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Now that the Netherlands is in a strict lockdown again, I can't go to the store where I buy my painting canvases, I have time to dive a little deeper into a project than I normally would. A possible visit to the hairdresser for my Christmas haircut is cancelled, in short ... staying at home as has been the case for the past two years is the only thing that is left for us again. A shame for everyone who is now on Christmas vacation, and unfortunately for all the people who are craving a hug, it's not going to happen in the coming weeks until at least January 14th. We are not allowed. So time is a problem this week, my partner has his holidays, we can't go anywhere. What better to do than dive deeper into a new project for me? And this week I chose a project that focuses entirely on the climate.
Perhaps not an unwise choice. After all, we see the crypto market often coming in a bad light because some systems are not sustainable. Like there was some severe criticism from Elon Musk last spring, and as we can remember that caused a significant drop in the Bitcoin price. Yeah, Elon seemed to have turned around. But for how long?
However, Bitcoin is of course not the only crypto out there. What a surprise to hear, huh? LOL. Everyone here knows that all too well. And yes, there are also sustainable initiatives that work with blockchain technology. Thanks to the transparency of the blockchain, everyone can see what companies are actually doing to ensure a better planet. In itself, of course, a very nice goal, because it is no secret that this planet now needs quite a few improvements. But how do such crypto projects do that?
Today we are going to look at KlimaDAO. That's one of those projects that focuses on improving the planet. This organization focuses in particular on climate change and encourages investment in sustainable alternatives.
The decentralized project KlimaDAO is a fork of OlympusDAO, and uses a similar concept. Both projects received a lot of attention from the crypto world, thanks in large part to their high APY. However, this is where the resemblance ends! The projects have very different goals. The purpose of OlympusDAO is not important here Although I will briefly mention it for the sake of clarity. OlympusDAO is a treasury backed protocol that aims to be a store of value asset.
Now we're going to look at what KlimaDAO aims to do, and you'll immediately see the big difference. Because KlimaDAO is working on making carbon assets valuable.
A high carbon price forces the economy to take more sustainable measures more quickly. With this the project tries to influence climate change. The plans of KlimaDAO should, among other things, ensure that technological developments related to climate change proceed faster.
The project also tries to make sustainable initiatives more profitable through their plans. How they do that, and whether there are also opportunities for you to benefit from this, will hopefully become clear later. Are you reading along?
KlimaDAO has the ambition to become the biggest disruptor of the 'carbon markets'. The project also aims to create a new monetary system, which is supported by the transparent carbon measures. The economic activities in the new monetary system will accelerate the recovery of man-made damage to the planet.
The KlimaDAO team sees the developments surrounding economic growth. Due to the increasing prosperity, individual interests are increasing. Economic growth leads to more production and consumption, making it possible for society as a whole to be prosperous.
The project sees the economy as a rational market, in which the market values certain products in a certain way. For example, oxygen and water, important necessities of life, are freely accessible in most places on earth. Other earthly products such as diamonds, on the other hand, are not a primary necessity of life and represent an enormous value. However, this enormous value is only reserved for a few people.
The most striking comparison that KlimaDAO makes is about Amazon. The Amazon company is considered one of the most valuable companies, while the Amazon forest has little market value. Trees are very important to our survival, but people cut them down to create farmland and sell the wood.
Today's financial markets focus on speculation, rather than physical goods and services. The crypto market is an example of this, where cryptocurrencies without intrinsic value go to the moon.
KlimaDAO wants nothing to do with this speculative trade! Sounds pretty contradictory for a crypto project, doesn't it? KlimaDAO is concerned about how we treat the earth and the climate. They see the effects of carbon dioxide, a greenhouse gas that inhibits our planet's ability.
This affects the natural ecosystems. Permafrost is melting, deserts are forming in tropical places and coral reefs are disappearing. KlimaDAO sees problems with the current markets in these developments, but also opportunities.
Climate change is seen by KlimaDAO as the biggest problem of our generation. The only solution is to tackle this problem on a global level. In addition to being a major threat, the market is also a huge solution to the problem. Companies and governments can focus on reducing CO2 emissions, but also on absorbing the CO2 emissions that do occur. Market forces are the solution for this.
Through a thorough organization and coordination of the solution, the market itself can solve the problems surrounding the greenhouse gases. The consumer also has a contribution to make by ensuring a fair price.
You and I as consumers can leave products that are harmful to the environment and look for alternative and sustainable options, which can also be found on the market. This indirectly determines the price of carbon.
KlimaDAO believes that companies that focus positively on greenhouse gases should be rewarded for their efforts. By investing in these companies, or buying their products, you ensure that the right companies can grow.
According to KlimaDAO, this solution can be perfectly implemented with the developments surrounding web3. Sufficient financial resources are available at this location, which ensure a transparent and secure way of transfer via smart contract. As a result, good initiatives become transparent and can be appreciated.
