Klima DAO

Summary Redeem a portion of the KLIMA/USDC liquidity pool to direct KLIMA liquidity to other markets and fund strategic partnerships that create long-term value for KlimaDAO.

Motivation In the early days, KlimaDAO required a robust KLIMA/USDC pool to facilitate a smooth onboarding process for new users. However, the volumes have leveled off, utilization has decreased, and there is far more liquidity on-chain than there needs to be to facilitate an efficient market. It’s time to adapt our strategy to maximize utility and value creation.

Increasing liquidity on other markets like centralized exchanges will significantly reduce the barriers to entry for new participants, thereby accelerating the adoption of KLIMA and contributing to our mission of carbon offsetting. The USDC redeemed will be used for forward purchases and other initiatives that directly contribute to KlimaDAO’s value proposition.

There are a few things to consider here:

Increased Accessibility: Many potential users find centralized exchanges (CEXs) to be more user-friendly than DEXs, especially those who are new to the crypto space. Market Depth: A deeper market on CEXs will make KLIMA more efficient to trade for new users. There is a large user base that trades without self-custody wallets or interacting with decentralized finance, but still want access to the Digital Carbon Market. A deeper $KLIMA market on CEXs is a key signal to larger users. Conversely, a shallower market on chain will cause buy and sell pressure to have more impact on price. Onboarding Efficiency: Easier onboarding through CEXs will likely lead to increased demand for KLIMA, which in turn will drive up its value and utility.

Implementation Redeem KLIMA and USDC from the KLIMA/USDC pool leaving $500k TVL in KLIMA/USDC , far in excess of a 20% utilization target when we are realizing average daily trading volumes of $10k/day. With $500k left in the LP and $10k daily utilization the KLIMA/USDC pool is still overfunded relative to market volumes at an estimated 2% utilization rate. When utilization increases, liquidity can easily be re-added to facilitate larger volumes.

The assets will be allocated as follows: 882,352 KLIMA: To be used for bolstering liquidity on other markets. $750,000 USDC: To be used for strategic partnerships and other value-accretive initiatives.

Beginning & ending KLIMA/USDC values found here.

Framework

Redeem Assets: The team will redeem the specified assets from the KLIMA/USDC pool. CEX Liquidity: The redeemed KLIMA will be strategically allocated to various centralized exchanges to bolster liquidity. Strategic Partnerships: The redeemed USDC will be allocated to initiatives that have been vetted for their potential to create long-term value for KlimaDAO. Future Liquidity: USDC redeemed from this KIP can be used for forward purchases and liquidity provisions for new markets.

Proposal Redeem KLIMA and USDC from the KLIMA/USDC pool, leaving a target of $500,000 remaining total liquidity.

Utilize the redeemed assets as outlined above.

Rebalance KLIMA/USDC?