• General
  • Request for Comment: Toucan NCT Bonds

I already voted no and will continue to vote against any new asset/liquidity introduced from Toucan until: (A) acceptable resolution of the return of BCT->NCT value at no additional cost to KlimaDAO; and **(B) a confirmed allocation to KlimaDAO of the future Toucan DAO/governance token, considering the current "going rate" among carbon bridges is ~ 10%, as recently established by Moss & C3.

Among RfCs from Moss, Flow/GoddessDAO, and C3, Toucan's is the latest and yet objectively the worst, offering zero incentivization/reward to KlimaDAO, which was a part of every preceding carbon bridge proposal to KlimaDAO.**

greevesie It is an interesting narrative take when our problem isn't the will to climate action but the number of people who are willing to get involved. If every turn there is going to be another nonstandard business action, lack of mass engagement will be the least of our problems. That being said, part of the problem here is that easy resolution seems to present itself. I trust the swift action to secure the funds, which is appreciated by me, results in a similarly swift resolution of fund allocations.

I am voting yes.

Because Toucan has the simplest process for bringing carbon offsets on-chain, I think it is in the overall carbon market's best interest to provide demand for this forestry token to see if it disrupts the off-chain market similar to it's BCT token. I want to see more bridging on-chain and continue to drive up the price of carbon. Bridging has slowed tremendously the past couple months and this is an opportunity to increase the bridging volume.

Was BCT devalued through removal of certain TCO2s? Of course it was; however, it was known for a long time that these TCO2s were in the Base Carbon Pool. Anyone who was following the Toucan discord knew that a "redeem" function was in the pipeline and that implied that it would be a race to see who redeemed the NCT-Eligible TCO2 tokens from the BCT carbon pool first. Toucan acted without reaching out to Klima (it's largest holder and liquidity provider), but I personally believe that the Klima team should have proactively reached out to Toucan before this all went down since the writing was on the wall and the rebalancing was inevitable. Free market gonna free market. I understand why the Klima team is upset about the loss of value, but isn't that what being a Klimate is about? 😉

James We asked Klima for help to bootstrap liquidity for and NCT pool, as KlimaDAO did with Moss, but unfortunately the treasury hasn't been able to do that this time.

Can you explain why this didn't happen?

ollumi Neither you nor I nor the Toucan team determines what is "priced" into BCT and what is not, the market does, based on the information available to it, otherwise, you can stop listing BCT on any swaps and exchanges and just list it as a direct to consumer/B2B product only sold by you.

Every time the price of BCT goes over the price of the lowest quality credit permitted in the BCT pool (usually 2008 renewable projects), large quantities of these credits are bridged on chain an sold until the price of BCT returns to the the off-chain price of the lowest cost of production. This is how commodities work, and our pools function similarly.

    ollumi It's one thing to say the team with inside/proprietary information on redemption and access believes the market price does not accurately reflect the true value of the assets underneath, it's another thing altogether to simultaneously pretend this asymmetric information effect on price exist and pretend that BCT does not lose value from selective redemption by taking advantage of the asymmetric information. Toucan's "rescue operation" justification hinges on the very fact that the market would react to the release of this information to a greater public, yet continues to pretend it would have no impact on the price of BCT or recoverable value to BCT holders.

    The value doesn't effect BCT it effects NCT because profit seeking actors would just dump these credits that they have taken in a zero-sum way.

    Don't believe me ... look what happened to the credits that weren't rescued:
    https://polygonscan.com/tx/0x01fca7b28e1ca071e1074e57c63e556af6af220df07c9efb7952a9a018d638ed
    https://polygonscan.com/tx/0x3a6e6bc275a02e7327ce7be5b79e59c94a2c76e4b4f641d8954b339c13bca321
    https://polygonscan.com/tx/0x12c672fa006fc1e628f5e4a5fb02dad21a825876ffe1f6158efa93213e97d19f
    https://polygonscan.com/tx/0x15acf7c89a62f969037003b1c866c33144385114f68726adee2f50411526b2f5
    https://polygonscan.com/tx/0xb0095710f47a82c6e94c99684899e1c18fd8cf3852a4c9fcb9a53dde0548328d
    https://polygonscan.com/tx/0x119ff0caa53cee1b196eac8ce2a039c8f779bdfae5393b3bb00e0f92c770e0a3

      ollumi This is a point I must stress because it's increasingly clear that some members of the Toucan team and its advisors simply do not respect market mechanisms or believe the purpose of these mechanisms is to be manipulated. This lack of respect for the demand side is more damaging than any positive "motivation" you may believe you hold.

