KlimaDAO is an OlympusDAO-inspired protocol and Decentralized Autonomous Organization that wants to drive climate action and supercharge the carbon credits market, via a carbon-backed, algorithmic currency, the KLIMA token. Klima DAO’s purpose is to enlarge the participation in the carbon market through its token, thus accelerating the price appreciation of carbon assets and pushing quicker adaptation to clean technologies and processes, and driving additional finance toward low-carbon technologies.

History

Specifically, KlimaDAO set out to solve three main challenges of the carbon markets:

1. Illiquidity: carbon credits can be issued in different forms, and traded by different brokers and marketplaces, which in turn fragment the total market liquidity.
2. Opacity: carbon marketplaces are not always transparent, which enables some to underbuy the market.
3. Inefficiency: while carbon credit tokenization is not a new concept, the operation of buying and transferring carbon credits on-chain has so far been complicated and slow. KlimaDAO hopes to solve some of these issues thanks to the accessibility, speed, and low cost of Polygon. KlimaDAO operates as a black hole for carbon credit, incentivizing operators in the carbon market to lock credits in the DAO’s treasury in exchange for KLIMA tokens. This would eventually reduce the availability of credits in the market, driving up the price of the available ones, and in turn incentivizing green companies to invest more in projects to generate carbon credits, while raising the cost for other companies to emit and offset, eventually pushing them to re-design their productive processes and adopt clean technologies. Each KLIMA token can only be minted when a unit of carbon credit (Base Carbon Tonne, or BCT, representing 1 tonne of CO2 removed from the environment) is deposited in the protocol’s vault, which also means that each KLIMA in circulation is backed by at least 1 BCT. The lower the availability of carbon credits, the higher their price, and the higher the intrinsic value of the protocol’s treasury and of KLIMA tokens.

The DAO serves the role of a "de-central" bank, governing the monetary policy of this new carbon-backed currency, and acting as the KLIMA buyer of last resort in case of emergency.