What You Need To Know About $KLIMA, $KlimaX, and $kUSD

KLIMA 2.0 will see some big changes from the way we’ve been working over the past few years to bring carbon markets onchain, increasing their efficiency, transparency, and accessibility in the process.

One of the most significant updates we’re making is to Klima’s token ecosystem. In the coming week, we’ll start migrating the existing $KLIMA to a new token on Base. We’ll also be distributing $KlimaX, Klima Protocol’s new governance token. Fair launch details are already up on our Github, and you can learn more from our recording of our Office Hours with the community from March 19.

Staking to earn points towards the new $KLIMA and $KlimaX will shortly go live at www.klimaprotocol.com!

Last, and certainly not least, the Klima Foundation has worked to incubate and accelerate the development of a new kind of asset. $kUSD is a Syncratic Balancer Token (SBT), which will combine yield, decentralization, and long-term stability into one instrument. It’s a philosophical hybrid that will fuse these traditionally distinct characteristics. We’re confident that $kUSD is going to be a game-changer, not just for the Klima ecosystem but for the wider DeFi space. $kUSD’s revenue model is attractive in its own right, and it will play a key role in powering the engine that will enable Klima 2.0 to execute its vision at scale.

$KLIMA: Carbon Assets Plus Secret Sauce

$KLIMA is the existing Klima Protocol’s native token. It’s backed by the reserves of carbon credits held in the Treasury. We’ll be keeping this broad approach with the new $KLIMA. As before, as new credits are added, more $KLIMA are minted. Conversely, $KLIMA are burned in the process of retiring carbon credits. In this way, $KLIMA is inherently designed as an index of the carbon market.

The current $KLIMA token has an intrinsic value of 1 BCT (Base Carbon Tonne), which is enforced in the Treasury and token contracts. The new $KLIMA will reflect the full diversity and value of carbon credits held in Klima’s Treasury, which includes much higher-quality and more specific assets than those included in BCT.

We’re adding some secret sauce in the form of yield. The real source of that yield is “structural delta”: as we incentivize the carbon market to progressively come onchain, we’re able to harvest part of the value that those efficiencies bring. We capture the spread – the difference between the price at which carbon credits are issued and sold on the secondary market, which would previously have been charged by brokers – and funnel them into $KLIMA. There will also be trading fees, driven largely by the natural arbitrage that will occur between the value of $KLIMA and its underlying carbon assets. Holders will be able to stake their $KLIMA and earn a share of those ecosystem fees, and can earn by providing $KLIMA liquidity in the core pools.

$KlimaX: Fixed-Supply Governance Token

Unlike the $KLIMA token, $KlimaX has a fixed supply and acts as our economic governance token. Holders can stake their $KlimaX and vote which types of carbon credits should be purchased. Staking their $KlimaX in favor of a given class of credit will create capacity (in $KLIMA) to purchase that credit.

Staked $KlimaX earns a yield, and holders can also earn by providing $KLIMA/$KlimaX liquidity. The value of $KlimaX is inherently tied to the success and value of $KLIMA.

You can also check out the interactive version of the white paper created by Léo de Souza, Director of Applied Research at the Klima Foundation.

$kUSD: Syncratic Balancer Token

Did you know that Tether, the company behind the popular $USDT stablecoin, made an incredible $7 billion in 2024 from its vast holdings of income-generating securities? The firm has issued over 140 billion $USDT, which are 1:1 backed by low-risk, cash-like assets – mostly short-term US Treasuries (aka T-bills).

Tether doesn’t share its enormous income, but we got to thinking. Klima 2.0 is all about doing well by doing good, so what would happen if we took a similar approach but juiced returns with decentrally-managed risk assets and gave back the majority of those revenues to holders, while using a percentage to supercharge Klima’s carbon economy?

$kUSD is a new kind of asset. From the outside, it looks like a stablecoin. More accurately, it’s a syncratic balancer token: a decentralized reserve protocol, fully backed by a mixture of US treasuries and other risk assets, with an initial focus on climate risk. We'll be partnering with financial service providers, asset managers, and protocols to bring more real yield onchain.

These three pillars – $KLIMA, $KlimaX, and $kUSD – are the foundation of the Klima Protocol’s new token ecosystem.

The Fair Launch for $KLIMA and $KlimaX will go live very soon. Get ready to stake your existing $KLIMA at www.klimaprotocol.com to start earning points.

We’ll be publishing more information on the staking mechanics, so stay tuned!