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Understanding Carbon
Tokenomics and Mechanisms
References
Get Involved
Ecosystem
KlimaDAO will maximize value creation for its community by creating a virtuous cycle of growth.
Economic activity within the ecosystem will increase the supply of KLIMA; a new KLIMA can only be minted by locking a BCT (Base Carbon Tonne) in the Klima DAO Treasury and removing it from the market.
Hence, when scale is achieved, the supply of (KLIMA backed by) BCTs in the treasury will be inversely proportional to the availability of carbon offsets on the traditional carbon markets.
Removing carbon supply in the market and locking it within the treasury will interfere with demand conditions in the traditional markets, increasing the cost of carbon offsets and increasing the intrinsic value of newly minted KLIMA.
Klima DAO will be deployed on Polygon, an energy efficient L2 solution; deploying on-chain will bridge carbon offset supply, with DeFi demand.
There are two key pieces of infrastructure underpinning the system:
1.Carbon Offset Tokenisation: Toucan Carbon Bridge
The BCT (Base Carbon Tonne) — KlimaDAO's reserve asset — is a carbon offset index token representing a basket of different tokenised carbon tonnes starting with
TCO2.Every
TCO2 represents a unique carbon offset brought on-chain using the Toucan Carbon Bridge. And each offset is equivalent to 1 tonne of carbon dioxide emissions mitigated or removed from the atmosphere from verified projects across the globe. Key characteristics of the carbon offsets are brought on-chain when it is transformed into a
TCO2, including:- Project Name
- Serial Number
- Project type (renewable energy, forest carbon project, blue carbon, etc.)
- Vintage Year
- Verification Standard
Different
TCO2 tokens can represent carbon offsets from different projects, e.g. a forestry project in Brasil or a soil carbon project from the US. However, creating a liquid on-chain market for carbon requires standardisation. This is the role of the Base Carbon Pool — each TCO2 can be locked into the Base Carbon Pool in return for a BCT token. BCT is thus a carbon index token, backed by various offsets from multiple projects.2. Klima DAO Ecosystem
The core principle of the KlimaDAO ecosystem is that a KLIMA token can only be minted by the treasury if at least 1 BCT is deposited and locked away.
Because every BCT is backed by a carbon credit that guarantees the mitigation or removal of 1 tonne of carbon, this system is built on, and internalises, the cost of carbon.Thus, KLIMA has an intrinsic value attached to the price of carbon locked in the treasury.
KLIMA will be traded on the open market (and exposed to speculation). KLIMA price will be underpinned by the price of BCT locked in the KlimaDAO treasury -- we anticipate the price of BCTs to increase over time, in line with the wider carbon market.
Longer-term participation in the Klima ecosystem will be incentivised by three key mechanisms:
1. Bonding
Bonding is the process of trading an LP share to the protocol for KLIMA. The protocol will quote an amount of KLIMA, a discount, and a vesting period for the trade. Creating a bond will require participants to give up their LP share, but in return, the protocol compensates them with discounted KLIMA relative to the price on the open market. This enables the treasury to collateralise with more than just BCTs and increase its purchasing power (for BCTs), thereby increasing supply.
2. Staking
Staking is the reward distribution mechanism of KLIMA. Staking is designed to incentivise longer-term holding of KLIMA, and to give market participants exposure to the climbing price of carbon. The longer participants hodl and stake, the more they compound and the more KLIMA tokens they will have when they unstake.
When KLIMA is staked via the staking contract, they receive sKLIMA on a 1:1 basis. sKLIMA automatically compounds via rebase operations, but it is illiquid and not officially listed on any DEX. sKLIMA can, however, be transferred between wallets - for example to move your sKLIMA from a hot wallet to a cold wallet.
When stakers unstake, they always receive KLIMA on a 1:1 basis for their sKLIMA holdings.
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