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Understanding Carbon
Tokenomics and Mechanisms
References
Get Involved
Glossary
AKR
Annualized KLIMA Rewards is the annualized reward rate in percentage terms, taking into account autocompounding over one year assuming a constant reward yield and constant epoch length.
Note that AKR is quoted as a ballpark estimate and does not guarantee precise future returns. AKR will go down periodically in accordance with KIP-3 and fluctuates along with Reward Yield due to changes in % of KLIMA staked and Polygon blocktime variability.
NOTE: AKR was previously called APY.
APR
Annual Percentage Rate, is the annualized reward rate without taking the effect of compounding into account.
BCV
Bond Control Variable, is the scaling factor at which bond prices change. A higher BCV means a lower discount for bonders and higher inflation by the protocol. A lower BCV means a higher discount for bonders and lower inflation by the protocol.
BCT
BCT (Base Carbon Tonne) is a Toucan Protocol carbon pool, which accepts any TCO2, independent of project type (e.g. forestry carbon offsets, renewable energy carbon offsets or methane capture offsets). At this time, the only requirements for TCO2s to be eligible for deposit into the BCT pool are: the TCO2 is verified by Verra, and has vintage later than 2008 (there is also one blacklisted methodology).
Bonding
Market participants can acquire KLIMA at a discounted rate via the bonding mechanism. The bond contracts require the user to provide some carbon asset (e.g. BCT, MCO2) or KLIMA-paired LP tokens in return for discounted KLIMA over a fixed vesting period.
CC
Carbon Custodied, the total amount of tokenized carbon offsets held by the treasury to back KLIMA supply. Includes all carbon offset reserves (e.g. naked BCT, MCO2), as well as a marked down portion of KLIMA/carbon liquidity pairs.
This metric was formally referred to as "RFV" or "risk-free value" in the context of the Olympus protocol, whose backing is dollar stablecoins. Since carbon offsets are volatile assets whose price can vary over time, this value is not actually "risk free" in the Klima protocol.
The carbon is considered "custodied" because, if incoming reserves were to drop to 0 and the protocol simply paid out all remaining staking rewards, CC would be the final supply of KLIMA, backed at IV of 1 tonne of carbon offsets. So, in this endgame scenario, each 1 KLIMA would end up being a claim on 1 tonne of carbon offsets from the treasury - thus CC/KLIMA is the estimated number of carbon offset tonnes that a holder of 1 KLIMA today would have after all staking rewards are paid out if they remain staked until the end.
C3 Token
A utility token for the C3 carbon bridge. It is distributed as a reward to users of the protocol that stake, bridge or provide liquidity. C3 can be locked for veC3, which is eligible to vote on C3 protocol decisions and gauge weights. See the C3 docs for more details on the C3 token.
C3T
C3 Tonne (C3T) is the general term for fungible tokenized carbon offsets bridged via C3. When you fractionalize the C3VCU NFT received after bridging, the resulting C3T ERC20 token will have C3T- as a prefix, followed by an information-rich name that includes the registry of origin, the project, and the vintage.
DAO
Decentralized Autonomous Organization, is a governance mechanism for making decisions in a more trustless and collaborative way. Voting rights are often bound to a governance token.
DCV
Deflation Control Variable, is the scaling factor at which protocol defined buy pressure changes. A higher DCV means more buy pressure from the protocol, resulting in a higher deflation. A lower DCV means less buy pressure from the protocol, resulting in a lower deflation.
EVM
Ethereum Virtual Machine, is a state machine in which all Ethereum accounts and smart contracts live. At any given block in the chain, Ethereum has one and only one canonical state, and the EVM is what defines the rules for computing a new valid state from block to block.
KIP
Klima Improvement Proposal, the principle mechanism for DAO governance. Most KIPs begin as posts on our discussion forum, either proposed by DAO contributors, sourced from the community, or brought forward by a third party (typically to propose a partnership).
All KIPs must pass a vote by token holders on Snapshot prior to implementation - see our Governance Framework for more details on the KIP lifecycle.
KI
Klima Infinity is a set of products and features built on top of the core protocol, geared toward scaling the traditional VCM by empowering organizations and individuals to quickly source and retire tokenized carbon credits, to become “climate positive”.
Klima
Climate (in Greek and German).
KLIMA
The primary KlimaDAO token. Each KLIMA is backed by a TCO2 locked in the Klima DAO treasury. KLIMA has an intrinsic value underpinned by the cost of TCO2s. KLIMA is an ERC20 token.
Liquidity Bonds
Liquidity bonds are LP token bonds. Examples are KLIMA-BCT LP bonds and BCT-USDC LP bonds.
MC
Market capitalization - total market value of all KLIMA tokens in existence
KLIMA price * KLIMA supplyMCO2
Moss Carbon Credit (MCO2) is a relatively homogenenous, centrally managed pool of tokenized Verra VCUs. Moss created it in August 2020, by curating REDD+ projects in the Amazon Rainforest (one in Peru, five in Brazil).
