Klima DAO: Dissonance

14 min readJan 10, 2022


This is not a post about the price action of Klima and most certainly not about price predictions. I have no idea what will happen in the future.

What I want to reflect on below is the fundamental development of the DAO while leaving any price or sentiment verdicts to the reader.

However, for context, when I first wrote about Klima on Nov 30 2021, the price of the token was ca $1,000 or $2,150 adjusted for the APY.

Klima has inflated at annual rates between 30,000–70,000%, currently ca. 28,000%. Even in inflation-adjusted terms, the price is down 78% since launch.

When people see a chart looking like this, they usually start writing the obituary. Many have done just that. This random tweet is from 1 Jan when the price was still 45% higher.

Since my initial deep dive into the DAO, I’ve published my research journey on how Klima works, the value proposition and why I believe it makes sense.

As of today, nothing has changed in my view. On the contrary, there have been plenty of new developments. I’d like to explore whether there have been or currently are any areas where perception differs from facts.

This is obviously just my personal view and no financial advice. I am biased so please take anything which is not an actual fact with a grain of salt.

At the end of each section, I am asking you some genuine questions. I hope they will spark discussion and I will get new insights and different views.

Let’s dive in.

11 Things That Make You Go Hmmm

The great Grant Williams likes to muse about “Things That Make You Go Hmmm”. I will kindly borrow this.

Hmmm #1: Community

Maybe one thing that people have found confusing is too much going on or too little and Klima risks losing momentum. Not sure.

One of the main things about DAOs is that almost everything is public. Granted, there is a core founding team which drives the development, but the idea is for the DAO to become more decentralized over time, not less, which would bring even more transparency in addition to the current very high level.

Klima has an extremely active and popular Discord server with over 42,000 Klimates and an overall community of > 60,000. The team is holding various talks all the time, from office hours to policy-related talks, has a great podcast called Planet of the Klimates, an active Medium and Twitter presence with >66k followers.

In other words, there is no shortage of available information on current developments and future plans.

Q: Should there be more publicity? Less? How can things be better organized and channeled?

Hmmm #2: Roadmap

As it often happens with startups, it takes time to see what it will turn out to be. Many on Discord were asking what the goals are and the plans to get there because naturally, with the strong early traction came a lot of chaos.

The Klima team recently published a high level roadmap for the development of the DAO. It outlines the basic building blocks and development phases from today’s point of view. It shows a progressive growth towards a better product, larger community and impact, resulting in a leadership role in an exceedingly popular and very high growth market. All of this based on an impressive 3-month traction that nobody on the market expected. In other words, the roadmap states that things should continue to grow based on the fundamentals. That makes sense. Looking at the chart above, one might think that something is broken and needs a restart or a pivot.

Q: How do you find the roadmap? Does it align with your understanding of the vision and mission? Is anything crucial missing?

Hmmm #3: Traction

Let’s assume for a moment that things are going fine with Klima. This would imply that there is a >0% chance of successful execution of the roadmap and of Klima playing a continued role in ReFi even if it doesn’t achieve its vision to be the central vehicle for combating climate change.

The initial traction indicates a disruptive, dominant role and market leadership in the crypto x carbon space.

All of Klima’s stats are publicly available on Dune. You can find all of them here and here. Let me just list the most impressive ones for me:

  • In 3 months, Klima absorbed 14.3mn carbon credits = between 2.5%–4% of the entire available global supply. Klima managed to convince 50-60k people to spend between $80–$100mn on carbon credits. To put the supply shock in perspective, these 14.3mn tons would be the equivalent of the gold owned by Switzerland as % of the total global gold reserves.
  • Klima helped 2x and in some cases 3x the average prices of carbon credits. This is a 20 year old market that had been going nowhere till 2021.
  • The average annual market trading volume since 2007 was ca $420m. Klima owned market pools traded ca. $3bn in carbon credits (BCT) on-chain: a 7x increase.
  • Klima currently inflates by ca 28,000% per year. Crazy huh. If no single penny went into the treasury from now on, it could sustain this inflation rewards rate for further 4 months.
  • Klima owns ca $80–$100mn sized liquidity trading pools (the largest on the market) and has earned ca $10mn since mid October.
  • There hasn’t been any early backer (“insider”?) selling since Nov 26 2021 (meaning pKlima to Klima conversion). The first week of trading saw ca 45% of total issued pKlima so far (59,501). This also coincided with the price peaks of >$3,000. The rest was issued in the next month. I haven’t done the exact calcs, but let’s say early pKlima holders sold around $2,800 on average and the remainder around $1,500. This means ca $120mn–$130mn total trading, which represents ca 6% of the total traded volume till Nov 26 of $2.1bn. It doesn’t sound outrageous I guess.
  • The DAO has ca $2.7mn (at current prices) to spend on development, which increases daily via the bonding operations.
  • Klima announced its first new reserve asset — MCO2, a nature-based carbon pool by Moss, which provides diversification. Another pool by Flow Carbon is under public commentary. Nature-based carbon credits are perceived among the highest quality credits on the market and command prices of $10–15 per ton.
  • The market value of treasury assets remains well over $100mn.

