KlimaDAO Forum

Car54 To the first part of your reply, 0 expansion would only be ideal if we were already in the stability phase. But we're not and some expansion is still true to our goal of building KLIMA into a carbon-backed currency. Stopping expansion now would be pre-maturely foregoing that goal as the on-chain carbon market is still growing albeit slower than ideal.

To your point in the last paragraph, I'm afraid if we don't significantly lower AKR as proposed (and keep it at 1000% or lower to 800%), we might not even see your rewards being worth much in 3-5 years. The reason is if the on-chain carbon market continues to stagnate and only picks up 1 year from now for example, we would reach 1 KLIMA : 1 tonne backing way faster. This wouldn't be ideal as at this point we wouldn't have the defense of runway and might need to resort to buying back KLIMA if volatility in the market kicks in such that the token trades below IV. It's a very dangerous position to be in for all KLIMA holders

Creating a system where the more people buy the higher the AKR gets, is a pretty good idea from a marketing standpoint and a holding standpoint @MarcusAurelius . It would give the balancing inverse effect of the supply increasing. If this is a side effect of this proposal then I may support it.

against.

gui_m_p Yes that's right. Right now, our bond capacity is low but AKR still remains high. Adjusting bond capacities up right now is not ideal given thin premiums and there are only about 7.2M tonnes on-chain to capture into the treasury before we run out of on-chain tonnage. So the idea is that when on-chain supply growth picks up, we would be able to adjust AKR and bond capacities to capture that growth into the treasury

omilidio In order to net slow down in expansion, we would have to burn more than a few tokens if we were to adopt this strategy while having an AKR of 800%. Also, we have to consider where the burn supply is coming from - there are two possible sources - DAO Treasury or KLIMA/Carbon LP.

DAO Treasury - We use this source to pay builders/contributors of the project, there are only about 100K KLIMA in there. If we burn this source, we'd be burning the lifeline that sustains project builders. And builders are who we need in this bear climate.

KLIMA/Carbon LP - Burning this source is not ideal as it goes in direct contradiction to our goal of horizontal development of the KLIMA liquidity rail which we want as a public good.

For the above reasons, this is why we have an alternative and that is inverse bonds with USDC (currently sitting in the DAO wallet). You achieve the same effect but over a period of time and dependant on market demand. However for it to have net positive effect on the token supply, we still need to reduce the AKR drastically. Otherwise, inverse bonds would not be effective and we would be wasting precious resources from the treasury.

@zynec made a very good point about dropping akr now, needed, versus designing a long term strategy and making sure that we have the time and the people with the best knowledge in this area to kick the wheels on the strategy until it is sound. So I support the need to drop the akr but I would like to see a strategy team really delve into the weeds and come up with the best way to implement an auto adjusting akr

Rene exaxtly. how is klima attractive to anyone to buy atm? low apy, disaster looking chart.

khyezr Thanks for your detailed response. I totally agree that we do not want to spend Treasure, but I'd like to emphasize that the sooner you take this kind of action the less you would need to spend. For example if we don't do it now probably we will have to do it when total supply is around 10mm. Then it will be even more expensive and less effective than using it right now or better yesterday.
Just trying to help here, not totally against this KIP.

And yes ok let's take AKR to 500%

A dynamic AKR to reflect the dynamic nature of the on-chain carbon market is logical.

CryptoKnight absolutely, and honestly in an ideal world we would have had the time to do extensive modeling and analyze the data in more depth before proposing this new framework, but as I've explained above, market conditions forced our hand to do a major reduction sooner rather than later. Given the community's concerns raised around KIP-14 about reducing AKR outside the bounds of the KIP-3 framework, we felt we had to put forward a new reward rate framework to replace the overly-simplistic KIP-3 framework at the same time as this significant reduction.

I think it's more or less the adopted framework model of OIP-93 where the APR is adjusted with lower and upper bound ranges. I fully support this approach for protocols long-term sustainability

With such a drastic reduction you are likely alienating a large part of the Klima community who are genuinely here to support the project but are also trying to break even on their initial investment. The policy team needs to balance the health of the project with the impact that this will have on the existing Klima holders and attracting new ones. As many of stated above there is likely going to be an exodus if AKR reduces too much as many of us here also see it as an investment of our capital and savings. The planet is important but if Klima keeps sucking our investment down the drain I don't see how it can be relevant. There needs to be balance here to keep people invested giving them a 1-3 year timeline of where their investment is going. Yes Klima is looking at a 10+ year horizon for building a carbon currency but IMHO you need to focus on yh 1-3 year horizon to keep Klima holders bought in.

Car54 A large supply is certainly needed but what we are saying is that the supply expansion would need to be commensurate with the tons coming on chain. So long as the on chain market grows so does klima. The current supply is 5-6 m and the number of carbons tonnes with verra are hundreds of millions so the potential to grow supply to a large amount still remains. The case for relevancy is whether or not klima can become the main market facilitator for the on chain market not how high its APY is.

Car54 The issue here is that there'll be no carbon credits to bond with at the current AKR. In other words, the # of carbon credits coming on-chain is lower than the # of $KLIMA that is being minted everyday (by bonding). AKR dictates the minting rate of $KLIMA.

At the current AKR, considering the same rate of carbon credits coming on-chain, we'll probably run out of carbon credits to bond in 6 months or so. What do we do if there are no more carbon credits to bond?

This is situation is unlike OHMs, as there is a massive supply of DAI, LUSD, ETH and several other "blockchain native" assets to bond as Olympus pleases. So OHM's changes to its APY is a strategy. But KLIMAs reduction is a necessity, at present. If this is not done, then in a few months, there's a risk of nothing left on-chain to bond with.

Once we run out of carbon credits to bond with, then a treasury supporting a long runway is of no use. We'll just deplete the treasury paying rewards and treasury won't go up due to zero bonding and it all collapses.

This proposal gives sufficient time for the #ReFi ecosystem to grow... We lower the AKR, reduce bonding capacity, take fewer carbon credits into treasury, allow for more carbon bridges to develop, allow time for more adoption & partnerships, see more investment flow into facilitating the flow of offchain to on-chain carbon credits, see the on-chain volume increase..... and then bring up the AKR

khyezr is there a timeline by when you expect on-chain carbon to become healthy enough for a AKR raise? so when the 90 day moving average reaches 0.35% then we decide? How did you come up with 0.35%?

Voted in favor, finally akr is going down more. Why not even go down more for a specific period to compensate for the way to long time that the AKR was to high?

Shame that still so many people don't understand that the rebases don't make your capital grow else they would all vote yes...

why is the AKR stated as, "Reduce AKR to 300%, or a 5-day reward rate of 1.9%, per the framework.?
According to my calculations, if rebases occurred 3 times per day, the two rates are not equivalent. For example, if 15 rebases would be 5 days at 3 per day, the rebase amount would be about .0012575 or 1.2575% and would equate to a 1.9% reward. It would though yield a AKR of 396%.

Just curious. Is it the lessor or greater of the two proposed rewards?

Crypto4theWin The rebases are not every 8 hours on polygon. They have been averaging around 7 hours so the number of rebases per 5 days is slightly higher at around 17