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  • Writer's pictureKlimaDAO

Introducing: Green Ratio, the Klima Foundation, and Carbon Procurement Framework

Updated: Apr 3


KlimaDAO’s mission is to build an accessible and robust base layer for the carbon and environmental commodities markets through the pooled resources and technology that it develops.


Three new proposals have been posted on KlimaDAO’s Forum for discussion with the community – the intention of these proposals is to significantly mature KlimaDAO’s governance processes and codify how the project will fulfil its strategic objectives.


This article gives a short introduction to the proposals, and contextualises the broader state of play for KlimaDAO, thereby encouraging discussion on the proposals and making the case for progressing governance at this time.


Bringing Structure to the DAO’s Foundations


The flexibility and freedom that DAOs tend to afford themselves can be dichotomous – a laurel wreathed with nettles – the set-up can lead to rapid growth, innovation and disruption (to both itself and the outside world), but along with that can come chaos, inefficiency and tension. KlimaDAO itself has been through various iterations over the years:

  • periods of growth and disorder, little structure and much noise

  • periods of an unrelenting drive towards utility (yielding the creation of Carbonmark and Klima Data)

  • and periods of change

Throughout all of these periods, the DAO internalises knowledge, matures its perspectives on the market, and sharpens its focus.


Today, there is a particular opportunity for KlimaDAO to move forwards given that it has spun out of the bulk of its research and software development activities after KIP-45.


The project can afford to now dedicate all its resources to hone in on activities that prioritise the development of the core Protocol – whilst being content that there is an ecosystem for the Digital Carbon Market (and beyond) under development around it.


Specifically, there is an opportunity to anchor the DAO more concretely to its strategic priorities, and ensure that future iterations of the DAO are still afforded the ability to innovate and bring in new knowledge, but also remain focussed on specific outcomes aligned with the Protocol and the market that it provides for.


In general, these areas of focus fall under 3 categories:

  • Carbon: taking positions in the environmental commodities markets and building environmental commodity liquidity on-chain for the DCM.

  • Protocol: stewarding the development of the Protocol, as a means to fulfil its top level objective of providing common resources and public goods for the environmental commodities markets.

  • Treasury: protecting its treasury, and aligning it with low-risk growth opportunities, that ensure it can provide the foundation for the above activities.

Hence, the three RFCs discussed below – and which are now live for discussion on the Forum – aim to more strongly define and codify how operational decisions are taken, increase clarity over the project’s long-term strategy, and enable KlimaDAO to build trust with strategic partners.


Green Ratio Framework


The Green Ratio Framework intends to establish a top-level framework that can codify how economic decision making happens at KlimaDAO:


  • Establishes a foundational ratio of 50:30:20 by which the DAO can consider its carbon commitments, treasury and OpEx positions.

  • Encourages efficiency and transparency in capital allocation decisions - and a move away from ad-hoc, isolated decision making.

  • Codifies KlimaDAO's economic approach to bring credibility and clarity to its mission, and simultaneously signal the DAO's strategies to the community and market stakeholders.


Klima Foundation


The Klima Foundation RFC introduces steps to mature the legal structure of KlimaDAO into one that is simpler and more robust:

  • Proposes the transition of KlimaDAO into a Foundation - opening up opportunities for tighter collaboration and more trust with market stakeholders.

  • Introduces the role of a “Guarantee Committee” to provide further oversight, experience and due diligence over KlimaDAO’s climate financing activities.

  • Nominates long-time contributor ThereisonlyoneDJ as President of the Foundation to oversee and legally represent KlimaDAO.


Carbon Procurement Framework


The Carbon Procurement Framework presents a comprehensive framework for KlimaDAO to follow when assessing and funding carbon agreements, aiming to ensure impactful and financially sound environmental contributions:


  • Establishes a detailed scoring system for evaluating carbon projects on factors such as impact, financial stability, and market demand.

  • Stipulates a transparent smart contract architecture for managing investments and automating proposal and reporting processes.

  • Invites KlimaDAO community engagement for refining the strategy, emphasising transparent, data-driven decisions for environmental impact maximisation.


Further Implications of the Proposals


If these proposals pass, the DAO will see significantly more structure to the way that it runs itself – and reduce its reliance on the knowledge and skill of individual contributors to chart their way through ideation, governance and execution.


The DAO’s processes will be less ambiguous and its intentions will be clearer. The implication of this is that there will be more accessibility to the DAO and its resources by and for the market. The clarity afforded by this will underpin KlimaDAO’s continued iteration of the project towards decentralised outcomes – work undertaken by the Decentralization Working Group (DWG). The general hypothesis being that more codification of the DAO’s scope and activities means that it will be possible to interpret what needs to be done to optimise outcomes in the DAO’s operating model, rather than simply attempting to interpret what is actually going on.


For example with greater clarity on how economic decision making happens (via the Green Ratio), and more robustness in decision making with respect to taking positions in the carbon market (via the Carbon Procurement Framework and the Klima Foundation’s Guarantee Committee), the Policy Team can focus on further automation of core policy activities (e.g. the modification of Bond Variables and AKR), or how the DAO can effectively bounty research and development tasks to the community to drive innovation and tacit knowledge generation within Protocol level activities.


Summary


The contents of these RFCs represent proposals to mature and codify KlimaDAO’s governance processes against clear frameworks, as a means to continue to fulfil its initial scope of scaling the digital carbon and environmental commodity markets.


This is key at this stage in KlimaDAO’s journey, as the project can only achieve its goals by wielding its community and governance. Governance allows the project to harness the knowledge and wisdom of its community and chart a course towards optimal long-term, climate-focussed outcomes. Concurrently, it also requires organisations to tap into the governance process and leverage the DAO’s resources for themselves, in order for the DAO to be a long-term success and a valuable resource for the market.


Get involved: forum.klimadao.finance


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