0xWhiteLotus

  • Nov 27, 2023
  • Joined Oct 24, 2023
  • In RFC: KlimaDAO x Helios Partnership Proposal for Solar Yield Generation

    Appreciate the questions Dionysus, answers below:

    1) Absolutely! Some clients we work with include Keken and Walmart in Mexico, Indus Motors and Xion Mall in India, and Victory Heights Primary School in UAE. Working with established businesses with 10+ year track records of strong cashflows, dramatically reduces counterparty risk.
    We do not yet operate in Zambia but are working with East Africa Power to get the deal done. We do not target specific industrial sectors to avoid an overconcentration of risk in any specific sector.

    2) All users have the options to enable or disable reinvestment at any time (toggled via user dashboard). Correct, enabling reinvestment routes that users returns directly back in to the diversified solar pool (think a blend of all active solar projects) and LP tokens are automatically distributed to the users wallet.
    Quick example: You invest $100 of USDC at 10%. Each month ~$1 of yield is automatically sent to your wallet in USDC. After 3 months, you decide compound interest is the way and toggle Reinvest to On. Now each month, you receive ~$1 in additional Helios LP tokens. After 6 months, you decide you want monthly distributions again and toggle yield off, back to $1 in USDC returned each month. After 1 year, you decide to exit your investment and cash out all LP tokens for your principal investment + principal of additional Helios LP tokens from reinvestment.

    3) Happy to share information on our current assets under management for DD purposes. An MNDA would be required at this time to ensure we can give you all the necessary information. We intend to open source everything but need more legal guidance to ensure regulatory/contractual compliance before we fully commit.

    • In RFC: KlimaDAO x Helios Partnership Proposal for Solar Yield Generation

      Hello! Appreciate the consideration and questions, I'll do my best to answer them succinctly:

      Response to Questions for Clarification:

      1. Liquidity Access: Most of Helios' current AUM comes from long-term oriented eco-conscious high net-worth individuals (HNWs). These investors have committed to lock up their capital for 3-5 years, but more importantly, to reinvest all dividends earned throughout that period (earning compounding interest). If Helios users wish to withdraw, they can withdraw the reinvested earnings of larger users, in exchange, transferring their yield-earning LP tokens to the larger investors (all handled natively via smart contract). This system creates liquidity for small to mid-sized investors AND hyper efficient reinvestment for larger users.
        While $250k is a sizeable investment, we're confident in our ability to provide liquidity due to 1. the sizeable returns we need to reinvest from larger users and 2. the consistent flow of new capital into Helios (~$50-100k/month). If Klima chooses to withdraw their full investment, Helios can provide bespoke liquidity by sourcing new investors to subsume Klima's LP position.

      2. Yield Distribution: Yield is distributed each month, automatically via smart contract. Users may also choose to automatically reinvest their earnings to fund more solar and achieve compounding interest, but that is entirely optional.
        On the RWA side, we receive monthly energy payments which we transmit directly back into the Helios protocol to ensure timely repayment of all users (100% on-time payments, historical)

      3. Audit and Security: We intend to fully complete the audit process and publish the results by mid-January. We will certainly publish results + any fixes that were made prior to our full public launch.

      4. Emerging Markets: Risk management is core to what we do here at Helios. Political risk in emerging markets is significant; much of our solar strategy/biz plan is designed to reduce/negate various aspects of this risk.
        Helios only funds Commercial & Industrial (C&I) solar, rather than residential or utility-scale, to ensure we're working directly with well-established, long-standing commercial partners. (as opposed to individuals at residential scale and governments at utility-scale).
        While Helios operates across a wide diversity of markets, there are far more countries we DO NOT operate in than those we do. We take great care in selecting the regions, countries and counterparties we work with. We've labored for 2 years to uncover investable projects across the African continent and are only now considering a single investment in Zambia. Sadly, we've had to turn down scores of projects across the continent due to untenably high political/gov risk.
        Helios projects do not depend on government incentives or even carbon credits/RECs. Should governments change their mind about such incentives, Helios will not be affected.

      5. Exit Strategy:
        Absolute worst case scenario 1 - The counterparty defaults on payments
        This is very unlikely for many reasons (simplest one: as their power provider, we are often the first debt paid as a business cannot operate without power). But, it is still possible. In this case, Helios and our solar development partners would pursue legal action as specified in our real-world legally binding Power Purchase Agreement (PPA) contract. In the mean time, the solar panels (which we always retain full ownership of) would be moved to another site (with a new PPA) where they would continue generating energy for the next 20-25 years. The labor cost of moving the panels is 10% of the project cost, so APY would be adversely affected, however the principal investment would remain intact. Once legal dispute settles, funds would be used to make whole on promised APY.
        Absolute worst case scenario 2 - Every single Helios user demands full repayment at exactly the same time 😢
        Sad days, but honestly not too bad. In this case, Helios would sell off its substantial portfolio of profitable, operating solar assets to a larger asset management firm and use all the funds to repay users. In this case, we still make a pretty impressive return as selling operating solar assets backed by strong PPAs is a strong business model in and of itself (many firms just do this). This would likely take 3-6 months but everyone would be paid in full.