      If you have read and understood all the explanations that we have taken pains to put out on this and still feel this way, then I respect your right to an opinion.

      It sounds like you're saying you would have let individuals actors extract the value and profit, and we all lose?

      That was literally the only alternative or please tell me what you would have done?

      (btw: first redeems by unknown actors on BCT starting 31st October 2021)

        ollumi To answer your question about the board, the funds are now in a 4/5 Multisig that consists of:
        Klima DAO, BICOWG 1, Toucan Protocol, Moss, Regen Network

        If that is the ultimate governing bottom line, what you're directly saying is that Klima would have at most a 20% say, and actually less because other signees were coordinated participants in the "rescue operation", is that correct?

        It's literally the people who put the nature based credits in the BCT pool in the first place.

        None of the signers participate in the rescue operation besides Toucan Protocol

          ollumi This is your vision, not the market's decision. If you see robust initial enthusiasm for your framework, then experience a sudden decline in the enthusiasm, I would first look toward yourself and the products you make before blaming other market participants.

          Please point me to where we blame other market participant for anything?

          Also not sure what you mean about sudden decline in enthusiasm?

            James

            Which...proves my point exactly, so I'm happy that you agree with me?

            James

            To borrow your tone in your replies: if you understand the effect of information, these transactions were done before the information was available to a greater public, while we're discussing why you would willingly 'chose' to continue to withhold that information rather than having it be out to the greater public. So to summarize, you're using transactions with insider information priced out of it to prove what prices would be with information priced into it.

            James

            If you have read and understood the conversations I've taken pains and my own valuable time to engage in good faith with your team on your server and on these forums and still do not understand why I feel that way, I think this proves my last point in my previous post. As for "only alternative" - as said already, you could've released the information to the greater BCT holding community - this is called transparency. If you were concerned about arbitrage, you could've either swallowed the pill that this is what market prices and your own product design dictated and shored up the difference via a capital partner, or been slightly less of a command & control operator compared to the route you chose and retroactively imposed selective redemption fees on nature-based credits in the BCT pool that would account for any projected price gap and announce the reason why, or selectively reached out to those who have been redeeming from your protocol with a bounty that represents a sure haul compared to the uncertainty of whether you would launch an NCT pool at all or whether the NCT pool liquidity could absorb their theoretical arbitrage maximum, or any number of other, non-self serving steps. But most importantly, I don't have to offer any of these alternatives to criticize what you did do: to paraphrase a certain comedian - I don't have to be a pilot to see a helicopter stuck up a tree and think that fellow screwed up.

            James

            That is my misunderstanding then, thanks for clearing that up!

            James

            I mean since you asked so nicely, here's an example, on KlimaDAO's forum in a RFC from a 3rd party no less, but I guess that's also consistent with how your server is mobilizing people from the Toucan server to vote on this KlimaDAO forum RFC - you don't see governance issues with voting on your own request to a separate, independent party?

            https://imgur.com/a/20c4F30

            I won't bother listing others where members of your team try to label other startups in the space as fragmenting your "one standard" and doing harm, people do see for themselves.

            As to the sudden decline in enthusiasm, if you're not sure what I'm referring to, you wouldn't be here on these forums replying to me.

              Hello Ollumi, I'm really sorry that you feel this way, and I apologize for you experiencing a lack of responsiveness in our Discord.
              We hear and understand you, and we are working on making things right, so we can move forward together. We are all humans here aiming to solve the biggest challenge of our species, which should provide enough common ground to work out our differences in a way that satisfies all parties.

              We would like to invite you on a call with members of the Toucan core, so we can have a fruitful conversation around the points you brought up. Please message me (ela @ Toucan | GMT+2) on Discord (DMs are open, otherwise please ping me on the Toucan Discord), so I can coordinate a time that works for you and the Toucan core.

              Thank you!

