Why KlimaDAO Exists

The Problem

In our market economy, the invisible hand works to create prosperity and individual self-interest prevails. The freedom to produce and consume as we see fit generates value for the economy; value that allows the whole of society to prosper.

We generally consider that the market itself is rational, and assume that it values things in a perfect way. We ignore the paradoxes in front of us everyday. Water, a necessity for life is essentially free across (much of) the world; diamonds have no real utility for us, yet in the free market they are priced exorbitantly, excluding all but the world’s richest.

According to the market, Amazon is the world’s most valuable company. But the Amazon Rainforest has no market value until its vegetation is cleared for farming, and its trees are stripped of their greenery and extracted as logs.

In the past, the market price of a good was determined by the socially necessary labour inputs required to create it. In recent times we have moved to a system where subjectivity and speculation are key driving forces behind prices.

For many, the ‘marketplace’ is no longer a place where two people physically exchange goods or services. It is where we buy securities, that we will never touch, that we often do not understand, in order to grow personal wealth.

Value has become totally detached from the ‘market’.

So much so, that when a good or service destroys value, sometimes immeasurably, there is no penalty imposed by the market.

Carbon dioxide is a greenhouse gas that inhibits our planet’s ability to let heat escape when it gets too stuffy down here. Carbon dioxide’s effect on our global climate is already leading to change in our planet’s most vulnerable ecosystems: it is bleaching coral reefs; melting the permafrost beneath arctic tundra; leading to the desertification of the tropics. There’s no punishment by the market for emitting carbon dioxide.

What we truly value, is not being valued by the market.

The solution

Climate change is the number one issue of our generation.

Carbon dioxide knows no borders, nor do the impacts of global warming. The only way to tackle global warming is by mobilising action at the global scale. The market is the best solution we have at our disposal to achieve decarbonisation of our existing economic activity, and to retrospectively capture and store the carbon we have already emitted, at the scale required.

Markets are dynamic and more than a place of exchange, they are a manifestation of our culture and our time. So through organisation and co-ordination we have the power to modify them to reflect what we need and want. If we want the market price to be a fair price of what we value, then we need to move the goalposts and force it to work to the parameters we define. A perfect market should price in carbon.

To properly value carbon, we need to fully integrate the carbon market with the market, and we need to reward participation for those who participate in the carbon market with value or influence, or both.

Web3 is the perfect place to integrate these markets, it is a place where there is sufficient liquidity to have impact at scale, where smart contracts can securely and transparently govern transactions, and where contributions can be fairly incentivised.

KlimaDAO

In acknowledgement that the carbon markets are one of the most powerful and immediately available tools available to us to fight climate change at scale, KlimaDAO was designed.

What does KlimaDAO do?

KlimaDAO gives individuals and organizations the opportunity to participate directly in the carbon market via its infrastructure and the KLIMA token.

KlimaDAO infrastructure prioritises accessibility and transparency across the value chain of the carbon markets:

• Project developers can access the infrastructure to immediately find counterparties for their carbon credits.

• Those looking to acquire carbon credits can do so efficiently and securely using Web3 tools.

• To claim the environmental benefit of any carbon credits, KlimaDAO’s retirement infrastructure enables this to happen with no reliance on intermediaries.

• Anyone who holds KLIMA tokens can participate directly in the governance of the system.

The system is built on a public blockchain and is fully transparent, for the first time creating a level playing field across the market. The permissionless and interoperable nature of public blockchains enables greater innovation and lower transaction costs across the market.

Ultimately, the KlimaDAO protocol aims to reorient the carbon markets to be more equitable, and ensure that they prioritize the climate. To achieve this, an economy is required, an economy or ecosystem built on top of open, transparent and public infrastructure.