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).