                After reading through the comments it seems to me that the biggest concern about this proposal is that KlimaDAO’s treasury would have to buy back what it had already paid for.

                I think it’s worth to take a closer look:
                Would KlimaDAO really have to start buying back the same assets (NCT and LP tokens) that were “taken out” of its treasury if NCT bonds would be introduced?

                My understanding is quite the contrary. Klima will be able to sell bonds in return for NCT and LP tokens only to users who either sourced these NCTs via bridging or they bought them on SushiSwap after the NCT liquidity pool was launched and none of these assets were previously in Klima’s treasury (except the NCT that was redeemed by non-Toucan entities, over which nobody has power anyway neither now or in the future). The NCTs that were “taken out” from the Klima treasury changed their shape into the form of LP tokens – so to avoid misreference it only makes sense to refer to them as such hereafter - and Toucan have absolutely zero intention to bond any NCT-USDC LP tokens from the mass-rebalancing action.
                Also, it’s both very dangerous and quite ridiculous would be to think that if a user who bought his NCT from the - currently still Toucan owned - NCT-USDC pool, isn’t acknowledged as his legitimate property, and thinking it belongs to Klima. It would make the meme turn reality in which Bugs Bunny says: “Our carbon.” Image of the meme: https://media.discordapp.net/attachments/846431959042621480/912120960906317864/Klima_Meme_1.png
                This would also break the fungibility of NCT. I think there is no need to explain further why this narrative would crush the on-chain carbon market.
                On the other hand what should we say to those who may want to bridge new NCT and bond them ASAP to the treasury?

                Not enableing NCT bonds would both delay the inflow of carbon assets from the traditional market to the on-chain which would delay global carbon price increase, and it would prevent users to play the beneficial 1,1 strategy, delaying the increase of Klima’s runway. Btw, I think if Klima is offering to sell a bond, it is only doing so under such conditions that is beneficial to them, so Klima would lose potential revenue.

                If we are delaying the launch of NCT bonds, we are essentially throwing the baby out with the bath water.
                I ask everyone to reconsider this proposal and don’t see and point to Toucan as the single identifiable blameable actor. One can only do that because Toucan had to do the rebalancing operation themselves. By supporting NCT bonds, you are not doing Toucan a favor. You are doing it for the benefit of Klima, the emeriging On-Chain Carbon Market and mainly for the health of the Planet with all the living beings in it.

                  ollumi Which...proves my point exactly, so I'm happy that you agree with me?

                  Sorry, which point exactly?

                    ollumi To borrow your tone in your replies: if you understand the effect of information, these transactions were done before the information was available to a greater public, while we're discussing why you would willingly 'chose' to continue to withhold that information rather than having it be out to the greater public. So to summarize, you're using transactions with insider information priced out of it to prove what prices would be with information priced into it.

                    I hope I'm not the only person who doesn't understand what you have said here, maybe you can make your point more clearly please.

                    If by tone you're referring to facts rather than opinions, then yes please... let's do that.

                      ollumi If you have read and understood the conversations I've taken pains and my own valuable time to engage in good faith with your team on your server and on these forums and still do not understand why I feel that way, I think this proves my last point in my previous post.

                      Sorry what point exactly?

                        ollumi As for "only alternative" - as said already, you could've released the information to the greater BCT holding community - this is called transparency.

                        What information exactly the functioning of the pools has been consistent since they were launched, anyone could have redeemed from them at any time.

                          ollumi or been slightly less of a command & control operator compared to the route you chose and retroactively imposed selective redemption fees on nature-based credits in the BCT pool that would account for any projected price gap and announce the reason why,

                          This was a work in progress, but we didn't have time to implement this. We also are of the opinion that any changes to the BCT smart contract would have to be run by KlimaDAO first.

                          ollumi or selectively reached out to those who have been redeeming from your protocol with a bounty that represents a sure haul compared to the uncertainty of whether you would launch an NCT pool at all or whether the NCT pool liquidity could absorb their theoretical arbitrage maximum, or any number of other, non-self serving steps.

                          Unfortunately there's not email address attached to wallet addresses that we can reach out to... and we don't know who was redeeming. We couldn't do a public shout out for all the reasons previously mentioned.