• Proposals
  • KIP-45: Separate Carbonmark from KlimaDAO and fund expansion strategy

don't get me wrong, it's more like I don't understand

endwar the intention is absolutely not to get rid of Carbonmark. It is the opposite: to enable Carbonmark to pursue its commercial objectives, which are challenging within the DAO environment.

Who will be the new entity?

"Upon receiving the community's approval, the DAO will initiate the legal processes necessary to formalize Carbonmark as an independent entity. Once complete, the Community will be informed on the steps that will be taken for Carbonmark to become fully operational."

don't get me wrong, it's more like I don't understand

The full RFC post and previous discussion is visible here which can add further context to help you understand: https://forum.klimadao.finance/d/250-rfc-separate-carbonmark-from-klimadao-and-fund-expansion-strategy/31

    I am in full support! With this KIP, I hope the team expand their marketing strategy for Carbonmark. On X, Carbonmark has less than 1k followers and Youtube 23 subs. We need to get more people in this great project.

    endwar this is the power of Klima governance 😄
    Thanks for your continuous support.

    I'm for this proposal as it's clear Carbonmark requires more operational latitude to achieve its mission of increasing overall DCM throughput.

    I agree with the proposal and $300k on legal expenses, but $2.7 million in the middle of a bear market doesn't sound great especially since $1.5 million was allocated to operating expenditure in KIP30 and since then the KLIMA price has continually declined. I'd like to see a financial breakdown of exactly how the $2.7 million would be used

      IntoTheEther
      As you can read previously, the goal is to have more months rather than the previous budget.
      Rationale is, instead of asking continuously, have one single ask.

      What happens after 20 months? If there is no sustainable business, ramp down the whole operation? I remember that once upon a time it was said that klima core team has external funding for a long time to keep operations running. Has that funding now ended?

        While I am fully in favor of separating interests of Carbonmark and KlimaDAO. I am completely opposed to funding it to the tune of 3MM USDC. Why is $3MM needed? This is an irresponsible amount of funding to be taking from the DAO. Ultimately, there's no accountability to deliver on any sort of metrics of success and the 3MM is handed to the org as a speculative bet in an uncertain time in the market.

        For this to be done properly, I'd rather see a proposal that outlines specific milestones and metrics of success that unlock tranches of funding. Clear objectives, achievable milestones, funding that's allocated in stages.

        In the proposal’s current form, Carbonmark would not meet any reasonable milestones that could be set out by the DAO. The biggest retirements and offsets that occurred in the history of the DAO came from personal connections to larger orgs, none of which came during the time of Carbonmark or from the team that currently works on it. These were all largely done in 2021 and early 2022.

        This is why it's important to keep this funding tranche incredibly well documented and marked with high quality objective milestones. Otherwise we are speculating on the potential of a product that has yet to create tangible value for the DAO. KlimaDAO is in the business of facilitating carbon markets and not funding speculative ventures. The reality of the situation is that even the markets top leaders in offset sales are having a hard time selling anything in this saturated market. Believing that Carbonmark can come close to that or even more naively, believe that we can outperform market leaders is not only misplaced and will be very costly for the DAO. The data so far shows exactly this, it is costly and to date has produced no sizeable results.

        To justify further spending on this, I want to see strict assurances of success put in place such as milestone based funding. So that if they are not met, the DAO can halt funds, reduce spending if there are no results and protect the interests of the DAO.

        I completely understand and agree with the notion of separating, the commercial need for this is clear. However, funding should be a separate discussion entirely with more strict assurances put in place. My interest here is to protect the DAO and ensure its longevity and its success.

          Alanos86

          The proposal isn't to wind up the DAO's operations at any point. Nor is there any need to for a number of years with current funds and burn rate (whether the KIP passes or not).

          The "20 months" simply refers to how long the Protocol Team could in theory continue at current spend, if the KIP was to pass and remaining KIP-38 funds were left for the running of the Protocol (not Carbonmark).

          That is not to say that Protocol Team would not change their burn rate, or present new KIPs to the Community for OPEX funding, in the interim. Obviously what happens there would be at the Community's discretion.

          Carbonmark on the other hand would not be expected to request any additional funds from the DAO.

