KlimaDAO KIP-3 Reward Rate Rationale

The Big Picture

  1. In periods of growth, if the protocol sells 1 KLIMA for 100 BCT, since 1 BCT is needed to mint, it makes a profit of 99 BCT.
  2. In periods of contraction (when KLIMA trades below BCT), if the protocol buys back 1 KLIMA for 0.5 BCT. As it costs 1 BCT to back 1 KLIMA, and it has spent 0.5 BCT to get 1 KLIMA, it saves (or makes a profit) of 0.5 BCT.

Staking Rewards Explained

Maintaining stability

KIP — 3: Good Policy Design

  1. Reducing the reward rate decreases the overall emissions of the protocol (and the rate of inflation), ensuring each KLIMA retains its value for much longer. This makes it more attractive for other protocols to integrate with KlimaDAO as a long-term partner and lay the foundations for the on-chain carbon economy.
  2. Reducing the reward rate decreases the selling pressure from stakers, as high reward rates can make holders feel more inclined to sell their staked rewards into the market.

Unlisted

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KlimaDAO

KlimaDAO

KlimaDAO enables mass participation in the carbon markets and governs the development of KLIMA, an algorithmic, carbon-backed currency.