Klima DAO For Apes, Degens & OGs

  1. Compliance market: must have
  • Team: 330m pKLIMA, and 7.8% supply share
  • Project Stakeholders: 70m pKLIMA, and 3.5% supply share
  • Advisors: 50m pKLIMA, and 1% supply share
  • OlympusDAO: 70m pKLIMA, and 3.5% supply share
  • Klima DAO community: 480m pKLIMA (no supply share)
  1. Buy directly.
  2. Bond.
  • KLIMA distributed = KLIMA totalSupply * rewardRate
  • rewardYield = KLIMA distributed / KLIMA staked
  • APY = [(1+rewardYield)¹⁰⁹⁵] — 1
  • The higher the APY, a higher % of the revenues are paid out as staking rewards.
  • The APY is monitored by the policy team at Klima DAO and changes have now been proposed and voted for (KIP-3) to reduce it in order to make it more sustainable.
  • The APY floats within a range. As staking increases, the APY tends to decrease in order for the DAO to be able to support more stakers and not blow up. If people unstake and sell, the APY increases as there are less people to claim the staking rewards.
  • Higher APY keeps people staked, which removes Klima from the market and some of the price volatility as people may not sell too much.
  • Lower APY on the other hand pushes the nominal Klima price up as the inflation rate decreases and also shows a more stable protocol, which helps to provide confidence with external parties.
  • The current BCT price, which is like a market index is officially the highest in history.
  • The addition of a Gold Standard pool, for example can easily 2x-3x average prices, however the total issuance volume is much lower than Verra. A GS pool can likely add another 5–10mn tons.
  • One thing that will help keep the BCT price up is when Toucan and Klima enable burning of TCO2/BCT for offsetting purposes, because then other end user services like Ecologi, Yayzy, PlanA and many others can connect their demand. In addition, there will be on-chain versions of these companies, which will do the same in various creative ways.
  • The other factor is that as the BCT increases towards the $8-$10-$12, it starts to become interesting for higher quality projects which currently sell at higher prices elsewhere. There is plenty of room as the current BCT price is currently only sucking up the bottom part of the range (see below).
  • In supply terms, I believe the BCT price can see more selling pressure when more and more projects realize how Toucan / Klima work and be able to sell credits at scale. Historically, the price difference for a 5k and a 100k VCU transaction has been almost 2x as the market lacked depth in demand.
  • I don’t think many project developers will use their converted BCTs to buy KLIMA, although I think this would make sense in the future as KLIMA stabilizes. So far, the external dollar demand for BCT has been higher than the supply as evidenced by the price increase from $5 to $8 in a month or so, before the latest market sell-off.
  • Rug pull by team, because to the outside world, they are basically random anonymous people.
  • Hack or other code issue because they are not audited or something else. Note: For what it’s worth, Klima is a fork of Olympus DAO, so the smart contracts are the same and Olympus has been audited multiple times.
  • Early Klima holders dump before sustainable new demand has really kicked in.
  • Ponzi game (not Ponzi scheme): there is an element of Who will sell first given the market value premium, but this is compensated for by the staking rewards and book value.
  • Not possible yet (but may become). People withdraw better TCO2s from BCT and leave low quality (cheaper) credits in. The risk with this is that you can take out TCO2 which are different than the ones you put in the BCT. That means that you can tokenize 100 tons of large hydro you bought for $1 and then take out 100 tons of some better forestry project, which you can potentially sell for $5. Now, you can’t go back from TCO2 to Verra as the tokenization is a one way bridge, but once burning is enabled, there is a risk of this happening and the BCT pool to be drained of the better TCO2s, thus driving its value and likely its price down.
  • Carbon market participants flood the BCT pool with credits and push the price down
  • Klima will need to absorb between 500m-1bn older vintage credits from Verra only before the supply glut has been cleared — will there be enough demand on-chain?
  • There has always been an issue on the voluntary market, where projects with questionable additionality and/or logic have issued huge amounts of credits, then other truly additional projects had trouble selling their credits because of the lower average market prices due to lacking exchange infrastructure and subdued demand. As a result, many projects stopped verifying and issuing credits (it is also not very cheap to verify/issue).
  • Carbon projects need a higher price, but couldn’t get it because of old issuance overhang. All that changed in 2021 when the market ticked up due to many climate fintechs in B2C and B2B that started bundling and selling projects at higher prices to end customers. These companies have the incentive to get cheap VCUs in the mix to make more money, but there is a trade off with transparency, because forced to choose, people would prefer the higher quality projects. Klima is trying to force the higher BCT price on everyone as a pool.
  • Nobody knows what is inside the BCTs, but people don’t care. It created the incentive for old project developers to issue and revive projects — I view this as a necessary evil to kickstart the market, but we should also be honest with ourselves about what is inside at least in the short term. The saving grace may be when burning becomes possible and people burn BCT as a pool. But for now, God bless the APY.
  • New DAOs replicate Klima and community flocks there, thus reducing demand for Klima, leading to drop in long-term APY.
  • A completely new / different carbon finance mechanism replaces the voluntary market as a way to fight climate change — like a global carbon tax directly at a country level.
  • Carbon removal projects with innovative tech reduce emissions based on a different business model without using carbon credits, i.e. some methane burning tech for power plants makes money off of hardware sales instead of credits or some digestion pills for cattle that reduce methane are sold to farmers and don’t use credits as additional revenue.
  • The obvious one — burning tokens for offsetting, which will reduce BCT and KLIMA, which will help the price.
  • Other building blocks around Klima — lending already started.
  • New pools: new projects from different standards, which are more expensive and would push the treasury assets up. Potentially compliance credits?
  • Focus on removal credits and direct links to project developers, which will create a whole new financing ecosystem.
  • Verification: current standards are too slow, bad UX, expensive. Klima could share fees with other on-chain services
  • The DAO becomes the de-facto carbon exchange (the off-chain exchanges are pretty much non-existent).
  • Automatic greening of other crypto tokens by integrating BCT, which would increase demand. Such tokens could be accepted into the treasury (listen to the Klima team office hours from 25.11). Klima DAO can only accept something with a carbon offset in it.
  • For carbon project developers, this new infrastructure opens up a plethora of new opportunities to sell and monetize their credits, which, in turn, would enable new project development models.
  • Upcoming from Toucan: NBCT pool — nature-based pool with forestry and agriculture
  • Liquidity: Klima owning all of its liquidity is a crucial benefit and they will continue to do so with any next pool.
  • Community: Klima has amassed >50,000 strong community in just a few months, which is a huge advantage that will be very hard to replicate. The first mover advantage is really strong as all the PR and attention goes to them for free since they are the first to do this.
  • Composability: Klima itself is building on top of Toucan and a lending market has already been created so the tools stack up as Lego blocks. Klima is really well suited here.



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Climate, crypto, macro and tech M&A