      6. Performance Metrics: Helios receives monthly generation reports which detail energy generation/consumption by the day. We plan to publish these reports openly on our site.
        But we can do much better than that, and we will. We are currently piloting IoT sensors at 3 of our Kerala-based plants. These sensors capture panel-level generation data and stream this data directly on chain, batch processed every 5mins. This will give us not only the highest fidelity solar generation data (ever?) but also prove out our sub-passion project of web3-native renewable energy certificates. All data will be easily accessible via real-time dashboard for each Helios user.

      7. Flow of Funds: Some light legal guidance required, but I believe Helios can share most/all of the information we have on counterparty, site design, repayment schema, etc. Worst case, it may require an MNDA but that shouldn't be a problem. It's admittedly tricky to publicly publish our DD findings because they involve potentially confidential financial/strategy information of our commercial counterparties. We're still discussing internally on what exactly we can publish, open to working on this collaboratively if there are specific documents you believe to be critical.

    • In RFC: KlimaDAO x Helios Partnership Proposal for Solar Yield Generation

      Summary

      This proposal aims for KlimaDAO to deposit $250,000 into Helios, a liquidity provider for solar projects. The deposit will grant KlimaDAO access to an 8-10% yield generated from solar installations, aligning with our mission to accelerate climate finance.

      Motivation

      KlimaDAO's core objective is to create a transparent, neutral, and public infrastructure to accelerate climate finance. Helios offers a unique opportunity to diversify our DAO holdings with renewable energy, specifically solar installations, while generating a stable yield. This partnership will not only provide financial returns but also contribute to global sustainability.

      Proposal

      • KlimaDAO to deposit $250,000 into Helios, with a 6-month lock-up.
      • The funds will be used to finance the construction and operation of solar installations.
      • KlimaDAO will receive an 8-10% yield from the sale of clean energy generated by these installations.

      Background

      Helios is an open-source platform enabling both web3 & traditional investment in profitable, high impact solar projects in emerging markets, earning users stable, double digit yields uncorrelated with crypto or public markets while averting millions of tonnes of CO2 emissions each year.

      • By funding Commercial and Industrial (C&I) solar in emerging markets, Helios users achieve up to 10x more environmental impact as compared to funding similar US-based solar projects.
      • Less than 10% of proposed solar projects pass Helios’ meticulous diligence process, ensuring only the highest quality projects backed by top solar developers and established (10+ year track record) counterparties around the world.
      • In Helios’ first year of operation, they funded 4 solar projects across India, achieving an impressive 12.4% IRR while averting 900t of CO2 emissions. Now approaching their third year with nearly $1m under management, Helios is expanding globally with new projects coming online in Mexico, Brazil, Chile, and Zambia by end of Q1 2024.
      • Helios is currently undergoing an audit by web3’s most trusted audit firm, Trail of Bits, before launching publicly on Coinbase’s Base chain in Q1 2024.
      • The Helios project is fully bootstrapped with generous funding provided by Gitcoin, Future Quest, Celo, and NEAR. Taking no salaries, all Helios contributors are mission-driven by the clear goal of funding as much solar as possible. By eschewing traditional VC funding, Helios can fully decentralize ownership of the protocol, ensuring that the mission to fund solar can never be halted by short-term profit-seeking financiers.

      Risks and Mitigations

      Solar Risks
      Default on PPA: Helios mitigates this risk by working exclusively with well-capitalized businesses and has legal recourse in the event of a default.
      Operational / Performance Setbacks: Helios uses cutting-edge technology for 24/7 oversight and works with top solar developers to ensure peak performance.
      Project Pipeline: Helios maintains a strong pipeline of projects exceeding $150M, ensuring long-term success.
      Crypto Risks
      Liquidity / Bank Run: Helios has a multi-layered strategy to ensure liquidity, including large capital providers and a cushion of funds from solar installation repayments.
      Crypto Asset Risk: Deposits are only accepted in stablecoins, primarily USDC, to avoid volatility.
      Smart Contract Risk: Helios uses battle-tested open-source components and is in the process of auditing their contracts.
      Emerging Market Risks
      Currency Risk: Helios uses currency hedging contracts to mitigate this risk.
      Government: Helios limits government exposure by working solely with private enterprises.
      Repatriation: Helios owns LLPs in target countries to ensure smooth repatriation of funds.
      Further examine the risks here.

      Conclusion

      Helios is a liquidity provider for solar projects that allows users to fund solar installations and earn yield from the sale of clean energy. The protocol is designed with aligned incentives; directing liquidity toward financing profitable, high-impact solar installations. Helios makes money from funding these installations, just like its users, ensuring that all stakeholders are working toward the same goal: funding as much solar as possible.

      Read more here.

      We invite the KlimaDAO community to seize this unique opportunity to diversify its portfolio into renewable energy while generating a stable yield. By voting "For," you're not just making a financially sound decision; you're actively contributing to global sustainability and accelerating climate finance. Let's leverage this partnership to make a lasting impact—both for KlimaDAO and for the planet.

      Polling Period

      The discussion will last until November 2nd, at which time, if positively received, this RFC will be escalated to a KIP.