KIP 14: Resilience Mode

Joaquin

I am a bonder, and as a bonder, I voted for rip band-aid off and reduce reward rate to 0.164%. Long-term is our play.

bvid

Band aid off. Sustainability is crucial

Crypto_Coin_Guy

khyezr KIP was listed as a framework. However, the graphic which listed the stages and APY that corresponded with same was not. The graphic was used to market KLIMA. There were no asteriks. There was nothing listed on the graphic that said that it was only a framework or guideline.

I can't speak for what the law is outside of the US, but if someone advertises one thing (the graphic) and then does something else - that is a big no no. It can subject the company to treble damages and all sort of other grief. It is not enough that the KIP may have said something else because that information was not in the graphic. It is buried at the bottom of the KIP. Individuals are not expected to go and hunt for information like that. They are entitled to rely on the graphic that is put out and marketed with. And I can assure that many many people did.

KingArthur33

Crypto_Coin_Guy Since this proposal is being voted by the community are you reasoning that is legally wrong to allow any vote for an APY reduction outside the framework.

Crypto_Coin_Guy

TheLawyer You have individuals who have invested in this project who are US persons. The DAO marketed with the infographic that specifically delineated the APY range which corresponded to certain supply levels. There were no asteriks, no other language or statements published with the infographic that said what was on the infographic was merely a "guideline" or "framework." If you think that a federal district court in the US is going to play the personal jurisdiction game with the DAO when it has and continues to purposefully avail itself to US persons, taken money from US persons, you are sorely mistaken. I support this project, but from a legal perspective it is foolish in my opinion to adopt something that is inconsistent with what was marketed. The purpose of this discussion is for everyone to have input and to clearly understand the legal risks of a decision that reduces below 2000 percent . This needs to be discussed frankly and very openly.

Crypto_Coin_Guy

KingArthur33 There is nothing wrong with the vote itself. The DAO can vote to reduce below 2,000%. There is no injury to anyone until the APY is actually below 2,000 percent. But the DAO needs to consider the legal risks of implementing anything inconsistent with the infographic for persons who purchased based on the infographic. Companies do all sorts of things all the time understanding that they might be sued. The DAO just needs to know that there are a class of persons who might sue. This is not some metaphorical possibility. These kinds of claims are being fleshed out in US courts.

At a minimum:

The DAO needs to take down the infographic now or immediately add explanatory language to it that it is only a guideline or framework.
If this vote passes and the APY is reduced below 2,000% you will limit the number people who can potentially sue.
Going forward you need to always use language that allows for wiggle room. It is not enough that such language is buried in a KIP or a Medium article--particularly when the actual info being marketed does not have that explanatory language.
Have legal review the marketing before it goes out to avoid these kinds of issues.

It very well may be that nobody does anything. That there are no suits and everyone proceeds along with 1000% just fine. I hope that is the case if that is what happens. But you have a lot of angry people who have lost a lot of money in this project. You are giving those people a chance to fight back in a way that is completely avoidable. Respectfully, an extra 50 or so days of runway is just not worth all of that.

KingArthur33

Crypto_Coin_Guy The feedback is appreciated and will keep this in mind for future proposals !

mak

Before I can make up my mind about this KIP I would like to get some clarity from team regarding the following points:
Why is it bad if people unstake their klima, sell into the pool and then bond BCT or other bond assets? In the end this increases the amount of carbon locked in the klima treasury. All we had to worry about was the downward price action it puts on KLIMA but that will be largely addressed by the inverse bonds being introduced soon. Additionally locking more carbon and taking it out of LP pools increases the price of these carbon assets. If KlimaDAO still wants to achieve the stated goal of increasing the cost of carbon offsets then won't reducing the incentives interfere with this goal? We all understood that KLIMA holders will indirectly subsidize onchain carbon credits to achieve that goal and we agreed with it as the traditional market needed to be disrupted. Are we stopping/reducing that subsidy and letting the traditional market decide how much we can disrupt them?
Finally I would like to ask the team if they truly think there's no other way of achieving the intended long term stability via alternate methods such as stake locking etc? IMO 10 day lock to unstake will be enough to ensure majority of bond inflows comes from outside the system and doesn't put downward pressure on price.
Thanks

KingArthur33

mak So for your first point about people unstaking and selling. Currently increased bonding essentially damages the klima/bct premium (taking that pool as an example) as we sell klima into the klima-bct pool. Maintaining a high premium is important because it is harder to grow the treasury the closer klima is to the offsets in price. The inverse bonds KIP are a policy tool for extreme circumstances and not one that we should aim to use.

