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
KIP 14: Resilience Mode
- Edited
Voted for ripping the band-aid off. Tardfi carbon salesmen are fucking slowpokes. We actually have to slow down for them
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.
Crypto_Coin_Guy The feedback is appreciated and will keep this in mind for future proposals !
100% support. Lowered APY is better for the future health of the protocol.
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.
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%.
Why not adjust APY weekly, relative to the previous week's treasury increase?
Totally agree on 1000% APY, we need to make APY more realistic and sustainable for long term health.
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.
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.
Delhi_Cobra The would likely create too much volatility on a week to week basis.
Ananth The option to increase reward rate is something that theoretically could be voted on in the future if the conditions seemed right.
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?
10000% AGREE!!! every 10 days somebody is dumping on us, somebody changing the rules! Now all is going fine, we have a strong HODLER base, no sell offs, new buyers coming in. what the hell again is your problem?? you want to destroy all good and kill this project????
in two weeks, o sorry, we need 10% APY, you not understand whats going on?? many investors NEED high APY coz they buyed high!! we need a hodl base, not so many "experts"! now we have a hodl base, all goint good, leave it as it is!!
KingArthur33 rip the bandaid off and go with the 1k APY People always want to get rich now. People don’t understand lowering inflation will help the price. Let’s take klima back to 500.00 bucks with 1k APY!!
- Edited
Sir, please read the messages above on how high APY is irrelevant to growth of investment. Neither is the price.
High APY --> Increased supply of KLIMA --> Reduced runway --> Bad for KLIMA protocol long term health.
For now, let's assume we've a good runway. Let's compare
Your KLIMA: 10
Supply: 1mil KLIMA
Price: $100
Current Market Cap: $100m (Supply x Price)
Investment value: $1000 (# of KLIMA x Price)
Target Market Cap: $10b (in 1 yr)
APY: 10,000%
Your KLIMA: 1000 (approx) - 100X
Supply: 100mil KLIMA - 100X
Current Market Cap: $10b (set target)
Price: $100 ( Price = Market Cap / Supply)
Investment Value = $100 x 1000 = $100,000
Alternative: (for the same $10b market cap in 1 yr)
APY: 1,000%
Your KLIMA: 100 (approx) - 10X
Supply: 10mil KLIMA - 10X
Current Market Cap: $10b (set target)
Price: $1000 ( Price = Market Cap / Supply)
Investment Value = $1000 x 100 = $100,000
In both cases, your investment value has grown from $1000 to $100,000. But if the APY is 10,000%, the protocol has increased the supply to 100mil KLIMA instead of only 10mil KLIMA. This dilution would reduce the runway over those 12 months.
The key is market cap. For the same market cap, KLIMA will have a higher price for reduced supply (reduced APY).
Lower APY --> reduced KLIMA emissions --> Slower rate of supply of KLIMA --> Increased runway --> Better for protocol --> Better control over bonding metrics --> Controlled treasury growth
Love this KIP, a step in the right direction and getting closer to fixing the broken supply/demand dynamics of Klima that has been crashing its price.
Would love if you could share your actual spreadsheets and models around this, including how this impacts projected future supply. A lot of us are actively modelling this and some of the parameters are a bit hard to dig out.
For example:
What is the actual bonding rate? Eg how many Klima are issued via bonds right now vs the different proposals?
How will this affect supply growth of Klima? (Bonding + rebase)
How will this impact the ability to fund the team. Remember in KIP10 I believe there was a very short team runway, wont this reduce the funds flowing to the treasury that we can allocate to the team?
Cudos to the team for putting this together and again think this is a great proposal, in favor of 1k APY or lower until Klima supply dynamics are more favorable.