# Kilma DAO https://www.klimadao.finance/ ## Mission KlimaDAO's mission is to accelerate the price appreciation of carbon offsets. Carbon offsets connect carbon projects with consumers that purchase offsets in order to achieve their climate targets. A higher price for carbon will encourage companies to adapt more quickly to climate change, and will make low-carbon technologies and carbon-removal projects more profitable. ## How it works Klima's treasury accepts certified, third-party verified emissions reductions from reputable voluntary carbon markets (often called 'carbon credits'). Each emissions reduction (a credit) is tokenised in a transparent and traceable way by using blockchain to prevent double-spending or double-offsetting. Carbon credits are sucked off the market and enter Klima's treasury in the form of 'Klima tokens'. These tokens, each backed by 1 tonne of carbon reduction or removal, are either locked in the treasury indefinitely or sold to balance the price of Klima. A token backed by 1 tonne of carbon from the Verified Carbon Standard is called a Base Carbon Tonne (BCT). Holders of Klima can earn compounding interest on their Klima by staking. Staking encourages holding Klima over the long term, and allows participants to benefit from the rising price of carbon. As the protocol generates a profit through Bond sales, this profit is allocated to everyone who has staked Klima. ## Why it works KlimaDAO incentivises new supply of Base Carbon Tonnes (BCTs) on the blockchain through the Klima token. Since a Klima can only be minted by locking a BCT in the Klima treasury and removing it from the market, the system is built on and internalises the cost of carbon. Thus, Klima has an intrinsic value attached to the price of carbon locked in the treasury. When scale is achieved, after Klima is traded on the open market, the supply of Klima will be inversely proportional to the availability of carbon offsets on the traditional carbon markets. Removing carbon supply in the market and hoarding it in the treasury will interfere with demand conditions in the traditional markets by increasing the cost of carbon offsets and increasing the intrinsic value of newly minted Klima. Moreover, as demand for carbon reduction naturally increases (due to the growing effects of climate change) and the quality of carbon offset projects increase, the price of BCTs will also increase. KlimaDAO exacerbates this. The high price of carbon should then force corporations and economies to reduce their carbon emissions and embrace low-carbon technologies to avoid extortionate costs associated with producing and then offsetting their carbon emissions. ## Challenges Since it is currently voluntary for many corporations to offset their emissions, they could avoid paying higher costs by simply ceasing any activities to offset their carbon emissions. However, this is unlikely due to obligations made to the public, as well as increasing global and regulatory pressures to reduce carbon emissions. Achieving scale may be another challenge for KlimaDAO, particularly as the availability of other carbon-backed coins on the market grows. ##### Sources: [https://www.klimadao.finance/](https://www.klimadao.finance/) https://klimadao.medium.com/ #pn