KLIMA is the token of KlimaDAO and is very important for the ecosystem of the project. New KLIMAs can only come onto the market when a Base Carbon Tonne (BCT) is secured to KlimaDAO. You can see a BCT as the reserves of the project.
A BCT is a type of carbon offset index. The index contains several tokenized carbons. As a result, KlimaDAO is developing a kind of carbon money, which gives carbon a certain value.
An example of tokenized carbons is the TCO2. Each carbon offset achieved in this way is equivalent to 1 tonne of CO2 emissions, which are reduced or removed from the atmosphere around the Earth.
This will be done by selected projects operating around the world. From projects in Brazil that focus on deforestation, to soil carbon projects in the United States. As a result, each BCT is backed by a carbon credit, making KlimaDAO's token, KLIMA, valuable through the price of carbon.
Despite the fact that KlimaDAO is not a fan of speculation on the markets, KLIMA will still have to deal with speculation due to the open market forces. In addition to the sustainable utility of the token, the project aims to make the token even more important through the following plans.
By discontinuing KLIMA, the company is trying to incentivize investors to hold onto the coin for the long term. In addition to the rewards for the strike, the project also bets on a rising carbon price (i.e. their own product).
For staking KLIMA you will receive sKLIMA, which is equivalent to the normal token. When you decide to unstake your coins, you will simply receive KLIMA. You can move sKLIMA between wallets, both soft and hardware wallets. sKLIMA will automatically compound itself via rebasing.
The project distributes the KLIMA to the investors who are on strike, without asking sKLIMA in return. This results in an increase in KLIMA on strike, but also in sKLIMA outstanding. By rebasing, the project ensures that this difference will be corrected.
According to KlimaDAO's explanation, it works like this:
For example, there are 500k KLIMA staked and 500k sKLIMA outstanding. The project has made $4,000 profit from the demand for carbon (BCT) bonds (at an assumed price of $8 per BCT), which it uses to mint and repay 500 KLIMA.
It sends that KLIMA to the staking contract; there are now 500.5k KLIMA staked and 500k sKLIMA outstanding. The sKLIMA supply must rise by 0.5k, or 0.1%, to rebalance. So the sKLIMA is recalculated by 0.1% to restore the balance.
Note: If you have to read this more than once before you understand it, that's completely understandable
At the moment the possibilities to buy KLIMA directly are still very limited, I could only find possibilities via SushiSwap and Hotbit. If I became interested, these limited possibilities to buy the token would mean a No-Go for me personally. I would prefer to have more options as this also automatically means higher liquidity. Although I expect that the liquidity on SushiSwap will be high enough. But that aside.
At first I think a project that focuses on improving the planet is always GOOD. This also makes it difficult to take a critical look at such a project. Many organizations have been working on plans for years that aim to combat climate change.
Most people are now also realizing more and more how important the planet is for our survival. And yet, we continue to pollute the planet we so desperately need for our very existence in many ways. And yes, we need this planet! Maybe in the future Elon Musk can build a society on Mars. But we are not that far, and even then we would not be able to move to Mars with the entire world population at once. So we need this planet and we need to take good care of this planet! It should be clear that we don't.
But I still dare to question climate change, and in particular the way in which measures are taken. Increasingly, CO2 emissions are seen as something terrible, while the Earth's ecosystem needs this greenhouse gas.
Without CO2, trees cannot produce oxygen. Without oxygen, ... I don't have to explain to anyone what will happen to you and me, right?
And then there are the countries that, despite all plans to reduce CO2 emissions, do not care at all. For example, China's CO2 emissions have increased significantly in recent years. What effect do you think it will have if, for example, in the relatively small Netherlands, people do everything they can to reduce CO2 emissions, and a superpower like China realizes much more CO2 emissions? Well, that is! That has no effect at all! It represents good for the so-called government agreements, but it has absolutely no effect on the climate and therefore contributes nothing to climate change.
China's cement industry alone is responsible for a huge amount of emissions. Unfortunately I cannot verify it, but recently I read that this industry has more CO2 emissions than all cars in Europe combined.
KlimaDAO mainly focuses on encouraging good behaviour, by investing in sustainable projects and making carbon more expensive. Nice idea! But wouldn't it be much better if the project could also put pressure on the polluters, by calling them to account about their business operations?
This could even lead to a nice collaboration, which is better for the future of KlimaDAO, the companies, the planet and perhaps your bank account if you decide to invest in the project.
The ultimate goal of KlimaDAO is to change the monetary system, where carbon becomes very expensive and the market forces will provide sustainable alternatives. I doubt very much whether they will be able to do this with the current way of working, nor am I convinced that the path they have chosen is the best path to the ultimate goal. As long as the polluters are not dealt with immediately, I see little chance of success.
But a positive note last. In any case, it is hopeful that there are projects that focus on the climate!
