optima

  • 2 days ago
  • Joined Jan 2, 2022
  • Great write-up optima and SolidWorld Team đź‘Ź

    I'm very much in favor of the proposal. Being the first to do this in the DCM provides a notable opportunity for us on a marketing and public relations front, which we should definitely capitalize on. Additionally, there is a clear strategic benefit here with respect to Carbonmark, and making these credits more accessible to buyers.

    One initial question I have, most relevant for @TheLawyer, is whether we know any jurisdiction-specific legal challenges we'll face in trying to sell these credits on Carbonmark. Has PwC Estonia conducted a thorough examination of the major markets in the VCM, specifically the US, EU, Brazil, China, India and Australia? Are there any limitations that might prevent us from actually being able to sell these forward credits to certain buyers?

    Second thought - Taking a step back (and this is perhaps a little unrelated to this specific KIP), but I wonder whether KlimaDAO might be well-served by having an experienced advisory group who can specifically support the DAO on its carbon procurement efforts. If we are planning to continue using treasury assets to grow the supply side of the marketplace, it would be good to have advice on what credits we should purchase, and how much we should pay. Perhaps we can better leverage folks like Alik Hinckson (from WRI), or hire someone who can provide this service?

    Any thoughts on this @optima @Dionysus @0xy_Moron ?

    Cheers
    Hugh

    • KingArthur33 @optima okay thanks for the responses. That was the type of color / rationale I was looking for. I wasn’t saying we should strong-arm C3, but just to explain why we accepted material “deal” terms less than before (Flow also offered a marketing fee of $100k as I recall, plus bonding GNT), in lieu of other “strategic” value-add. It’s true that Moss and Flow are curated bridges, but I understand that C3 like Toucan although both permissionless are still companies with VC/angel funding, so it’s not like they don’t have some resources. The last point to consider is like @Sirob is wont to highlight, one of KLIMA’s (greatest) strengths is our community, the 40-60k+ Klimates’ attention/enthusiasm (which is the scarcest resource in crypto) and bearing the financial risk of bonding & 3,3’ing, whereas bridges are more toll takers. And while C3 can incentivize KLIMA pairs / single staking with its token emissions, there is no cost basis/risk (except opportunity & time) of its C3 tokens. Whereas there is for KLIMA bonders / stakers / bagholders who are buying from their pockets.

      Just before I left contributing, we were starting to think of inventive mutual value-add ways to use the marketing fees (especially as our own DAO wallet is constrained), starting with Moss’s. @Brian33 mentioned he’d ask C3 about this, so not sure if he did and they said no, or instead hadn’t yet?

      As for C3 bonding some of their UBO/NBO and commit to a certain staking period of say 1-2 years (KlimaDAO is locking its C3 perpetually after all too), that aligns interest and is a signal to Klimates bonding that C3 “walks the walk” & “puts their money where their marketing is.” (P.S. @KingArthur33 Moss bonded 15k MCO2 for KIP-6.) (P.P.S. Just being factually descriptive with my quotes, not baiting at all.)

      I wouldn’t vote against this KIP for the lack of these 2 value-adds, but would be interested to hear C3’s take on them. Keep in mind whatever terms we accept for C3 will become the new benchmark for Toucan with NCT and Flow with GNT.

      Lastly, on the trading volume, since we pledged to that as a barometer for bonding UBO/NBO, I just wanted us to ensure consistency in our commitment. For instance, then we couldn’t turn around to Toucan and say lack of NCT demand is still a reason not to bond them. I know the circularity of demand catalyzed/manufactured by Klima bonding is a real issue for us Policy has on their radar. So I just wanted to know if there were green shoots of alternate UBO/NBO demand, since NCT is struggling with that still, and I couldn’t find UBO/NBO volume yet on popular DEX/coin screeners.

      In sum, I like the C3 and would vote in favor, but I just want to remain consistent / neutral / thorough in our review process.

      cc: @Archimedes @MarcusAurelius

      • Sirob So basically as a user, you'd always weigh whether market buy or bonding gives you the highest return

        So based on @optima example - say now 5-day rebase yield is 8%, and for bonding to make sense for you, you require at least a 5% ROI on your bond so that you net higher returns when you adopt the 4,4 strategy as compared to a regular market buy and stake strategy. And you check this with the bonding calculator.

        Now when we reduce our staking APY such that 5-day rebase yield is 6%, this will increase demand for bonds. This increase in demand pushes bond price up to a new equilibrium, where the ROI of bonding is reduced to 4% but profitable enough for an actor to continue to 4,4. As a result of the decrease in bond discount, all else equal, the protocol now effectively pays less for the same assets it buys. As for stakers, they still get the same rewards but 13 days later (based on proposal). In other words, lowering the APY allows the protocol to incentivize less per bond it sells and the Klima treasury takes in more RFV per bond.

        • grap in conjunction to what @optima said , the drop seems significant because the reward rate is projected over a course of a year. Its a much smaller value then actually is felt.

          Brian33 This is equivalent to:
          A 0.35% Daily Reduction.
          A 1.87% Weekly Reduction.
          13 more days to double your sKLIMA balance.

          At current emissions, it is very much a hard task to keep metrics up as time goes on, and we are feeling that pressure today. I've been reading a lot of suggestions, and I've been taking them to heart. One of them is to reduce the reward rate when the market or metrics are significantly better, but there's been a lack of discussion on how we get to that state. The most optimal way to get it, outside of variables policy can control, is really through reducing emissions. Increasing capacity does work to an extent, but comes with its own set of problems (most notably a larger distribution of rewards to bonders rather than stakers). Increasing capacity with the higher reward rate also harms us more as we have to constantly pay more compounding rewards as time goes on.