• General
  • RFC: Separate Carbonmark from KlimaDAO and fund expansion strategy

Nikodemos Would like to know more about the Carbonmark as a separated company, what country it would be registered, can it issue shares to be listed, can it do capital risings for exchange for shares of the company and are klima holders going to get shares of that company in anyway?

The target is Switzerland, that has a robust legal framework for these kind of platforms

The idea is to keep it in a neutral entity such as a foundation/association/similar in order to respect the scope of KLIMA

Nikodemos Looking how the global markets are going down, is this good time to do this kind of move and separate funding? What kind of position Carbonmark should be after 18 months so we could say it was worth it?

Carbonmark is a vital platform for KLIMA'S growth and in preparation for the market growth, seems the right fit

This is an exceptionally detailed and well written proposal.

Are issues faced by Carbonmark on the demand side such as KYC, bank account, invoicing etc, also on the supply side?

I would also like to know what would be the expectations from Carbonmark in 18 months.

Currently, Carbonmark's fees are at 0.

In the future, if Carbonmark is a different legal entity, and if people at Carbonmark wanted to raise the fees, who would get the say? The Carbonmark team, or would it be a vote?

    Excited about this RFC! Few more questions;

    1. Is Carbonmark burning 150k USD per month at it's current state?

    2. If this modification goes through, is it true that only additional spending to current situation (150k/ month) is the 30k for legal and administrative spending that comes with the registration of Carbonmark?

    3. Is the spending rate of Carbonmark gonna stay at 150k/month level for ever?

    4. How Carbonmark would operate if it's budget runs out after 18 month? Is It going to continue working and only R&D is put on hold or what's the teams plan?

    5. Can klimaDAO participate into Carbonmark decision making in anyway?

    6. Is there examples about partners who has signaled that they would use Carbonmark if it's more like registered business?

    7. Can VCs or private individuals invest directly into registered Carbonmark so it could continue R&D?

    8. What would be the name of new legal structure? Klima labs, Carbonmark lab, etc.?

    And finally there was a mention at the OH that current budget going to fall short at december 23. Is this overall budget or budget for this year?

    Thank you guys and welcome onboard David! 💚

    vishkap I'll let others confirm it, but this is the way I look at it.

    Currently, the DCM and more specifically the KLIMA LPs are limited by the tokenized carbon credits from Verra (issued prior to May 2022) and it is skewed significantly towards BCT. This reflects in the carbon credits available on Carbonmark. With all the FUD surrounding Verra methodology (and VCM in general) over the last 12 months, adoption of carbon credits has been challenged significantly.

    The new supply from partnerships with Aither, Coorest, ICR, Limenet and forwarded funded projects, would enable Carbonmark to provide a variety of carbon credits making the marketplace more attractive.

    Carbonmark's goal is not to focus on revenue generation (which would be needed to repay a loan), but rather on 'retirement volume' and thereby the adoption of DCM and more specifically the KlimaDAO eco-system. This in-turn would result in increased adoption of $KLIMA and would restart KLIMA Bonds, which would generate revenue for the protocol.

    This is more like a strategic investment into Carbonmark which would in-turn help the protocol growth.

    vishkap The financial facilitation being provided to Carbonmark is not, in any manner, to be construed as a "grant." This is a crucial distinction. What we are discussing is a budgetary provision specifically earmarked for the continued development and advancement of Carbonmark. This aligns with the precedent set over the past two years, where funds were allocated for its growth, innovation, and service improvements.

    Channeling resources in this manner allows us to maintain a consistent trajectory in support for Carbonmark, while also ensuring it is able to develop as needed to satisfactorily integrate within commercial and regulatory realms, per the RFC post.

    Choosing to give Carbonmark a loan depends on a number of deliberate factors. We are aiming to create an innovative and symbiotic Digital Carbon Market. With this in mind, the earmarking of specific development budget allocations allows targeted work to promote the achievement of expected results without incurring repayment obligations.
    Also, it would change the terms of the relationship as for pursuing the repayment, Carbonmark would have to look for the best economic relationship, while in this case it's more of solidifying the relationship and having CM being the storefront of Klima.

    The synergy between Carbonmark and KlimaDAO's activities is intended to create a unique relationship that is defined beyond financial transactions. Carbonmark can operate and thrive on a budget while being closely aligned with KlimaDAO's strategies, ensuring both ongoing business' efficiency and effectiveness. Adding loans to the equation may inadvertently create financial stringency and potentially tie Carbonmark's growth efforts to repayment plan constraints.

    On the other hand, this approach intends to create a sense of trust that allows Carbonmark to operate smoothly and focus on its development goals and innovative activities - directing value back to the KlimaDAO ecosystem. Similarly, by separating KlimaDAO's work from Carbonmark's, we intend to preserved the integrity of its mission and ensured that the larger vision is not diluted (and we can proceed with further implementations at the protocol level for progressed decentralization).

      TheLawyer

      Appreciate this perspective, and the answer provided.

      That said it is referred to as a grant in the proposal above. If there's a crucial distinction to be made, it would be sensible to have that made more clearly in the proposal.