          To summarise, these funds would essentially give both projects around a year and a half of security with no additional funding asks.

          Slide from today's discussion attached for those who missed it for additional context.

          Archimedes Your concerns about the 3MM USDC funding allocation for Carbonmark's separation from KlimaDAO are valid and echo prudent business practices. The absence of a milestone-driven funding strategy in the initial proposal does indeed leave a lot to be desired in terms of accountability and risk management.

          The demand for detailed metrics and phased funding aligns with best practices in venture capital and should be considered the gold standard for any DAO aiming for longevity and fiscal responsibility. Your point about the market saturation and the struggle even for market leaders provides a sobering context for this funding proposal. Carbonmark needs to prove it can be an exception in this challenging landscape. Carbonmark should be funded, but the amount and the goals must be tethered in a pragmatic business case.

          Given that the ultimate goal is to benefit both KlimaDAO and Carbonmark by focusing on their core missions, the funding should indeed be subjected to rigorous conditions. Such an approach not only protects the DAO's interests but also helps to refine Carbonmark's operational focus.

          Hence, I completely support your stance that the proposal must be revised to incorporate milestone-based funding tranches tied to measurable outcomes. This will provide the necessary safety net and enable a more strategic allocation of KlimaDAO’s resources.

          Smart funding follows performance; no milestones, no money.

            Archimedes Are you the Archimedes the founder?
            Why your so strict when you never put milestones and metrics of success for all the previous funding requests? What are the milestones of the actual departments?
            Milestones and guarantees must be given, but it seems strange that this comes from a founder.

              Head of Engineering at KlimaDAO here 👋

              Creating & funding this entity is an absolutely critical step for both Carbonmark & the DAO.

              I only wish we'd done it sooner. Since day one, our approach to building products has been blockchain-first, and permissionless. These technical decisions have tradeoffs touching everything from user onboarding, to transaction speed and website performance. Some of these Web3 tradeoffs are simply insurmountable for the segment of the market who would adopt Digital Carbon at scale. Managing wallets, gas, and permissionless assets is simply too much to ask from carbon brokers and project developers who have long-established KYC and accounting practices. Many quality of life features that I want to ship-- Stripe integrations, wallet abstractions, KYC and AML, and more, are simply not possible in the current DAO structure, so me and the product team have deprioritized them. This has been deeply frustrating for me.

              Our legal designation has also made my job as a manager and team-builder more difficult, as I can't compete on the same level as software companies who can offer more familiar employment contracts. Thankfully KlimaDAO and Carbonmark are exciting, high-impact projects: plenty of top-tier builders have showed up to contribute. The team I work with right now is incredibly efficient and talented. The next phase of growth, however, is going to require a more traditional talent acquisition process.

              As I've come to understand (I am not a lawyer) the only way to bridge these gaps and solve these problems are to establish a legal entity.

              Right now, most dev time is already spent on Carbonmark. KlimaDAO invented ReFi and the Digital Carbon Market, but it absolutely can not succeed without a product like Carbonmark. I want Carbonmark to be the most comprehensive UI and API for interacting with the Carbon Market end-to-end. The DAO liquidity engine has already made the impossible possible-- the largest and most diverse supply of carbon credits with open access, instant settlement & instant retirement, and a set of APIs that allow anyone to integrate carbon into any application.

              Now, we believe we have enough feedback to address fundamental issues and really unlock the scale we've all been envisioning.

              For those who are worried about my commitment to the DAO going forward: Me and my colleagues will continue to maintain app.klimadao.finance for the foreseeable future. The DAO marketing team has already made huge strides towards taking full control of the website & blog, so they are no longer dependent on us developers for their new content and campaigns. In addition, the DAO will benefit from the fact that projects like Klima Infinity, KlimaDAO Pledges, and the carbon-oriented sections of the app can be deprecated and no longer be a burden on the DAO to maintain-- these have already been re-implemented (and much better!) in Carbonmark with the same value-sharing mechanisms for the DAO.

              Finally; we work in the open and plan to continue doing that as well. Concerns or complaints about our pace, code quality, roadmap or spending have always been welcomed. So far the product and engineering teams have received nothing but praise, our team outperforms any team I've ever been on dollar-for-dollar, and is improving every day.

              Archimedes an interesting set of perspectives!

