Klima DAO Ecosystem
Klima DAO will maximise 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) β€” Klima DAO's reserve asset β€” is a carbon offset index token representing a basket of different tokenised carbon tonnes starting withTCO2.
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 PoolΒ β€”Β 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 Klima DAO 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 Klima DAO 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 profit 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 stakers send KLIMA to the staking contract they receive sKLIMA on a 1:1 basis. sKLIMA is a transfer-restricted rebasing token that is not meant to be traded or used for anything except holding. When stakers unstake, they receive KLIMA on a 1:1 basis for their sKLIMA holdings.
3. Rebasing
The protocol distributes KLIMA by sending them to the staking contract (i.e. to those who are staking), without asking for sKLIMA back. This increases the ratio of KLIMA staked to sKLIMA outstanding. This leads to a rebase to correct the difference.
For example: there are 500k KLIMA staked and 500k sKLIMA outstanding. The protocol produced $4k profit for the day from demand for carbon (BCT) bonds (at an assumed price of $8 per BCT), which it uses to mint and back 500 KLIMA. It sends those KLIMA to the staking contract; there are now 500.5k KLIMA staked and 500k sKLIMA outstanding. sKLIMA supply needs to increase by 0.5k, or 0.1%, to return to balance. So, sKLIMA is rebased by 0.1% to restore equilibrium.
Rebasing allows market participants to compound without having to do anything other than stake.
Last modified 3d ago
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