KlimaDAO Status Update: November 2021
KlimaDAO’s thesis is that the power of Web3, (3, 3) and the design of powerful market incentives can quickly and radically move the dial on climate action.
Last Sunday evening, COP26 began with world-leaders and top diplomats from across the planet coming together to try their hand at achieving international co-ordination in the climate change arena.
As the events unfold in Glasgow, our thesis will continue to be quietly validated in the background.
In the words of Sir David Attenborough, “if working apart we are force powerful enough to destabilize our planet, surely working together we are powerful enough to save it.
In this entry, we give the community a brief summary on our progress.
KlimaDAO hitting the Mainstream
Since launch we have been picked up by the leading media outlet for carbon markets, Carbon Pulse. In their article from the 27th October titled Carbon-backed crypto initiative buys nearly 7 mln offsets in first week after launch, they included some useful analysis.
A digital currency protocol backed by carbon credits has purchased 6.8 million VCS units in the first week after its launch, while reaching a market cap of over $1.1 billion.
That’s equivalent to around 2% of what the entire voluntary carbon market is on course to transact over 2021, based on Ecosystem Marketplace surveys that tracked some 239 million tonnes of voluntary emissions reductions (VERs) as having traded for the year through August.
KlimaDAO has also been picked up by leading Australian outlet Financial Review. The article titled why the price of carbon credits is going to the moon highlights the impact of three key drivers that are having an influence in pushing the floor price of the voluntary carbon market up.
[the third driver] is the potential demand created by a new carbon backed digital currency called KLIMA, which in the past two weeks has absorbed and retired 7 million carbon credits, which is 23 times more than BHP required in the last year.
BHP, the company referenced in Financial Review is the world’s second largest mining company. “Carbon offsetting” is identified as one of the ways that BHP will achieve their climate change targets. Here’s to hoping that next year’s carbon credit bill is significantly higher 🍻.
KlimaDAO Carbon Analytics
KlimaDAO launched alongside the Toucan Protocol, which enables retired carbon credits to flow on chain and be transformed into BCT in response to the incentive mechanisms created by KlimaDAO. In total, there are over 10.5 million BCTs on-chain.
Just over 9.1 million BCTs are locked in the KlimaDAO treasury. This is more than the equivalent annual emissions of Georgia, Jamaica or Papua New Guinea, and almost as many as Honduras or Cameroon.
Around 90% of onchain carbon tonnes are now locked in the KlimaDAO treasury. The USD equivalent of these locked carbon has surpassed $100,000,000 (BCT = $6.32).
KlimaDAO Financial Analytics
A core pillar of KlimaDAO’s ability to grow for the long-term is the building out of protocol-owned liquidity (learn more here about why this is important). Currently, KlimaDAO owns nearly 99% of the KLIMA/BCT liquidity, and 91.5% of BCT/USDC liquidity.
Additionally, the fees earned by the protocol for providing the liquidity in the SushiSwap pools stands at almost $5.5 million since launch on the 18th October.
The protocol’s Risk Free Value (RFV) stands at just over 2 million BCT. RFV is the amount of BCT that the treasury guarantees to back KLIMA with, based on what is currently available in the treasury from bonds. The healthy state of the treasury and RFV means there is enough BCT in the treasury to continue to issue rewards in the form of sKLIMA for 105 days if the protocol was to stop generating revenues today.
The dominant strategy to get exposure to KlimaDAO’s growth is to bond BCT or LPs with the treasury to secure discounted KLIMA, and then stake KLIMA to get exposed to protocol growth (3, 3).
A higher percentage of staked KLIMA translates to more stable protocol growth and a wider distribution of sKLIMA rewards to Klimates. When the percentage is lower, we may see more volatility of KLIMA, but rewards will be higher for those who remain staked. The total amount of staked KLIMA has remained relatively stable since October 19th at >92.5%.
As of today, around 95% of KLIMA is staked, indicating rewards being paid out to the vast majority of KLIMA holders. Around 4% of KLIMA is being used to provide liquidity. This means that less than 1% of KLIMA is not being put to good use.
In the past few weeks since launch we have seen the amount of KLIMA holders move from the initial 5,000 or so from the IDO, LBP and pKLIMA distribution, to over 35,000.
You can view the analytics at https://dune.xyz/Cujowolf/Klima-DAO
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