              Thus far the DAO has spent ~$11,000,000 since it was launched - with budget approvals on a six monthly basis all that have been required for accountability. This level of spending / unaccountability cannot continue, and although internal cuts are hard, that ~$200k all in spend we now find ourselves at feels much more reasonable and where it should be.

              The proposal clearly continues to force efficiency within the CM team, whilst also cutting off the proverbial lifeline -a step required to force it to become viable within 18 months.

              By all accounts this feels like an efficient and responsible next step for the project. Far more so than continuing to try and navigate the internal challenges, and expose dev work to uncertainty due to the difference in opinion on funding the project is facing internally.

              Re PMF and market thesis -- your POV is one we have discussed at length and as you well know I disagree with it. I do however think there is a general misunderstanding on the USP of Carbonmark: scalable, automatable solutions will be an important component of the next iteration of the VCM. Carbonmark would do well to position itself at the front of the pack as the market begins to turn (and we need more work to achieve that). In any case, we can hypothesize on this forever and likely won't align at this point; more importantly is how do we force an outcome to either stick to our guns and try it, or go home, instead of stuttering along in a setup that doesn't work.

              Therefore for a number of reasons (arbitrary and counterproductive requirements for productivity being phased in; maturity and needs of Carbonmark; needs of KlimaDAO; challenges we will likely face with conditioning funding; issues that tranches funding continually pose for the project) I am personally in favour of the proposal as it stands.

              I look forward to more comments from the team and community as we chart out next, and critical steps, in the DCM.

              While I generally support spinning off Carbonmark into a separate entity, this proposal does not clarify how Carbonmark and it's future contributors will be aligned long term with KlimaDAO, hence I have voted no on this proposal.

              I'd like to suggest the following amendments:

              a. Milestone based funding as many have outlined here
              b. Some way for KlimaDAO to verifiably benefit from funding CarbonMark. This can be done in any of the following ways:

              I'd like the community and core team to think of this step from a long term perspective. If we as a DAO are able to successfully spin out CarbonMark and ensure that there is a verifiable way for it to add value back to the DAO, then this gives a roadmap for other groups to spinout of the DAO and form their own legal entities and add value back to the DAO. However, if this legal entity spins out without proper value alignment, then there is no guarantee that future employees of CarbonMark will be as value aligned as current contributors and may decide to take the legal entity to follow its own independent path.

                KlimaDAO also did not start with specific target milestones in terms of retirement volume, product features, adoption .. etc. The main reason was that we pioneered the launch of the DCM and it would've been impossible to set milestones for a nascent market with everchanging dynamics.

                In less than 2 years, KlimaDAO has built the base layer for carbon by creating a permissionless, frictionless, open-source inrastructure for the on-chain carbon market.

                We did have unpredictable setbacks when Verra stopped bridging. But we continued to build with an eye on the future.

                I think the vision should be the same for Carbonmark. To build a frictionless, permissionless carbon marketplace with unparalleled user experience for retiring or trading carbon credits.

                While the VCM as a whole is going thru multi-dimensional changes (Verra FUD, Quality issue, additionality, bogus claims..etc) and retirement volumes are unpredictable, we should be building Carbonmark with an eye on the future (net zero goals, new partnerships, on-chain registry, climate finance, institutional investment)

                Then KlimaDAO x Carbonmark combination would be rock solid. Also, I strongly believe that Carbonmark is just the first of many to come.

                jengajojo I've a couple of thoughts

                Firstly, I think setting milestones and tracking them is possible for matured systems / processes where metrics can be set as they've been modelled and proven to be replicable. I think it's difficult to do it for the DCM - ecosystem, products, marketplaces.. etc. But, I'm definitely open to ideas on what to track and how.

                Secondly, if you tie funding to milestones and if due to external factors it's not met, then do we stop funding? (Imagine Verra stopping tokenization, what if we stopped funding KlimaDAO). I don't think it's prudent. There is no DCM marketplace for web2 companies which can feed into KLIMA's growth. That's the reason Carbonmark was built. If that halts, then I'm not sure if there's an alternative.

                I definitely value accountability, but I think we are in very early stages of an evolving market. I'm just not sure how to do it in a way where we don't hamper growth.