For your 2nd point about increasing carbon offsets prices, the current method of people selling klima for bct doesn't increase the offset price as much but like mentioned above reduces the klima/bct premium which will later make it harder to bond assets while we wait for more external demand to arrive. One way to deal with this that policy is working on is increasing depth in the klima-usdc pool so that klima->bct routes klima->usdc->bct which places upward pressure on bct price instead of downward pressure on klima/bct premium so that goal is still there.

On your final point, locked staking is something that is being considered in the future and the architecture of how it might look like is still being developed but this KIP is more about matching total supply expansion to the growth of the space as a whole while locked staking has usually been proposed as a way to reward long term stakers. An important but slightly separate issue. Also in the current climate there is no guarantee that demand will come from outside the system and most of the current bonding is done by repeat bonders. We can reduce the sell pressure by reducing capacity but to manage that we must reduce supply expansion so I do think this is the best way forward for long term stability.

FluctusLux

Voted for ripping the band-aid off. Tardfi carbon salesmen are fucking slowpokes. We actually have to slow down for them

donmijoo

100% support. Lowered APY is better for the future health of the protocol.

MonkeyAssassin

I'm not sure it is in the best interest after the last massive drop of APY to do it again so soon. With all the things to be released in the next couple of months do we need to drop straight to 1,000 APY? I think 2,000 APY then look again to drop to 1,000 APY after a few months. I know this proposed drop to 1,000 APY has made me hesitant to invest more.

Laplace

I am very pleased with this proposal. Scaling the rewards in tandem with the growth of the ReFi markets will assure long term sustainability for KlimaDAO. All for this, 100%.

Delhi_Cobra

Why not adjust APY weekly, relative to the previous week's treasury increase?

KingArthur33

Delhi_Cobra The would likely create too much volatility on a week to week basis.

Tyoru

Totally agree on 1000% APY, we need to make APY more realistic and sustainable for long term health.

rittaaka

In my view, Resilience Mode is a perfect way to encapsulate the next stage that is needed for the evolution of KlimaDAO.

Reduce bond capacity to slow down the flywheel and increase runway
Reduce supply growth to reduce downward pressure on KLIMA
Diversify into new tokenized offsets, making the Treasury more resilient in the long run
Reduce burn rate by trimming down the team - run like a Lean Startup
Increase focus on fewer, high-impact projects and lower-funnel marketing initiatives, which are more ROI-efficient

This will enable KlimaDAO to emerge with stronger fundamentals, with a longer runway, with a tight group of diverse individuals who are building for the future, and being lean enough to pivot as needed. As the flywheel effect picks up, the DAO can grow, scale, and a) increase bond capacity to compound growth b) target the top of the marketing funnel in order to have wider impact.

Ananth

Over the next 2 decades, while the carbon prices are going to keep going up, there'll be ups and downs in prices at various point in time.

Is KLIMA considering flexi APY option?

When high quality carbon offsets are cheap or we are getting at higher discount, then increase APY and have higher KLIMA emissions. Bond more and get more carbon tonnes into treasury.

When the demand is less, then drop the APY, reduce dilution and preserve the protocol health.

The same logic applies to demand / utility of KLIMA and its carbon assets.

KingArthur33

Ananth The option to increase reward rate is something that theoretically could be voted on in the future if the conditions seemed right.

rrrmmmmm

Do both options 1k% and 2k% APY include the same bond capacity or does it differ as well? Which one would be better for the treasury and for stakers in the current market situation?

Ananth

rrrmmmmm Lower APY means lower emissions and lower bond capacity. At present, lower the APY better for the protocol as it can bond less and increase the runway. 1000% is better than 2000%

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