Q: Which KPIs is Klima lagging at? Which areas does it need to improve?

Hmmm #4: Carbon Market

I believe the carbon market is going to grow by 50x in the next 20 years. Combined with crypto, it could be gigantic. I have laid out my thesis here if you want to dig deeper.

Carbon markets and Klima in particular seem to fit in all three definitions for “non-obvious” markets, coined by Elad Gil. As he puts it, such markets tend to host some great investment opportunities.

“The first type is, it’s a brand new market, but it’s growing really fast and it kind of comes out of nowhere and surprises people. And honestly, that’s actually the rarest market. And that would be things like cryptocurrencies…”

Klima came out of nowhere and disrupted the voluntary market. There is hardly any narrative combining crypto and carbon out there without mentioning it.

“…the second type … you have a market that looks extremely crowded. And so you think there’s tons of activity and it’s game over, but in reality, it’s still the really early days either because the product isn’t quite there yet, or the infrastructure …”

Voluntary markets are old & oligopolistic: standards, registries, project developers. Infrastructure layer is old tech, expensive, slow. Too many players within a currently tiny market. Huge margins for the top. This will get disrupted. Bezos said: “Your margin is my opportunity.”

“The third type of non-obvious market is one where there is an opening from a sales or distribution or channel perspective…”

GreenTechs and Klima are enabling massive surge in demand from completely new buyers, in turn enabling new business models and sales channels for high tech carbon credit supply that folks like Lowercarbon and BEV are funding.

Everything Klima has achieved so far has been recognized by the leading carbon industry’s publications like Carbon Pulse and Platts. It provides at least some media and narrative validation of the vision and execution.

Q: Do you think the voluntary carbon market has a big potential? What are the risks that you see?

Hmmm #5: Pledges By Corporations And Social Pressure

Even with all the caveats, >20% of the top 2,000 largest global companies have committed to becoming “net zero”. Why would companies voluntarily increase their costs? A McKinsey study found that (citing selectively):

  • The growth rate for food products clearly labeled as sustainable is increasing fourfold compared to the market average. Moreover, during the pandemic, sustainable companies proved more resilient during the market crisis.
  • Half of the respondents said that they are willing to pay an extra buck for sustainable products.
  • The consumers’ main areas of interest are reducing greenhouse gas emissions and conserving raw materials.

There are more reasons listed in the article — have a look.

Klima is aiming to connect these corporations, their customers and products to the carbon offset market. It is acting as a marketplace, incentivizing demand and supply and soon enabling much better UX with frictionless tools.

Q: What can Klima do better or differently?

Hmmm #6: Crypto Eats Carbon Markets

Klima delivers greater value at a lower cost. It disrupts an old and stale industry with huge margins. At the same time, Klima helps to significantly expand the market for everyone.

Greater value for carbon suppliers? By lifting the average price of carbon, Klima is helping projects become profitable and enabling previously unfundable tech.

Lower cost? By gradually eating up middlemen margins, Klima is making it cheaper and easier for project developers to market their credits and fund their projects. Currently, the voluntary carbon value chain is quite expensive.

For carbon buyers? Klima is developing products for anyone to better offset their emissions and participate in the market. It makes it more expensive, not cheaper for buyers long-term, but that is what we all need and want right? Making carbon 10x more expensive actually means making it >10x “cheaper” to preserve life on planet Earth. That’s the trade off.

Q: Do you think crypto is a good solution to the problems of carbon markets? Would the market fare better staying in web2 instead?

