Title: C3 Alliance & veGovernance
Author: GolanTrevize
Contributors: Brian33, MarcusAurelius, Khyezr, SyZygy
Summary
• Support the launch of C3 as an ally of KlimaDAO, supporting each other to develop the new crypto carbon economy with KlimaDAO as its decentralized bank and reserve currency.
• Approve the longest vote locking of KlimaDAO’s vested C3 tokens to maximize governance rights and delegate C3 voting on behalf of KlimaDAO to the Policy team with appropriate consultation of the community until a proper voting mechanism is implemented.
Motivation
As the KlimaDAO protocol evolves, it is currently progressing through the Integrations (Sprout) phase with a KLIMA supply of 1-10MM. In this stage, the KlimaDAO Roadmap highlights the importance of “new bridge protocols [to] bring novel classes of carbon assets on chain.” In particular, it emphasizes that “new carbon assets [should be] bridged on chain by a diverse group of protocols. Klima establishes its position of leadership in the climate blockchain space.”
This implies three prerogatives to adhere to KlimaDAO’s Roadmap and ingredients for its success:
1. Support new carbon bridges that increase ReFi liquidity & volume on-chain and diversity & quality of tokenized carbon tonnes locked in KlimaDAO’s treasury;
2. Encourage growth and experimentation of ReFi mechanisms and composable carbon-based building blocks, especially those that further the establishment of KLIMA as a base carbon trading pair and expand its utility; and
3. Accept governance rights in the carbon bridges KlimaDAO supports to assist their development and more broadly voice its community’s interests in the climate blockchain space.
The new C3 (aka Crypto Carbon Company) carbon bridge is scheduled to launch in March and has requested an alliance with KlimaDAO in its recent RfC.
This KIP-15 recommends a KlimaDAO alliance with C3, plus the acceptance and effective utilization of its C3 governance token grant to KlimaDAO, in satisfaction of each of the above mentioned three Roadmap objectives, as described below.
I.i.) C3 is partnered with Aither, the largest carbon brokerage in Europe, with an annual revenue of EUR €1.1BN. Aither will collaborate to utilize C3’s offset tool as their main source of retirement, plus sourcing carbon tonnage on-chain. Importantly, Aither’s involvement portends the attraction on-chain of alternate demand sources from its legacy clientele to complement that of KlimaDAO’s, mitigating crypto carbon supply-demand circularity. Moreover, Aither’s Verra API access will allow anyone with a qualifying project permissionlessly to bring offsets on-chain and avoid the need to manually review projects, further streamlining the onboarding of carbon credit supply on-chain.
I.ii.) C3 will introduce more registries beyond Verra underlying its carbon tokens’ certification, as provided by Toucan and Moss today, such as Gold Standard and possibly the American Carbon Registry too.
I.iii.) The criteria for UBO and NBO were purposefully aligned with CBL Market’s GEO and N-GEO contracts, which facilitates familiarity among traditional carbon credit buyers to come on-chain. These represent a distinct value-add diversification and improvement in quality starting with vintages of 2014, as compared with BCT and NCT with vintages beginning 2008 and 2012 respectively, but less than MCO2 starting with 2016 REDD+ limited geographically to the Amazon basin.
II.i.) For the first time beyond DeFi and of special benefit to KlimaDAO’s roadmap, C3 will be introducing token incentives to ReFi, which includes incentivizing UBO/KLIMA, NBO/KLIMA, & USDC/KLIMA SLPs and wsKLIMA single sided staking. Additionally, C3 indicated in its RfC Forum commentary that it intends to replace incentives for C3/FRAX to C3/KLIMA in the future, after its initial post-launch volatility is stabilized. All these incentives further motivate the horizontal development model of KLIMA as the fundamental carbon currency and liquidity pair in ReFi.
II.ii.) Apart from KLIMA specific C3 incentives, C3 emissions will heavily reward utilization and supply-demand growth of its ecosystem (75% of C3 distribution), including for actions such as bridging and offsetting, that accelerate the wider on-chain carbon-economy.
III.i.) C3 token distribution reserves the largest grant for KlimaDAO, as “thanks for igniting the new wave of ReFi” at 10%, vesting over 3 years. This together with Moss’s 10% allocation to KlimaDAO (5% grant + 5% MCO2/KLIMA LMI) sets a new market rate value for incentivization and alignment of a carbon bridge’s strategic partnership with KlimaDAO.
