From Experiment to Infrastructure: The Evolution of Klima

KlimaDAO launched in 2021, built on an idea, a community, and a single token that served multiple functions. It was an experiment in aligning climate finance with Web3 tools, and it quickly attracted attention across both ecosystems. Alongside that attention came scrutiny, debate, and valuable insights.

In the years since, Klima has matured through real-world experimentation. On the supply side, integrations were developed with carbon registries and project developers, with almost $3 million invested directly into projects across the globe via forward carbon agreements. On the demand side, Klima helped establish legitimacy for tokenized carbon, bringing it into institutional conversations and corporate buyer networks. At the protocol level, the project explored how token mechanics could serve, rather than distort, carbon market functions. And through onchain governance, it tested how a Web3 community could meaningfully shape the trajectory of an economy with real-world impact.

By 2024, this evolution required a new structure. The DAO’s assets and intellectual property were transferred to the Klima Foundation, a Swiss entity with a mandate to further research and development of open-source technical solutions for carbon markets. Within this context, the Klima Protocol has been designed and developed, drawing directly on the lessons of the past, and aimed squarely at the challenges that carbon markets face in terms of pricing and trading.

What We’ve Learned

Several explicit lessons stand out from Klima’s journey.

Registry acceptance. Some registries are uncomfortable with tokenization, or lack the resources to implement the necessary technical integrations. Klima now only works with credits and registries that explicitly consent to onchain integrations, and in some cases has directly funded the technical work required to bring them onchain.

Governance clarity. Klima’s early model of anonymous token voting created uncertainty for counterparties. Market actors cannot engage with ambiguous structures. Today, the Klima Foundation provides a legal anchor, governance is KYC’d, and decision-making is codified around the attribution of value to carbon credits. Counterparties engage with the Foundation, not with a diffuse online forum.

Speculation and volatility. Early use of automated market makers (AAMs) to price carbon credits introduced volatility into an asset class that requires stability. At best, this created unnecessary price swings; at worst, it gave the impression of intentional distortion. In Klima 2.0, carbon credits will not be traded directly. They will be acquired from the market and priced internally through governance mechanisms and supply-demand models. This approach better can better reflect the semi-fungibility of credits and shield them from broader market volatility. Automated market makers will remain only for Klima’s own tokens ($kVCM and $K2), giving participants the ability to enter and exit the Klima ecosystem without impacting the credits themselves.

Retirement demand. Carbon markets ultimately exist for retirements. Without retirements, there is no impact. Klima 1.0 launched without retirement functionality, but Klima 2.0 focuses exclusively on facilitating retirements, ensuring the market’s true purpose remains at the core. In Klima 2.0, for users interacting with Klima on the buy-side, they will only be able to acquire carbon credit retirements.

Beyond these hard lessons are softer insights. Web3 governance struggles when roles are undefined or inconsistent. Codification is critical; rigid structures can be conservative, but clarity is invaluable in complex, politically sensitive markets. DeFi mechanisms that capture speculation without utility create volatility that is incompatible with stakeholders operating on multi-year horizons. The real value lies in preserving liquidity, transparency, and programmability, while discarding yield loops and speculation-for-its-own-sake.

Technology, too, must be kept in perspective. Code alone will not solve the challenges of climate finance. Carbon markets are shaped by politics, trust, and human systems as much as by infrastructure. But targeted technology, from dMRV and automated data flows to programmable pricing frameworks, can bring transparency, broaden access, and empower the actors who matter most: project developers and credit retirees.

Looking Forward

The Klima Protocol is the product of this evolution. It is an opt-in, transparent system designed for those who see value in a more efficient and collaborative market. Its goal is not short-term hype, but long-term relevance: reducing transaction costs, aggregating fragmented liquidity, and building transparency into the heart of carbon markets.

Klima’s mission remains the same: to create infrastructure that rewards those who add value, coordinates the actors who sustain the system, and strengthens the carbon market as a whole. What has changed is our understanding of how to achieve it.

By listening, iterating, and building with discipline, Klima has moved from experiment to infrastructure. The next stage is not about speculation, but about delivering a market that works for suppliers, for buyers, and most importantly, for the climate.

👉 klimaprotocol.com