Hmmm #7: Competitors

Klima’s current competitors are most likely the old school project developers that are funding projects and intermediaries selling credits to end customers. Their core assets are not things like modern software, community or technology, its regulations, illiquidity and processes, which are old, opaque, slow, expensive and ineffective.

There is a new breed of web2 green fintechs, which enable new distribution channels to B2C and B2B using new tech with good UX. I don’t see them as comps to Klima, maybe more to something like Toucan and the old school middlemen. These companies would make for great partners for Klima as they tend to pursue similar goals.

Q: Who else do you see as competitors and why? What are we missing here and now can Klima become more competitive. If Klima was to fail, what would someone else have to do better or differently?

Hmmm #8: Team

The core team and early contributors managed to create an organization that became a dominant force less than 2 months after launch by single-handedly increasing the price of voluntary carbon credits by 2–3x. It wasn’t simply about raising money and buying up supply on the market. Anyone could have done that before if it was that easy or trivial. A whole lot of different ideas all needed to click for this to have the effect it did: Defi, DAOs, Olympus, carbon market structure, timing, climate change movement, market liquidity, purpose, initial backers, team, vision and obviously execution.

The unique structure of DAOs allows quick scaling of staff and contributors, often at little to no cost since everybody has already been incentivized via their investments in Klima tokens.

Klima has attracted very smart, committed people and organizations. Among publicly known early backers are Mark Cuban and Olympus DAO.

Last month, I ended up becoming a semi-active contributor to Klima, which gave me additional insights into the kinds of impressive people who are spending their time working on it. By the way, everyone I interact with is anonymous, I have never met them and don’t know their names. As a Gen X-er, I find this dynamic rather amusing, compared to the formalities of my previous working life.

It is not easy to recreate all of this again from scratch with all the momentum going on.

Q: How do you find the team? Is the structure of core and contributors clear, what they do and how? What can be improved?

Hmmm #9: Disruption Creates A New Market

Klima’s innovation allows people to easily learn and effectively participate in the fight vs. climate change. It is creating completely new use cases within crypto and beyond by leveraging a unique DAO model.

People and companies could buy and offset their footprint for the last 20 years. Yet, very few actually did because it was opaque, purposeless, viewed as charity or a nice photo on the cover of the annual report. Just think about how many times you have chosen the option to offset your flight footprint on the webpage of the airline?

Klima offers an inclusive and active participation with long-term benefits and incentives, a clear vision with measurable results, collective action and most importantly, a sustainable business model aimed at maximum impact. This sounds much better to me than the current status quo.

Q: What can Klima do better in its organization? In its business model or positioning?

Hmmm #10: A Successful Platform / Ecosystem And Network Effects

Klima’s ecosystem allows the economic value of its users to exceed the value that the DAO is creating, i.e. enabling large network effects.

Think of Klima as a market network of businesses / people that want to stop climate change and carbon projects plus related services to all participants.

The marginal buyer will tend to drive the price of carbon higher by using Klima as a vehicle to do so. The built in incentives for doing this and investments in integrations make Klima very difficult to replace.

Accepting multiple bridges and pools, owning the largest liquidity and offering a better way to own carbon assets via its native token vs vanilla holding could prove to be very sticky.

This is my own speculation, but in its later stages, Klima might own the customer and supplier relationships, control multiple parts of the value chain, become the center of carbon transactions and be at the center of an ecosystem around climate assets across the crypto and beyond.

Think of the future Klima value proposition as “a one click solution to solve your carbon footprint pledge”. Its first solution, called Klima Infinity has already been outlined in the roadmap.

Even if the voluntary market today is tiny, Klima is not solving a niche problem. It aims to become the most significant and effective platform to stop global warming by continuously innovating and introducing new services and products.

Q: Is that how you understand Klima’s stated ambitions and vision? Is it doable?

Hmmm #11: Products

I deliberately left this as the last point because Klima is known and popular for its vision and traction and not for its products as of yet. It is also not super easy to quickly grasp what “products” Klima actually offers.

Carbon Accumulation

At a very basic level, Klima is selling 1 Klima for 25 BCT or 15 MCO2 (as of today). At the same time 1 Klima = 1 BCT/MCO2. It doesn’t do much with the excess BCT/MCO2 apart from keeping them locked in the treasury for the moment and using them as backing to issue Klima and pay the rebase rewards to stakers. This is kind of the goal — to remove supply from the market and cause an increase in prices.

