• General
  • Request for Comment - KLIMA X MOSS collaboration

Nikodemos agree - i would like to see this tokenization architecture transparently in this forum so the community can more deeply understand it. insufficient details are available on the website to conduct a deep inquiry at this juncture.

RobXRP THIS is critical - who makes these decisions and how? Feeling uncomfortable with the defi-high five yes's - can we get explanations for why people are saying yes? This is just the 1st proposal of this kind - shouldn't we be first asking how these decisions are made, rather than trying to make a decision based on 1 proposal? (I love a clear and public process for decision-making -> personal thoughts)

SBax_Regen
I appreciate your thorough reply to this proposal and have provided my thoughts below - I think you bring up some interesting questions about the role of KlimaDAO, bridge entities, and other actors in the space.

• TIMING of this proposal:
-Klima has been in internal discussions with MOSS to learn more about their platform, as have members of Toucan, for months now. I’d remind you that Klima has advisors who are members of BICOWG, and we certainly do not need to run policy decisions by a third party industry body whose job is to be impartial. Moss’s post is for discussion purposes, and that’s precisely what is happening right now.

• LACK OF COMMUNITY CO-DEVELOPMENT:
-Again, this is a KlimaDAO decision, not a BICOWG decision. There are carbon market experts within KlimaDAO’s core team and countless others who are active in the community. Everyone is open to share their perspectives on this forum and I do not believe one specific group holds agency over others in the community, and certainly not the DAO itself.

• COMMUNITY VALUES & DECENTRALIZED FINANCE:
“Should the first new carbon asset included in the klima treasury be moss? Is there a risk to adopting a heavily VC-funded, centralized exchange traded asset as the first expansion of the Klima treasury?”

-This is a very curious point, given that KlimaDAO itself has received VC funding, as have many carbon market entities who have utilized Toucan’s bridge. Are you concerned with VC funding in the carbon market space in general? My understanding is that Toucan themselves are pursuing VC funding – does this change your calculus of their ‘web 3 values’?

-The climate space is seeing a surge of VC capital due to an awakening on the importance of the the work happening here - as well as various macro factors which make companies operating in the space quite attractive investment opportunities (e.g. the general bullishness of the VCM and compliance markets).

• CLIMATE EXPERT OPINIONS:
-KlimaDAO is fortunate to have attracted many individuals with deep carbon market experience to our team and community. This ranges from project development & financing, corporate climate strategy development, and voluntary and compliance market trading. I’d expect each of them to weigh in on this discussion and share their perspectives. I don’t see a need to call into question this community’s ability to analyze this opportunity and move forward in a way that is most advantageous to KlimaDAO and our vision.

• RISKS TO THE LEGITIMACY OF THE KLIMA PROTOCOL:
-“Are moss assets the same quality, or lower or higher, than assets already in the treasury?”
I know you know the answer to this question but I don’t want to automatically assume you’re doing this just to cause FUD. Perhaps you can elaborate on your understanding of BCTs composition and that presented by MOSS so that I and/or MOSS can better respond to your concern.

• UNCLEAR VALUE TO KLIMA HOLDERS:
-Please see my first post in this thread.

• UNCLEAR ROLES BETWEEN MOSS TOKEN AND BCT AND TCo2:
-This is a question for Klima’s policy team to model and handle. These discussions are on-going and will certainly be shared with the community prior to any vote if this becomes an official proposal.

• CAN WE LEARN MORE ABOUT MOSS:
-I expect the MOSS team will be happy to answer additional questions about their organization and host an AMA with the KlimaDAO community – we’d expect nothing less!

• CAN WE LEARN MORE ABOUT THESE TOKENIZED CREDITS - MOSS TOKEN?:
-I provided Verra registry links to each of their projects in my first reply. The question we need to ask ourselves is to what extent bridge entities are responsible for due diligence. Do you expect Toucan and all future bridges to conduct in-depth due diligence on every project they allow in? Or, are we comfortable allowing the carbon market experts, certification bodies, VVBs, etc, make those decisions? Considering future bridge plans which have only methodological and vintage requirements for their new pools, I’ll make a confident assumption that the quality of MOSS’s smaller, curated pool, would on average be higher. Consider that Pachama offers e.g. the Agrocortex project (meaning that this project also went through their satellite analysis program).

-Current bridge designs focus on bandwidth rather than curation. To a certain extent we need to trust that the existing quality management practices in the VCM are adequate. We could ask ourselves, for example, how the level of scrutiny differs between a VCS + CCB credit compared to an alternative certification standard, like Plan Vivo.

