There were approximately 672,000 tonnes of HFC-23 credits within the BCT pool, KlimaDAO’s community voted to remove them from the pool to improve the quality of contained credits.
(San Francisco, September 15, 2022) - KlimaDAO has announced that it has allocated a limited amount of its treasury holdings to remove the 672,000 HFC-23 credits from the Base Carbon Tonne pool and ‘burn’ them – an act which means that the environmental benefit of these tokenized carbon credits cannot be claimed by any entity or organization.
The completed transaction to remove the HFC-23 credits can be seen on the Polygon blockchain explorer.
HFC-23 carbon credits were phased out from the Verra Registry in January 2014 after they were banned in the compliance markets, with concerns cited around HFC-23 facilities gaming the system to create new carbon credit issuances that could be sold on into the market for a profit.
Two carbon projects had been registered with the Verra Registry prior to the phase-out, with issuances made only from the Yingpeng HFC23 Decomposition Project of 4.5mn credits. A number of these credits remain live on the Verra Registry, meaning their environmental benefit can still be claimed through the retirement of the credits. Data from AlliedOffsets shows that up until 2020, these credits were being retired by a number of entities to claim their environmental benefit.
The initial design of the Base Carbon Tonne pool by the Toucan Protocol allowed a broad range of carbon credits to be deposited in the pool, providing they had a vintage of 2008 and onwards. It wasn’t until a number of HFC-23 credits had been deposited into the pool, and concerns were raised about the quality of these credits, that the depositing of HFC-23 credits were blacklisted by Toucan.
Today, KlimaDAO holds over 90% of the Base Carbon Tonne pool within its treasury reserves and its liquidity pools on the SushiSwap platform. The primary function of the credits within the liquidity pools is to enable users of on-chain carbon to acquire tokenized carbon credits and claim the environmental benefit of them efficiently and transparently by retiring them on the blockchain using KlimaDAO’s retirement aggregator infrastructure.
To address concerns around the quality of these credits, KlimaDAO utilized its decentralized governance process to host a discussion with its community members on its Forum about the removal of these credits from its ecosystem. A token vote of the community members on the Snapshot platform passed with 83% approval to destroy the credits.
The approximately 672,000 HFC-23 credits in the BCT pool have now been burnt and removed from KlimaDAO’s tokenized carbon credit ecosystem.
Drew Bonneau of KlimaDAO said:
Both market commentary, and the available data on the HFC-23 credits demonstrates to us that this credit is considered at best low-quality, and at worst valueless. After discussing the issue with our community it is clear to us that removing these tokenized carbon credits from our ecosystem is the desired approach.
One of our strengths as a DAO is that we are able to bring in the perspectives of our 70,000 strong community, which includes a number of advisors from across the carbon market – we are grateful for their engagement and encourage continued participation with our DAO’s governance processes as we develop our ecosystem in line with market needs.
KlimaDAO is an on-chain scaling solution for the Voluntary Carbon Market. By combining tokenized carbon credits with a blockchain-enabled technology stack, KlimaDAO aims to open up the market to greater transparency and efficiency.
Disclaimer: The information provided in this blog post pertaining to KlimaDAO (“KlimaDAO”), its crypto-assets, business assets, strategy, and operations, is for general informational purposes only and is not a formal offer to sell or a solicitation of an offer to buy any securities, options, futures, or other derivatives related to securities in any jurisdiction and its content is not prescribed by securities laws. Information contained in this blog post should not be relied upon as advice to buy or sell or hold such securities or as an offer to sell such securities. This blog post does not take into account nor does it provide any tax, legal or investment advice or opinion regarding the specific investment objectives or financial situation of any person. KlimaDAO and its agents, advisors, directors, officers, employees and shareholders make no representation or warranties, expressed or implied, as to the accuracy of such information and KlimaDAO expressly disclaims any and all liability that may be based on such information or errors or omissions thereof. KlimaDAO reserves the right to amend or replace the information contained herein, in part or entirely, at any time, and undertakes no obligation to provide the recipient with access to the amended information or to notify the recipient thereof. The information contained in this blog post supersedes any prior blog post or conversation concerning the same, similar or related information. Any information, representations or statements not contained herein shall not be relied upon for any purpose. Neither KlimaDAO nor any of its representatives shall have any liability whatsoever, under contract, tort, trust or otherwise, to you or any person resulting from the use of the information in this blog post by you or any of your representatives or for omissions from the information in this blog post. Additionally, KlimaDAO undertakes no obligation to comment on the expectations of, or statements made by, third parties in respect of the matters discussed in this blog post.