The Presents for the Planet initiative proposes an allocation of $100,000 USDC for the utilization of retirement bonds in order to rebalance $KLIMA and Base Carbon Tons (BCT) within the ecosystem.
The implication of this strategy will be the reduction of BCT and KLIMA in the ecosystem, and acceleration of carbon asset retirement.
Concurrently, a community-centric carbon offsetting drive will be incentivized, with KlimaDAO additionally matching each ton of carbon retired 1:1 (regardless of ton type), up to a maximum of 1,000,000 tons, thereby fostering a collaborative and impactful carbon reduction initiative.
The $KLIMA token is intrinsically tied to the associated carbon assets in the treasury and its liquidity pools (LPs). By systematically activating Retirement Bonds targeted at BCT we stand to rebalance $KLIMA’s alignment towards a more diversified set of carbon, whilst also offsetting carbon emissions via protocol mechanisms.
By initiating retirement bonds focused on BCT, we aim to diversify the carbon assets associated with $KLIMA, enhancing the token’s relevance in the broader environmental context. This approach not only aligns with KlimaDAO's mission of environmental stewardship but also actively engages our community in carbon offsetting initiatives. The proposed matching mechanism in this initiative is designed to incentivize community participation, fostering a sense of collective responsibility and reinforcing our commitment to carbon emission mitigation.
For context, currently, 97.8% of on-chain carbon in KlimaDAO’s treasury – through which $KLIMA is intrinsically tied to via its LPs – is BCT.
This action comes as an extension of KIP-49’s initial rebalancing of treasury assets. Here, the underutilized KLIMA / USDC pool was reduced by 75% to allow for a more efficient market and use of treasury assets. The recent rebalancing of the KLIMA/USDC pool presents a timely opportunity to inject additional liquidity. Our decision to utilize USDC from our treasury surplus for this rebalancing is strategic, optimizing our resources while enhancing the pool's liquidity. This action is not merely about maintaining equilibrium; it's a proactive step towards strengthening $KLIMA's market presence and utility for the ecosystem.
This proposal essentially proposes to continue rebalancing activities further, with a particular focus on carbon holdings, in an attempt to prime the ecosystem and set it up for its next steps - which focuses on onboarding new carbon assets, and shifting KLIMA’s exposure to a more balanced allocation of carbon holdings.
Practically speaking, the proposal will implement retirement bonds (RBs) to reduce the amount of BCT and $KLIMA in the ecosystem through retirements. First, by acquiring $KLIMA in the KLIMA/USDC pool for use in RBs. Second, by retiring BCT with that $KLIMA via retirement bonds.
Hence, the cost to the DAO treasury is 100,000 USDC to acquire that $KLIMA (so, 13.3% of the USDC pulled in KIP-49 rebalancing).
Continuing on with this strategy: further rebalancing towards a diversified set of assets will occur over the next 12 months, as the forward deals that KlimaDAO has engaged with on its Forum will further rebalance on-chain assets towards a more diversified set of carbon, namely:
- $USDC 227,000 for 14,276 tonnes Verra ARR credits (via Aither)
- $USDC 250,000 for 31,250 tonnes Gold Standard community-based energy efficiency credits (via SCB)
- $USDC 600,000 for 1,000 Ocean Alkalinity Enhancement Carbon Dioxide Removal credits (via Limenet)
- $USDC 250,000 for 15,151 ICR ARR credits (via GroInitiative)
Therefore, from the Protocol perspective this proposal allows:
- Reduced exposure to BCT by directly retiring and incentivizing third-party retirements on-chain
- Support for the KLIMA/USDC LP
- Increased $KLIMA’s purchasing power for carbon, (e.g. via DEALP)
- Preservation of existing $KLIMA in treasury for other strategic deployments (e.g. DEALP, liquidity programmes, etc.)
Furthermore, through the proposed matching programme incentivising community engagement for carbon offsetting will:
- Showcase the Protocol’s retirement bond mechanic for carbon offsetting to the market
- Accelerate carbon emission reductions via offsetting
- Align with Protocol’s long-term strategy of stewarding the environment and environmental commodity markets
- Dedicate $100,000 USDC from KlimaDAO’s treasury reserves for a systematic acquisition of $5000/KLIMA/week over the ensuing 20 weeks.
- Maximum of 1,000,000 tons used for matching of carbon retirements
Strategic Asset Burn:
- Channel the acquired KLIMA towards burning BCT via Retirement Bonds, thus reducing the circulating KLIMA supply while directly supporting projects taking positive climate action.
Community-Centric Carbon Reduction:
- Launch a community-driven carbon reduction campaign, with a solemn pledge from KlimaDAO to match each ton of carbon reduction 1:1, thereby doubling community impact.
- Transparent Reporting and Accountability:
- Instituting a transparent reporting framework to chronicle weekly progress on KLIMA acquisition, carbon asset burn, and community-driven carbon reduction, ensuring accountability and engagement.
- Conduct a comprehensive impact assessment post-initiative to quantify the economic impact on $KLIMA , carbon inventory, and community engagement outcomes, thus informing future strategic initiatives.
The Presents for the Planet initiative is a stride towards amplifying on-chain carbon retirement, thereby enhancing the KlimaDAO ecosystem's economic and environmental footprint. It extends a call to the community to transition to active participants in the global carbon reduction narrative.
Your endorsement is a significant leap towards a carbon-conscious and economically robust KlimaDAO ecosystem.
The polling journey begins now and will culminate at 07/12/2023. Upon favorable forum approval, the proposal will transition to KIP for further voting.
The RFC poll is a simple For / Against / Abstain. More nuanced polling options, such as:
- $100k budget & retirement match
- $20k budget & retirement match
- $0 budget & retirement match
- no budget & no retirement match
May be discussed, and if supported the KIP polling options can be revised.