FAQ KLIMA Mechanics
Questions and answers related to the mechanics of KlimaDAO, the treasury and economics

What is a DAO?

A decentralized autonomous organization (DAO) is an organization represented by rules encoded as a computer program that is transparent, controlled by the organization's members and not influenced by a central government. A DAO's financial transaction record and program rules are maintained on a blockchain.

Is KLIMA a stable coin?

KLIMA is not a stable coin, but rather is envisioned as a floating algorithmic reserve currency backed by carbon offsets. Similar to OHM in OlympusDAO, upon which our architecture is based, the treasury backs every KLIMA token by at least one tonne of carbon offsets, which guarantees that users can always sell their KLIMA for at least one tonne.

How is KLIMA created?

Just like OlympusDAO, KlimaDAO consists of a protocol-managed treasury, protocol-owned liquidity, a bonding mechanism and a staking system that control supply expansion and contraction. New KLIMA can only be minted as long as there are enough tons in the treasury to back them. The protocol profits by issuing bonds, i.e. if KLIMA trades at $100 and the price of the accepted carbon is $10, a user must bond ~9.5 tonnes of carbon to mint one KLIMA, assuming a 5% discount. As long as the treasury owns more than one tonne of carbon per each KLIMA, new KLIMA can be minted to reward stakers (via sKLIMA rebasing).

Is KLIMA a governance token?

KLIMA is first and foremost a floating currency and a form of money backed by voluntary carbon offsets. Additionally, it will be used to govern the protocol. KLIMA and sKLIMA can confer voting power to influence decisions on various policies such as changing whitelisted carbon assets or adjustments of the supply expansion mechanics.
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Last modified 14d ago