• CAN I GET A KLIMA ROADMAP?:
-Absolutely, and an updated vision document with accompanying roadmap will be released by mid January. Until then, I’d encourage you to review our early Medium posts which provide context for our mission.

    SBax_Regen

    Just wanted to add regarding our view in policy; We should be viewing all carbon assets with a neutral stance. BCT has been a great carbon asset, but because the space is so new, we shouldn't disregard other assets coming into the space. When new carbon bridges and token emerge, we heavily encourage them to make a post as well, as I feel collaboration yields the greatest results.

    SBax_Regen It is unclear in this proposal if moss is asking for moss token to be directly accepted to the Klima treasury, or if it is expecting to convert moss tokens into BCT to then convert into the treasury? If moss tokens aren't converted to BCTs, does this not put the stability of the BCT and its accompanying pools at risk? Are moss tokens not just the equivalent of a Tco2e NFT (ie. they are just tokenized VCUs)?

    Regarding stability; more carbon assets introduces more stability into the carbon ecosystem, as now users have a method of pricing different quality of carbons. Klimates are able to choose between BCT or MCO2, and the treasury has a lower dependence on the toucan bridge, promoting decentralization and diversity. Policy team will take account all of the qualifications of the token and determine how much should be in our treasury.

      As a Klima co-founder and core team member, I am strongly against this.

      The argument for me isn't about the quality of the credits, it's that MCO2 pretty much acts as a Moss token by proxy. Moss is a centralized, VC backed company , they are picking the projects, buying the credits tokenizing them and then selling them. This kind of policy decision enriches them, and other MCO2 token holders, and is again just another middleman, who I thought the whole point of this was to replace?

      With BCT, any carbon project can bridge their own tokens and mint Klima or use the BCT to take out a loan and finance themselves. None of this is possible for MCO2 and centralised approaches like this.

      On top of all of this, we have fragmentation of liquidity, and competing tokens... again... re-inventing the same this that was always there off chain in the first place.... The whole point of bringing credits on chain is to build an abstraction layer and meta-registry on top of these different credit types, but now we have another abstraction next to an existing abstraction, and we just end up with an even more ugly fragmented, illiquid monster markets than before...

        This criticism is far from the reality of what happens in countries covered by forest areas such as Brazil. Here in Brazil, these liquidity instruments, like mco2, offer carbon asset distribution solutions that have never existed before. As a result, more and more forest conservation projects have emerged, and the income from credits at source has increased, making many conservation projects that were not financially viable to come into being. Mco2 is an important solution for credit originators, as we now have distribution channels for our assets and with increased liquidity we have increased the price at source

          Brian33 I am all for further decentralization that decreases the pressure on the toucan team, and for opening up avenues for other tokenized carbon assets to be included in the klima protocol. That seems like a logical progression and maturation that will be necessary for scale.

          However, I don't think that BCT and MCo2 are meant to be parallel assets, right? MCo2 is a REDD credit, ie. a digital forest carbon asset that focuses on a distinct area of the world - which is many ayers more granular than BCT - ie. VCU (ie. BCT) -> nature-based VCUs -> REDD projects -> Brazilian REDD projects (MCo2); It feels extremely granular from an asset pattern level to structure MCo2 as a bond given that it doesn't even represent an asset class or index type, which would be natural first step of BCT alternatives.

          I'm not opposed to including MCo2 as eligible to become BCT, but it doesn't feel the same as a BCT. It feels eligible to become a BCT.

          I am additionally wondering if there is public criteria for which specific methodologies can become a MCo2? For Klima to accept MCO2 at the token level, it has to accept its underlying criteria, which isn't highly detailed in this proposal, which just lists a few verra project links in the comments. For example, if MCo2 decides to accept Gold Standard projects in its criteria, is there the possibility that these MCo2s could be bonded in a pool even though Gold Standard is not yet accepted to the Klima treasury? Since MCo2 is a fungible asset type, is there a way that the criteria of what is within a MCO2 can be sure to meet the criteria of Klima (as is done by the Toucan bridge)?

          This relates to the underlying question of what is the hierarchy of inclusions criteria - is that still driven by the methodology inclusion criteria of the klima treasury? Can an asset, once included, divert from that inclusion criteria, or is bound by it? I don't know the answer here so looking for others opinions on these relationships.

