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Klima - Coggle Diagram

- - - - Created by governments
        
        Forces a punitive market on polluting industries like energy, steel and cement via cap-and-trade schemes
        
        E.g. The largest mandatory market is EU Emissions Trading Scheme (EU ETS) which is a $300 Bn market
        
        Tradable asset = A carbon allowance
        
        A polluter who purchases these credits, buys the right to pollute, they don't actually save CO2 with the purchase. It's a penalty
        
        Expected to grow in size to $1 Trillian
    - - Based on goodwill of people and companies
        
        By buying 1 carbon credit, you are supporting a project, which has already save this 1 ton CO2
        
        If you retire (destroy) carbon credits equal to your carbon footprint, you become carbon neutral
        
        As an investment, carbon credits are practically non-existent
        
        Expected to be come an asset class which could go from a $500 Mn market to >$50 Bn by 2030, likely with the help of crypto
        
        A 100x opportunity
  - - - Three types of non-obvious markets:
        
        Brand new market - Growing really fast and surprises people. E.g. cryptocurrencies
        
        Non-crowded in reality - markets look crowded but are in reality in their early days because the product isn't quite there yet, or the infra isn't quite there yet
        
        Sales/Distribution market - An opening for sales & distribution or channel perspective
    - - For the past 20 years, this market has been relatively stable at <$500 Mn
        
        Old school value chain: Project developer -> Wholesaler -> broker -> retailer, increasing prices up to 75%
        
        We are starting to see a new distribution channel to a new price insensitive buyer group - individuals and SMEs
    - - Demand
        
        Mckinsey estimates the market to be $5Bn-$50Bn by 2030 (10x-100x)
        
        Green is the new digital. Startups are building enterprise tech solutions for estimating, analysing and reducing carbon footprint
        
        Supply
        
        Historically, there has always been more issuance of carbon credits than retirement (demand), leading to a steadily increasing overhang
        
        About 100 Mn over the overhang is from Indian & Chinese projects, largely dominated by renewable energy at lower prices
        
        Note: In a crypto startup, you can get equity and/or tokens. A carbon startup often has a viable business plus it produces carbon offsets, which can be sold later
    - - E.g. KlimaDAO, MOSS, Carbongrid, Nori
        How can bitcoin help voluntary markets?
        
        Digiconomist calculates Bitcoin's carbon footprint to be a ca 50mn tn CO2 based on the electricity consumption and energy mix footprint where miners operate (most in China and use coal power)
        
        University of Cambridge has estimated Bitcoin mining's renewable energy share to be 40%
        
        Today's BTC footprint is equivalent to 50% of the total voluntary carbon market
        
        That is, 50 mn tn is the footprint of Bulgaria, or 0.1% of total human emissions, which is not so dramatic for a global value network
    - - Still very early, market is small and far from straightforward
        
        Carbon feels like crypto in 2012/2013. Terrible UX, old infra and misunderstood
        
        But it's at an inflection point and it is a land grab
- - - - Users can trade an LP share to the protocol of Klima at discounted price
    - - This is the profit distribution mechanism of KLIMA
        
        Market participants get exposure to the climbing price of carbon
        
        sKLIMA automatically compounds via rebase operations, but it's illiquid and not officially listed on any DEX