possible way to repay the loan. This would mean even not using Klima, but any platform or activity that would make CM repay it in the safest possible way. Maybe meaning not using Klima at all.
      Where's the benefit in that for Klima?
      Moreover, it is essential to underscore that the provision of loans doesn't align with the foundational objectives of Klima. It's imperative that our discussions remain anchored to the broader vision and the effective methods to achieve it.

      Nikodemos If this passes, would Carbonmark be able hold stocks, bonds and shares of other legal entitys although it self doesn't have shares to be shared? If so this might open more opportunities to do deals with other companies like Limenet.

      Exactly

      Also would like to know what the treasure of Carbonmark would look like in the beginning. Would it have any klima tokens for participating into KlimaDAOs decision making?

      KlimaDAO can decide to give some tokens to CM in the near future

      Would there be two seat problem if there is voting regarding situation where result of voting is more favorable for KlimaDAO or Carbonmark since same people are on both teams?

      I don't see it happening, as both entities are in the same team

      From the Provide perspective, I see some likely benefits in our combined enterprise GTM approach from this move. It can bring more clarity and function to the roles each participant operates from.

      In addition to all the comments shared in this post already, I feel that any revenue that is generated by Carbonmark should be reinvested in to growing Carbonmark. Any repayment condition would inhibit this process.

      By growing Carbonmark and increasing DCM adoption, the returns for KlimaDAO would be several folds higher than just the repayment of the $2.7m funding request, mentioned in this proposal.

        What would be the CM’s legal structure and who would be the owners/decision makers in that structure?

        • emc likes this.

        Good conversation here - it goes without saying that internally these are questions we have been grappling with for some time, and a lot of effort has gone into rationalizing the project, where its going, and what needs to be done to accelerate it. Glad to see this level of engagement around what is a big strategic decision for the project.

        A few high level thoughts from me addressing the themes that have come up:

        In terms of objectives of the RFC:
        the Protocol's main interest in this proposal is to have the ability to enable the creation of an entity that can drive retirement volumes onto the underlying carbon credits held in the DAO's LPs / ecosystem. The major question the Protocol has been asking itself for the past year or two is "how do we drive demand into the ecosystem", based on the understanding that this is ultimately how value will be accrued back to KlimaDAO. Carbonmark as is is today was the short-term solution the DAO developed. This proposal seeks to answer the same question with a longer-term view. Conversely, it does not seek to define how KlimaDAO can become a lending facility for DCM innovation, "investor" or otherwise.

        In terms of synergies between KlimaDAO and the proposed Carbonmark set-up:
        Carbonmark has been built expressly to leverage the DCM ecosystem, based on our theory that the benefits of the public blockchain tech-stack will win out over the long-term. If we are correct with this assumption, KlimaDAO should remain a powerful mechanism to build on-chain liquidity - and thus service Carbonmark and other DCM solutions long in to the future. If we are wrong on this assumption (and traditional infrastructure will remain dominant), then our Protocol and innovation activities will remain purely experimental, but not achieve mainstream adoption. I do not think that is the case, but if it is and Carbonmark and/or KlimaDAO need to innovate in different ways (looking at different asset classes, technologies, etc), my personal view is that it is ok; in a future where commercial activities are separated from protocol activities, it is not a problem if they are able to iterate in different ways from one another (in fact, this may be optimal).

        Re the funding ask:
        Per the initial RFC, the funding proposal is intended to ensure that there is 18 months of runway for the tech layer for the DCM to be built out, without the risk and turmoil that funding cliff-edges create. This is slightly below current BAU spending forecasts, but for all intents and purposes would be used for BAU dev activities, with the added benefit of having the ability to commercialize these activities through traditional business rails. This can also help project attract / retain talent talent within a more traditional structure, and generally increase operational efficiencies (things that can be sometimes challenging within a DAO). From the internal perspective, this feels like a no-brainer to ensure we can deliver on the objective outlined in #1.

        I caveat that the DAO has spent much more on tech development thus far on a pro-rated basis than the amount that is represented in this funding ask. With the maturity of the product, the clear vision Carbonmark has, and with appropriate contracts in place to attract FTEs, we stand to be much more efficient to build out the rest of the tech.

        Generally agree that attaching loans which anchor Carbonmark's priorities on repayments could distort its objectives (and intentionally deferring comments on the feasibility of this to others who are more qualified to comment).

        Risks / opportunity cost:
        ...and ref @vishkap's comments on the bear market. We are in a highly competitive market segment (blockchain x climate), although its currently stunted due to tokenization embargoes and the current state of the carbon market. Carbonmark does at some point need to position itself more strongly for when the the markets recover / (re)open -- not doing so will likely mean losing ground in the future.

        The nature of the competitive pursuits that the DAO is now pursuing are indicative of the organic nature of a DAO; but not that they are particularly well advised within the DAO set-up. We are where we are today... but crossing the chasm to "web2" / off-chain is going to be required to rectify the situation at some point.

        Realistically, a bigger issue (that has been unsaid but is known within the community) is that Carbonmark is open-source. At some point the tech may well simply be taken - this is the nature of R&D within the environment we are in. The opportunity for Carbonmark to "do it itself" is probably time-limited.

        In terms of the risks / opportunity cost, we can (and indeed have for many many months) speculated on when the right time to move forwards with such a proposal would be. The only certainty we have, is that at some point it will be too late.

        To summarise from my point of view, "doing nothing" is not a neutral act. Staying as we are will also have significant ramifications for both Carbonmark and KlimaDAO's abilities to pursue their respective objectives.

        As was requested at the last Office Hours, it certainly seems like it'd make sense to arrange for a second session dedicated to this topic with the Community - next week in the usual slot(?)

          0xy_Moron One of the most important points in what was said by 0xy is that 'doing nothing' is not an option. If Carbonmark is not separated into a legally compliant and registered entity and provided sufficient funding, then the growth of the KlimaDAO ecosystem is at risk. This would have repurcussions on the $KLIMA ecosystem.

          Currently, Carbonmark is the biggest supporter of DCM and more specifically the $KLIMA ecosystem. It needs to be nurtured and grown. All other #ReFi players in the blockchain x climate space do want to grow the DCM, but they are primarily vested in their own products / protocols / software / marketplaces.

          Considering the effort put into building Carbonmark and Offset API, it only makes sense to grow it ... preferably rapidly.

          I repeat 'Doing Nothing is not an option'. That could lead to stagnation of the $KLIMA ecosytem.

          9 days later

          TheLawyer Thank you for your efforts to explain this

          More likely a no profit entity such as a foundation or association

          This piece of the proposal still feels fairly opaque. Which of those structures will it be and what ramifications does each of those have over the other?

          As a "legal" entity does there need to be an individual (or individuals) who are responsible for the actions of the foundation/association?

          Will this person(s) be registered and how can we ensure that the current decision making process used for the DAO is followed/honoured by this person(s)?

          With the questions being raised about liability of DAO members I think it would be beneficial to know exactly what legal structure Carbonmark will have and who the key stakeholders/responsible parties will be.

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