            Tiago Thanks for further elucidating the additionality associated with these specific REDD projects - this seems to be the case with liquidity at large for many types of methodologies that are included in the Klima treasury at current. Can you share more about the financial relationships moss has with the project developers? Does Moss buy the credits, and that is the only financial transaction, or do the project developers have some role in the defi upside of MCo2? I'm personally curious as to their role in your ecosystem.

              Dionysus i'm excited that you've chimed in here as we always have great discussions! a few responses:

              original Q: "Is there a risk to adopting a heavily VC-funded, centralized exchange traded asset as the first expansion of the Klima treasury?”

              • I'm not for or against VC funding as I've been on all sides in my career (as you know). I'm pro climate impact investing of all colors! The point I am trying to highlight is that in this context moss is a centralized corporate entity, not a DAO, a blockchain company, or a layer 1 protocol with a decentralized community, so the financial upside to this decision distinctly benefits their investors, who they have a fiduciary responsibility to maximize corporate profits for. It's web2 + bridging, and mirrors the OTC market relationships which klima states it intends to disrupt. A centralized organization listing a carbon token on a centralized exchange as its launch strategy does allow for people to purchase MCo2 easily, which is great for moss and opens avenues for liquidity, but is something quite different than many of the protocols and DAOs of the space are designing or coordinating for with decentralized exchanges. To some people, many of whom invested in the klima treasury, this distinction is quite important and is something they are designing to disrupt. Perhaps what I am uncovering is that the klima community is agnostic to these power dynamics? If carbon is tokenized carbon, perhaps that is the most important aspect to consider in this proposal's context?

              original Q: “Are moss assets the same quality, or lower or higher, than assets already in the treasury?”

              • Not trying to be a FUD-muffin, although i do like to bake a little dissent pie when it creates good conversations 😉 I was trying to uncover if there was something distinct about the Mco2 that wasn't clear in the proposal (is there extra project verification or remote sensing or something?). It would be great if the moss team could clarify their role in the project links -> are they just performing the role of a bridge? did they buy these credits outright? are they performing project financing? are the MCo2 tokens so distributed because of their listing on coinbase that this would be a mute inquiry at this juncture?

              • for public record, I feel aligned with your comments overall about the reliance on existing standards. at the maturation level of this marketplace it's a reasonable approach to ensuring quality, and i wasn't directly questioning whether these 4 projects were more or less quality than a BCT; it's well known that i feel index differentiation is a valuable strategy to create informed price discovery for different forms of carbon, and that the blended price average of BCT is what it is! that question was posed as an invitation for moss to offer more detail if they felt it was relevant, and i think it's a worthy edge to explore as it underpins core tokenomics questions that have real financial outcomes for klimates.

              Q: Learn more about moss

              • yes to AMA! since moss have a fairly limited role in the klima discord channels they dont feel as entrenched in the public discussions as some other projects and partners do - i think the community would welcome the opportunity better understand this organization, and to have a health QA session to address some of their questions!

              Q: role of moss token, bct, TCO2?

              • I look forward to seeing this modeling! I'm a numbers gal, and I know that understanding the economic upside (or downside) of a for or against vote would provide many people an effective way to make a decision on this proposal, all other inquiries aside.

              Onward!

              RainbowWarrior

              The argument for me isn't about the quality of the credits, it's that MCO2 pretty much acts as a Moss token by proxy. Moss is a centralized, VC backed company , they are picking the projects, buying the credits tokenizing them and then selling them. This kind of policy decision enriches them, and other MCO2 token holders, and is again just another middleman, who I thought the whole point of this was to replace?

              I thought the point of Klima was to drive up the price of carbon offsets to make it cheaper for companies to not pollute in the first place, and to make it profitable for projects to pull carbon out of the atmosphere - i.e. using market mechanisms to incentivise the behaviours we need.

              If someone finds a niche where they can make a profit by doing that, isn't that a good thing? Does it really matter if they're profiting by being a middleman if the carbon price goes up, and decarbonisation projects happen which wouldn't have happened otherwise?

              With BCT, any carbon project can bridge their own tokens and mint Klima or use the BCT to take out a loan and finance themselves. None of this is possible for MCO2 and centralised approaches like this.

              My understanding is that the journey from "I have a great idea for a decarbonisation project" to "Here are your BCT tokens for this year" is a multi-year process requiring a lot of specialist knowledge and interactions with several different organisations. If Moss have a way to streamline that process for qualifying projects, doesn't that mean they're enabling projects to go ahead which otherwise might have stalled or not started in the first place?

