KlimaDAO Forum

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.

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!

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

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

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

@Sirob @SBax_Regen @Dionysus I am the Moss CEO and we are all for a AMA session, and truly believe in the immense benefit of building a community and decentralization. As we all know, the planet is running out of time, and we must join forces to go as fast as possible on the mission to reduce emissions drastically.

SBax_Regen June 2020

SBax_Regen Ecoregistry, for example

Spike great points made here by @Spike