MCO2 was the first tokenized carbon credit to be listed on major centralised exchanges like Gemini and Coinbase, and the reconciliation of its ledger pool is done in real time by crypto auditor Armanino.
NBO
NBO (Nature Based Offset) is a pool from the C3 protocol. Accepts all VCS and GS methodologies characterized as NCS, including REDD+, IFM, and those with VCS or GS certification utilizing CDM-based forestry methodologies such as AR-AM0014. Vintage of 2014 onwards.
More information is available in the C3 docs.
NCT
NCT (Nature-Based Carbon Tonne) is a Toucan Protocol carbon pool, which accepts TCO2 from nature-based methodologies such as avoided deforestation or afforestation.
See this page from Toucan for the detailed requirements for pooling TCO2 into NCT.
POL
Protocol Owned Liquidity, is the amount of LP the treasury owns and controls. The more POL the better for the protocol and its users.
PoR
Proof of Reserve, is the mechanism of strengthening the reserve of Klima DAO treasury via the sales of bonds. Bonders provide liquidity to the treasury, thereby building its reserve. In return for their service, bonders get paid in KLIMA.
Reserve Bonds
Reserve bonds are single asset bonds. They are sometimes referred to as "naked" bonds. Examples are BCT bonds.
Reward Rate
Reward rate is the configured percentage of KLIMA distributed to all stakers on each rebase relative to the total supply. The reward rate is precisely set by the policy team.
Reward Yield
Reward yield refers to the actual amount of KLIMA received by each staker on each rebase. The reward yield is a rough target from a policy point of view. It can almost never be maintained precisely due to fluctuating percentage of KLIMA staked and variabilities in Polygon blocktimes.
RFV
SLP
Sushiswap Liquidity Provider, is the token received when providing liquidity on Sushiswap. For instance LP bonds require SLP tokens of the KLIMA / USDC pair.
Staking
Market participants can deposit their KLIMA tokens in the staking contract to receive additional KLIMA as reward in return. These rewards are distributed via rebasing of the staked token (sKLIMA), which can be unstaked at any time to receive an equal amount of KLIMA.
TCO2
Toucan Carbon Tokens (TCO2) is the general term for fungible tokenized carbon offsets bridged via Toucan. When you fractionalize a BatchNFT received after bridging, the resulting TCO2 ERC20 token will have TCO2- as a prefix, followed by an information-rich name that includes the registry of origin, the project, the vintage, and so on. More information on the tokenization process can be found in the Toucan docs.
Tokenized Carbon Asset
A Tokenized Carbon Asset (TCA) refers to a carbon asset (e.g. voluntary carbon offset) brought onto the blockchain.
TCAs are usually represented as an NFT for bridging purposes, since carbon assets are typically only semi-fungible: each asset has attributes such as vintage, methodology, and country of origin. Tokenized carbon can refer to a single unit (e.g. one carbon offset) or a batch of assets (e.g. a certain number of carbon offsets from a specific project and vintage period). These NFTs can be deposited into Carbon Pools to create fungible ERC-20 tokens representative of that tokenized can that meets those pool's requirements.
TMV
Treasury Market Value - the current market value in dollars of all assets held in the treasury, including both reserves and all LP tokens.
TTC
Treasury Total Carbon - total carbon offset tonnage held by the Klima treasury, including both carbon offset reserves and the full value of the carbon assets in all carbon-paired LP pools (both KLIMA/carbon and stablecoin/carbon pairs).
Note that this value fluctuates up or down as carbon offsets are sold into or bought out of the liquidity pools.
TWAP
Time Weighted Average Price, is the average price of an asset over a specified time. TWAPs are used to represent the fair value of an asset as defined by the market.
UBO
Universal Basic Offset (UBO) is a pool from the C3 protocol. Accepts most VCS and GS methodologies for credits issued from 2014 onwards. There are a number of blacklisted methodologies, including VM0002 due a perceived lack of additionality after 2014. More information is available in the C3 docs.
VCU
Verified Carbon Unit (VCU) is a carbon credit issued under the Verra Carbon Standard (VCS). Under the VCS Program, projects are issued unique carbon credits known as Verified Carbon Units or VCUs. Each VCU represents a reduction or removal of one tonne of carbon dioxide equivalent (CO2e) achieved by a project. VCUs are characterized by a number of quality assurance principles which are confirmed through the project validation and verification process. VCUs are ultimately purchased and retired by an end user as a means of offsetting their emissions. All VCU issuance and retirement records are publicly available on the Verra Registry.
VCM
The Voluntary Carbon Market is a key tool in the fight against catatrophic climate change. The VCM enables consumers and organizations to fund of projects with real-world climate impact via modern financial market.
The VCM has been around for decades, but has long suffered from lack of access, opacity, illiquidity, and high transaction fees. KlimaDAO aims to change that by migrating the VCM on-chain, where all market participants can benefit from the advantages of distributed ledger technology.
Last modified 1mo ago