              Also, if MCO2 is a treasury asset, that doesn't stop projects from bridging to BCT - it just offers another option that some projects might be able to use.

              On top of all of this, we have fragmentation of liquidity, and competing tokens... again... re-inventing the same this that was always there off chain in the first place.... The whole point of bringing credits on chain is to build an abstraction layer and meta-registry on top of these different credit types, but now we have another abstraction next to an existing abstraction, and we just end up with an even more ugly fragmented, illiquid monster markets than before...

              I thought the plan was always to have multiple "pools" of tokenised carbon offsets - e.g. nature-based, direct air capture, etc. Are you saying that Klima should only ever be backed by BCT? Also, doesn't bonding the base carbon tokens for Klima have the effect of converting less liquid, heterogeneous carbon tokens into a more liquid, homogenous asset (i.e. Klima)? Or, have I misunderstood the point you were trying to make?

                SBax_Regen

                I see what you're saying now. At a high level, KLIMA currently has an intrinsic value of 1 carbon tonnage. This means (if this proposal passes snapshot), both BCT and MCO2 are used to back each KLIMA token, as they both represent 1 carbon ton. Since both are VCU's, as well as MCO2's carbon credits are comprised of more higher quality carbon credits, its valid to consider it for backing.

                For certification, I regard both Verra and Gold standard to be very reputable carbon certifiers, so if in the future BCT or MCO2 decide to go that route, then we'd still accept them as a carbon asset.

                I an in favour of bonding for both the pair and the MCO2 token

                Clearly with the above, more educated, people asking appropriate questions that needs answers. I feel this proposal unripe to move to the following step of being a KIP.

                An AMA would be the first logical step, followed by answers to the questions asked in above messages.

                  Because of my lack of knowledge in the carbon markets, I will leave it to those with expertise to expose the pros and cons of integrating MCO2 to the KLIMA treasury.

                  However, if we’re talking purely from market mechanics, I would like this proposal to be revised and consider the liquidity for MCO2-USDC as well. Like what @0xFelix mentioned, not having a dedicated liquidity pool for MCO2-USDC will just create this routing:

                  MCO2 -> KLIMA -> BCT -> USDC

                  Which to me, is a big red flag. Integrating Any other carbon asset to KLIMA’s treasury automatically creates a liquid market for that carbon ton, which is ripe for arbitrage opportunities (we’ve seen this happen when BCT first opened up). Moss needs to rethink this proposal from a purely market dynamic perspective and include an initial allocation for MCO2-USDC as well

                    SBax_Regen Hi Sarah! Currently Moss is a vertical platform. Moss is also developing carbon credits together with land owners. Moss is also able to provide different financial resources to allow them to increase their impact on conservation and social investments.

                    lancecord Sequestration credits are very rare. Carbon capture machines don't really scale (yet) and neither does reforestation. The ubiquitous type of credit is avoided deforestation, having represented more than 50% of the global carbon credit market in 2020 according to Ecosystem marketplace. @Moss

                    Moss The curation done by the Moss team is not currently done in other carbon credit tokens... Brazil has many land ownership issues, local knowledge is key here

                    Sirob The real world still has no clue of what a DAO is. Having presence in the centralized exchanges helps to reach the average retail and institutional investor and bridge demand for carbon credits while the system is not fully decentralized @Moss

                    Sirob Check out the proposal for your answer here: "Klima's most valuable proposition over time is the intrinsic value. Would you agree to stimulate demand for Klima among your end clients as an alternative to selling MCO2 directly to them?"

                    Our proposal at Moss (I'm the CEO):

                    "Furthermore, to facilitate this joint partnership, the MOSS team will bond 15k tons and collaborate to jointly market this effort in catalyzing the DeFi carbon offset market. This collaboration includes the following pledges from MOSS:

                    Should KLIMA-MCO2 bonds be of interest, we will provide $500,000 worth of MCO2 tokens to Polygon to pair with $500,000 of KLMA from the DAO to form a liquidity pool. This will be shared between us and the Klima protocol.
                    MOSS pledges to engage in joint-marketing efforts with KlimaDAO to accelerate the development of DeFi carbon markets. Part of this effort includes providing KlimaDAO with $30,000 in funding for marketing efforts."

                    RobXRP Agreed, carbon credits and blockchain are incredibly complex and detailed matters, tough for laymen or newbies on one of these topics to opine.