Klima DAO

DAO Members Interviewed:

  1. Hugh, Core Team
  2. 0xymoron, Core Team
  3. Marcus Aurelius, Core Team

Interviewer(s): Darren and Deepa

What is Klima DAO

Klima is disrupting the traditional voluntary carbon credit (VCC) markets using web3 technology. The Klima protocol uses the public blockchain to bring transparency to the current system, which is opaque and inefficient. With the issuance of carbon-backed, algorithmic currency - the KLIMA token (Klima Token) - KlimaDAO aims to further incentivize demand for carbon credits.

As the protocol grows, KlimaDAO aims to solve various critical issues with the status quo:

  • Illiquidity: Carbon Credits come in many different varieties, and a multitude of carbon brokers and other middlemen fragment the total liquidity of the market.
  • Opacity: Trades occur often behind closed doors, allowing buyers to circumvent the pricing power of the market.
  • Inefficiency: buying and retiring carbon credits has numerous barriers. By utilizing the Polygon ecosystem, much of this friction is removed for users.

KlimaDAO launched on October 18th, 2021. It was inspired by Olympus DAO (a decentralized, censorship-resistant reserve currency designed for the Web3 ecosystem) and was both conceptualized and built by a distributed pseudonymous team.

Klima’s reserve currency is backed 1:1 by carbon credits. The protocol rewards users for bridging carbon credits on-chain and bonding them to a treasury (see here to understand bonding and staking works) managed by the DAO. Since its launch, over 25 million carbon credits have been brought on-chain using the bonding mechanism. This represents a significant fraction of carbon credits on the market, and has drawn attention from ReFi natives and legacy carbon market players.

Klima bootstrapped their community with an Initial Discord Offering to incentivize early members. Klima now has over 60,000 Klimaholders, over 40,000 members on Discord, and about 100 active contributors.

The token engineering of KlimaDAO is especially important to properly incentivize a community to achieve its goals. KlimaDAO’s token design, modeled after OlympusDAO’s OHM token, incentivizes individuals to bridge carbon on-chain and bond it to the treasury. The treasury then issues Klima in exchange, which users can stake to earn more rewards. Another important aspect of Klima’s community is its strong emphasis on meme culture, both to keep members engaged and to create coordinated actions like staking.

Looking to the future, KlimaDAO has identified a pressing need to increase knowledge and use of the web3 carbon market. On the supply side, the quality of credits remains an issue (as it does on legacy registries like Verra).

Strategies to reduce barriers to demand include simplifying the process of onboarding and executing transactions on the blockchain. Klima believes that addressing these challenges on both the supply and demand side could lead to a breakthrough in the adoption and growth of the voluntary carbon market.

To date, KlimaDAO has bridged 25.4M tons of carbon credits on-chain, retired 470K, and currently holds 16.7M (making it the largest single holder of tokenized carbon assets).

How Do They DAO

  • Klima launched as a DAO from the outset. The core team that formulated the idea and the protocol brought in early contributors to advise on policy decisions, help manage the community, and set up the DAO’s structure and processes.
  • Discord serves as the primary informal medium for community inclusion and discussion.
  • Governance matters are discussed on a forum prior to voting in Snapshot.
  • Multisig wallets are used for treasury management. These multisig wallets are the tools for executing adjustments to policy variables such as bond capacities and reward rate, as well as to distribute funds from the DAO wallet to pay contributors and fund DAO initiatives.
  • KlimaDAO compensates contributors in two ways: monthly payroll (for stable, long-term roles) and bounties (smaller, one-time jobs, such as content writing and software engineering tasks). Bounties are managed by means of a web3-specific tool called Dework that integrates with cryptocurrency wallets for reward distribution.
  • Distributed team and community with remote, asynchronous work practices and a flat organizational structure.
  • The tech stack includes Snapshot for token voting, Discord for community, Notion for organizing work, Figma for UX/UI, Github for code, and Safe (formerly Gnosis Safe) for fund management and protocol access control.

For a deeper understanding of Klima DAO and how it operates, please refer to the following conversations with Klima Core Team and their DAO documentation.

Interview with Marcus Aurelius, Core Team Klima DAO Klima DAO Governance Framework