2 -KlimaDAO: The Double Edged Sword of Refi
In the previous article, we explained the difficulties that KlimaDAO faces by utilizing the Olympus mechanism to develop a treasury of carbon credits and accelerate the ReFi ecosystem. While there are things that are currently limiting the growth of KlimaDAO today, those very things are also what gives KlimaDAO the greatest chance of being the decentralized reserve currency of the carbon markets. Hence, double edged sword.
Today, the foundation and infrastructure needed to support Klima and the general ReFi markets isn’t developed quite yet. However, when looking at it in a different perspective, because there is no infrastructure, KlimaDAO has full control on how ReFi is developing step by step. By developing optimally for the future, KlimaDAO can guarantee its success as the cornerstone as the de facto currency of the carbon market. The figure in KIP-8 outlines this goal, where every asset is paired with KLIMA to trade. While the first pairs are the hardest, as the protocol adds more liquidity rails (and therefore more utility), it becomes harder and harder to justify against pairing with KLIMA.
An example of the power of the first mover advantage is how the ETH ecosystem is made today. On L1, ETH is the main trading pair against many assets, and for a protocol that's starting out, they are essentially forced to pair with ETH out of necessity. This is what KLIMA envisions as an end goal. With all the liquidity pairs, it allows KLIMA to center itself in the ever-growing ReFi economy, and best accelerate and grow it from within.
Newer protocols that are being developed today have learned from their predecessors, and with it, better development and tokenomics. If you compare protocols from the 2017 ICO boom vs protocols now, there’s been this shift in focus of revenue generation, sustainability, and DAO-DAO cooperation. KlimaDAO can and will be the cornerstone of the ReFi ecosystem, and C3 will be complementary to this. C3 will assist in setting the foundation, and Klima will build the structure on top of it.
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