      Whilst I see the benefit of a non-financial relationship between Carbonmark and KlimaDAO, I also think the governance of the ongoing non-financial relationship needs attention to ensure it stays productive, especially as Carbonmark could be considered a spin off with its differentiation and potential legal differentiation specifically whereby a unique entity may be required to qualify for KYB etc. (not a lawyer so feel free to chime in on the entity structure).

      There's a concern from my side that the funds of the DAO are declining whilst the market remains bearish. I appreciate the need to turn supply into value via Carbonmark. That said, I would highlight a concern that governance between entities and value to existing klimates may dilute as Carbonmark progresses.

      Concerns about loan repayment could be offset by favourable terms in terms of length of time and low or no interest to repayment. I would argue it's perhaps better for the organisation than to spin off a new subsidiary without any accountability to the parent or token holders in terms of financial performance and additionally may help with a complex governance problem. There was discussion about yield farming being hazardous due to the potential to investment tending to zero, which is very sensible; perhaps this is a lens for all DAO investment to be more hawkish in the bear market. With this lens a loan vs. a grant is quite a minimal step.

      Whilst work progresses on the DWG or the establishment of a formal plan for KlimaDAO's operations, it would be wise to also consider the financial and legal relationship (or indeed formalising the social contract in some other way) between Carbonmark and KlimaDAO. Making this clear internally and externally could be of value going forward.

      I appreciate the strategy may be complex between entities, which sometimes warrants this sort of family office type relationship. That said I think having some basic structure which passes a sense test internally and externally is valuable alongside a tense market position.

      Whilst I agree that there is need for the bridge to DCM credits, I would argue that (even minimal) financial accountability can only help the focus.

      Good luck on next steps.

        Garmon based on the proposal, it'd be Carbonmark team, as that isn't a DAO.

          Would klimaDAO get equity in return for the seed funding? if yes, how much and at what valuation?

            Z33 theres a bit of a mixup. Carbonmark is actually part of the DAO
            The difference is minimal, but it allows with the real world entity to be more scalable

            • Z33 replied to this.

              Z33 there is no intentions of putting it in a private entity with shares,as clearly stated
              More likely a no profit entity such as a foundation or association

              • emc replied to this.
              • Z33 likes this.

                vishkap financial accountability is necessary, but I don't understand how a loan can be different.
                Klima has requested more than once the budgets for building. The request now is a bigger budget (less future requests therefore), and provide a real world entity that has the possibility of accepting more and bigger clients.

                The idea, is of course to be as more decentralized as possible, and there it's clear and shown in the past months with for instance QV and other moves.

                The split will allow the protocol to focus 100% on the protocol itself, and allow carbonmark to build the infrastructure where Klima will benefit, and the infrastructure that so far Klima doesn't have and need (rw entity).
                On the other hand, the difference is truly minimal

                  Garmon Currently, Carbonmark's fees are at 0.

                  In the future, if Carbonmark is a different legal entity, and if people at Carbonmark wanted to raise the fees, who would get the say? The Carbonmark team, or would it be a vote?

                  So far the decision the DAO delegated it to the heads of the departments
                  I see no difference if carbonmark will use a RW entity

                  Engaging with the Klima DAO team's decisions, it's crucial to see things straight and cut through the noise. Here’s the breakdown:

                  1. Carbonmark is already a part of the DAO. Making a big deal out of this doesn't make sense. We should be focusing on the main goals.
                  2. Carbonmark is open-source. Anyone can clone it. If we keep opposing its integration, we might end up watching someone else reap its benefits while Klima gets nothing. On the other hand, in this scenario, Klima will have the most upside.

                  Why keep poking with more questions when everything's already lined up? Both entities are on the same page, aiming for the same goals. Instead of going in circles, let's keep our eyes on the prize and get things done. Let's not waste time on stuff that’s already clear.

                  Im in favor in anything that can give resonance to Klima

                    Z33 but DAO is not a specific entity form, but a set of rules to govern assets
                    Be more specific so I can help at the best of my abilities

                    The goal of this RFC is two fold.

                    1. Enable Carbonmark to become a real world entity with an address, bank account, etc to build partnerships and service customers in the real world (read web2). This is a big thing because

                      a) 99% of the customers in web2 are either unaware or don't understand or are skeptical of web3. Imagine a customer of Carbonmark asking "where are you based?" and the answer is "Uhh..We are on the blockchain. Present globally." Companies work with partners who are in the real world.

                      b) All of the web2 customers are the ones who contribute 100% of carbon emissions and need carbon credits of offsetting. We've to be in web2 to service web2.

                    2. Clearly demarking KlimaDAO and Carbonmark would enable proper allocation of resources and funds and define the role played by each of them.

                      • KlimaDAO is focussed on the protocol (decentralization, public good, open source, being the base layer for carbon) and how to add value to the $KLIMA token.

                      • Carbonmark would focus on increasing the adoption of DCM, bringing more customers into web3 (by existing in web2), retirement volumes, increasing the supply of new carbon credits and promote blockchain as the technology of the future for carbon retirement.

                    The activities and growth of Carbonmark would feed into the KlimaDAO ecosystem.

                    Z33 Carbonmark would be more of a separate division and not a separate entity.

                    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?