BCT as carbon credit pool is very broadly defined and has been floating in price between $4.50–$8 since Oct 2021. MCO2 is a nature-based carbon credit pool which has been floating between $8.50–$12.50 in the same time period.

The intrinsic value of BCT has been subject to critical questions by carbon market participants with some good quality discussions on how to improve. Obviously, the market participants who have successfully used the arbitrage have not criticized anything as it hasn’t been in their interest so far. They might in the future though, especially if prices fail to meaningfully increase.

A vocal issue for BCT and Klima was the case with the tokenization of some very old HFC credits, which caused a short-term stir. However, the issue was resolved within a few days by Toucan/Klima by blacklisting them which was a great showcase of reactive but decisive problem resolution. I feel not enough credit has been given, however understandable as this was a specific carbon issue which requires certain know-how.

The way BCT can affect Klima is if its intrinsic value decreased instead due to addition of worse quality credits. This is a complex subject as the quality perception can’t easily be quantified. Typically, OTC prices are used as some indication.

Every Klima is currently backed by ~6 BCT, which gives some comfort. In addition, Klima has added Moss credits (MCO2) as the second asset in its treasury, which should help the intrinsic value as these are nature based and perceived as higher quality. Another nature pool by FlowCarbon is currently under public discussion to be added as the 3rd asset.

Moreover, both Moss and Flow offer their own tokenization bridges which provides Klima users with diversification benefits for the bridging AND treasury assets.

Carbon Trading

Another “Product” are the liquidity pools. Klima managed to quickly assemble and own the largest trading place for on-chain carbon with close to $100mn in liquidity. This immensely helped price discovery and dragged the off-chain market with it. New pools around Moss tokens have also been voted for by the DAO. This is a core value proposition.

Klima Infinity

While just announced, this is shaping to be the initial solution towards turn-key carbon ownership / offsetting. Can’t wait to see what it will look like.


A common web3 criticism has been around product-market-fit. Even with all the traction, it will still take time for Klima to prove that it has reached “real” PMF instead of “3,3” because existing buyers are also token holders incentivized by having a stake in the DAO and receiving APY. The initial roll-out of Klima Infinity should give us early clues.

I’d say the burden of proof is still on Klima on this.

Market Premium

I’d like to finish off with a topic that may or may not potentially explain some of the price action. No idea, but either way, an important one.

A common question (that I have also been asking myself) is why anyone would pay a price premium above BCT. In simple terms, why would you pay $150 for 1 Klima by bonding 30 BCT when 1 Klima = 1 BCT?

To me, the premium offers the following current and potential future value:

  • Governance value which would only become more important in future years as the DAO grows and hopefully becomes more powerful. You can lock in a meaningful stake in the early days to have a say in what the potentially largest carbon funding vehicle in the world does.
  • Exposure to a diversified treasury: not only BCT, but also MCO2 and other pools, which you later have a claim on with your Klima.
  • Exposure to a potential increase in the RFV (intrinsic value of the treasury) as a result of the ongoing DAO efforts, including direct revenues from trading fees and future cashflow generating assets, directly held by Klima.
  • Stake and use the APY to your advantage while you wait for the above to materialize.

Q: Do you understand Klima’s products? What do you want to see developed? Are the products in synch with the mission, are they apt to achieve the goals?


I know, plenty of Hmmm-ing, and yes, crypto may be just doing its thing and not caring about Klima or carbon markets. Naturally, many of the things listed above are uncertain and some haven’t materialized yet (and may never).

In the end, we all want the same thing: for Klima to succeed in its mission and goals. But how we get there is also important. We can’t just make everyone charity pay for climate change salvation, we need incentives. We also can’t (or shouldn’t?) go ballistic on polluters by ordering them to stop their operations or pay a lot of money for their sins even if they caused a lot of the issues. That may look like a popular option but we all still need petrochemical products, cement, steel, glass and what will happen is that we as consumers will end up paying the bill anyway. We need to find a sustainable and balanced way for everyone to participate with the proper incentives in place. Today, Klima looks well positioned to offer a solution.

Last question: given everything I’ve summarized, I personally don’t think the chance of success looks that low. What do you think?




Climate, crypto, macro and tech M&A

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