III.ii) C3 is introducing the dynamic vote escrow (“ve”) tokenomics model popularized by the Curve Finance protocol. This means that to gain full governance rights in C3, holders would need to maximally vote lock their C3 tokens. This can be a comparative advantage governance value-add for KlimaDAO, given its very long-term goals’ time horizon.
Counterpoint
One hypothetical drawback of this KIP would be a potential perceived loss of neutrality by KlimaDAO among carbon bridges. On one hand, this is mitigated by KlimaDAO defining its relationship with C3 as an “alliance” of equals, rather than a hierarchical “branch” like Redacted Cartel’s relationship with OlympusDAO. On the other hand, as the different carbon bridges all launch DAO and governance tokens, it is inevitable that the different bridges will reward their users in bona fide Web3 fashion, with KlimaDAO naturally being the largest among them.
So while KlimaDAO will continue to fairly assess each new carbon bridge in the interests of its community and ReFi at large, it will be incumbent on the bridging market actors to determine the value-add of closer alignment and strategic partnership with KlimaDAO and award KlimaDAO their DAO/governance tokens accordingly. This in turn will drive the flywheel of value discovery for KlimaDAO’s governance role in ReFi and in turn potentially accrue a ReFi meta-governance premium to KLIMA.
Proposal
KlimaDAO hereby accepts endorsing C3 as an allied ReFi protocol as well as their proffered token grant and supportive efforts, and likewise returning KlimaDAO’s support for C3’s endeavors. As such, together KlimaDAO and C3 will collaborate in close synergy toward our shared mission to accelerate and democratize climate action by creating a robust on-chain market for carbon offsets.
In case of the former, specifically KlimaDAO welcomes from C3:
10% of total C3 governance token supply, vested linearly on a weekly basis over 3 years;
plus efforts to provide –
-> additional support in bootstrapping on-chain carbon liquidity;
-> an external on-chain carbon bootstrapping mechanism outside of KlimaDAO; and
-> increased utility to the KLIMA token by making it the main pair for all current and future carbon tokens.
In case of the latter, specifically KlimaDAO offers C3:
support of the KlimaDAO community and its Community contributors for C3 to launch and grow;
assistance from the KlimaDAO Marketing & Creative contributors in marketing and outreach to appropriately promote C3; and
regular communication with the KlimaDAO Policy & Partnerships teams to better facilitate C3’s goals and alignment with KlimaDAO.
C3 Governance Participation
In order for the treasury’s allocation of C3 tokens to exercise governance power, it must be locked in the “vote escrow” contract as veC3 – similar to Curve’s veCRV model. Since KlimaDAO’s allocation of C3 will be vested linearly on a weekly basis, the DAO must establish a plan for locking into veC3 and participating in C3 governance.
In addition to collaborating with C3 as outlined above, if this proposal is approved, KlimaDAO’s Policy team, in coordination with KlimaDAO contributors from Core, Council, and Partnerships, will be temporarily delegated to participate in C3’s governance process and all votes, with informal ongoing consultation of the community. Accordingly, the concerned KlimaDAO contributors with ad hoc community input will fully utilize the treasury’s allocation of C3 tokens to vote in good faith for C3 governance proposals and gauges that contribute to the long-term success of the on-chain carbon market and KlimaDAO.
To maximize the governance impact of the treasury’s C3 token allocation, we also propose to grant the Policy team permission to perpetually lock as many C3 tokens held by the treasury as necessary to max out the multiplier on KLIMA-containing gauges. Once all gauges are at max multiplier, any remaining C3 will be held in the treasury until allocated in a future KIP.
In a future KIP, we will propose a mechanism to decentralize control over the treasury’s C3 governance power. In the meantime, the Policy team will more substantively consult with the KlimaDAO community on any significant or potentially controversial C3 governance proposals.
To be clear, this proposal does NOT include enabling bonds of any C3 assets. Bonding for C3 assets will be proposed in a later KIP, should this proposal pass favorably. It is expected that before this subsequent KIP will be put forward, C3 will have launched successfully and demonstrated demand for their assets in the initial days following launch.
Polling Period
The polling process begins now and will end at 03:00 UTC on March 3, 2022. Assuming in favor, this vote will go to Snapshot.
Poll