KlimaDAO, a building block of the ReFi economy
Today, our economy rewards us for consuming energy, burning carbon, and polluting our environment.
We are, however, in the midst of a transition to a cleaner society. Web3 will be a key catalyst for change by enabling Regenerative Finance (ReFi) to rapidly scale and align incentives between those who want to have a positive impact.
ReFi speaks to a preference for the funding of community and the public good over — or in parallel to — projects that are expected to produce a return for the funder. In the context of KlimaDAO, ReFi refers to the environment and our climate, and how the cost of carbon can be internalised into DeFi.
Last year, on December 3rd, the QiDao community passed QIP-041, committing to use 100% of their profits from the Green Leverage Locker to purchase $BCT. This will internalise carbon into $MAI, which can then be used to leverage further funding for environmental initiatives.
$MAI (miMatic) is a stablecoin backed by collateral, and can only be minted with this collateral backing it. $MAI is created when users deposit accepted tokens as collateral in vaults and in turn receive a loan against that collateral. Users can also mint $MAI through Anchor, where $MAI is minted in exchange for accepted stablecoins. $MAI is soft pegged to the USD, meaning that 1 $MAI is around 1 USD.
Bringing $BCT into the QiDao ecosystem demonstrates the composability of $BCT as a digital asset that can be used as a form of green collateral in a treasury or portfolio. By utilising primitives such as $BCT and $KLIMA, the ReFi economy can scale, and ensure it is being built on high-integrity foundations that expedite investment into the climate above all else.
Building on this concept artist SVN created an experimental NFT named CO2_COMPOUND for the Ocean Drop that demonstrates $sKLIMA’s composability, and shows how $sKLIMA can be used to permanently compound $sKLIMA rewards and carbon. The artwork is irrevocably fused to its smart contract, and the $sKLIMA can never been redeemed.
The piece has internalised over 21 tonnes of carbon in time since its release in October and will do so ad infinitum. Below shows the rate that the piece has been compounding carbon since it was minted.
An example of how KlimaDAO can enable partners to take climate action was demonstrated by Manifest’s decision to bond 12,953 $BCT with the KlimaDAO treasury to receive $sKLIMA. The action means that Manifest have enabled 12,953 carbon tonnes to flow on chain and be locked in the KlimaDAO treasury, while also enabling them to get exposure to KLIMA’s long-term growth.
As $BCT, $KLIMA, and $sKLIMA begin to be used across projects, the ReFi economy for climate action will begin to scale and DeFi’s investments into the climate will grow.
Throughout 2022 and beyond, KlimaDAO will present a range of solutions for individuals and organisations who wish to participate in this economy, receive compensation for their carbon impacts, and get exposure to the growth of the ReFi economy.
In the near-term KlimaDAO is voting on whether its treasury should accept MCO2 bonds to diversify the assets currently backing KLIMA and enable these nature-based carbon tokens to form part of ReFi’s foundation.
KlimaDAO proposals can be viewed at https://snapshot.org/#/klimadao.eth.
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