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Climatecoin 2016 by Dennis Peterson

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Tj Piccard

Jul 13, 2016


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I think this is a fantastic idea - both specifically to deal with climate change and as a model for funding public goods.  I wanted to comment on two points in an effort to be constructive, especially in light of recent events surrounding TheDAO.

1) Distribution, governance and offsetter choice.  As I understand it: the first year of offsetting is paid to the lowest bidder on a list of offsetters curated by the developers, and subsequent offsetters are selected from a list of submissions by service providers as voted on by token holders.    

Such a system is open to many forms of manipulation, abuse, and neglect from users. First, there seems to be nothing obviously in place either to vet potential bidders or monitor the results of funding an offsetter (i.e. an offsetter collecting $ or ETH without producing the corresponding carbon offsets).  A hardfork isn't going to fix a year of payments already made to an abusive offsetter the first year.  Year2, reliance on user votes is also problematic, as it invites manipulation due to the collective action problem.  e.g. TheDAO - prehack - was having serious difficulty achieving anything like 10% voter turnout on any issue. Even TheDAO harfork vote has seen only a fraction of token holders vote, with $100mil+ at stake. Given that much apathy among users/donators (collective action problem), a 51% attack becomes something like an 11% attack where the cost of a voting majority is significantly lower than half the value of tokens.  Even without a malicious voter, it is easy to imagine a situation where Offsetty McOffsetFace (who’s only intent to offset carbon involves no longer driving to work but will “offset” for $0.0000002/ton) wins the Year2 contract with 2.2% of votes.  Obviously, even if the token system was wildly successful raising money, subsequent misallocation of the funds could be existentially problematic (TheDAO waiting period and presumably the hardfork to follow will mitigate what would otherwise be a total disaster for the investors and developers). 

Unfortunately, I currently see no viable decentralized/automated solution for verification of capital allocation in system such as the Climatecoin proposal.  A low-overhead non-profit responsible for backend carbon capture revenue expenditure would be one possible approach; moreover, a business entity, like a no-profit, would provide protection in the form of allowing legal action to commence, should the need to arise.  I recognize that “centralization” or perceived centralization could be damaging to the launch and success (reputation) of Climatecoin, but so would headlines indicating the money was misallocated en masse.  Thus, I think the aim should be the least amount of centralization possible to achieve the goal.  While the future may prove fully autonomous via smart contracts, the present is, unfortunately, not. 

Alternatively, if you sort out the collective action issue, please let the folks over at TheDao,, etc. know about your solution, as it would have broad implications.       

2) Tax Credit.  This could be an enormous source of value.  If Climatecoin suddenly became a commodity for industry because it could be exchanged for tax credit, early investors would be virtually assured a large ROI and the project itself assured a future protecting the environment.  Of course, this would require government recognition of the value of Climatecoin.  While I suspect the Climatecoin offsetting process wouldn’t necessarily need to meet all the requirements of plans introduced in various government projects (like cap and trade), it would certainly need more rigorous safeguards than those outlined so far and a probably a healthy dose of lobbying and legal wrangling to convince the IRS beancounters that taxes can be paid in internet money. 

In all fairness, these are common issues in the blockchain space and solutions have proven equally elusive thus far. 

As I mentioned: this is overall an impressive idea worthy of pursuit, and I write this in an effort to help it move forward successfully by considering some risk mitigation strategies before it goes live.  Please let me know if I can be of further assistance.  

Dennis Peterson

Jul 27, 2016


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Great comment, thanks! I think it's reasonable to start with more centralized governance until decentralized mechanisms are more proven, even if it's just a set of curators whitelisting offsetters.

I wrote some further ideas for decentralized governance here:

In the aftermath of TheDAO, an interesting idea cropped up as a mechanism for making decisions on forks: let people vote by committing their coins for some period of time. Given forks A and B, a vote for A means you deposit your coins in a contract, which keeps them locked on the A fork but releases them on the B fork.

The idea is that if you're more confident in the long-term value of the A fork, you should be willing to keep your coins locked up for a longer period on the A fork. If A becomes the majority chain then you're committed, and if B takes over you get your coins back, and can sell them off if you like.

Votes are weighted by number of coins times length of vaulting.

In a Climatecoin context, the premise for a mechanism like this would be that actually offsetting carbon is the best way to support the economic value of the coin. This could be true if governments prove willing to accept climatecoins for carbon fee payments, if and only if the accepted offsetters are reputable.

To that end: for a government to award you a 1-ton carbon credit in exchange for climatecoins, it would want assurance that your climatecoin payment really does represent a marginal 1-ton carbon reduction. We can achieve this by letting the coin supply reach a maximum; then, the only way to allow new coins (hence funding more carbon offsets) is to burn some existing coins. We can either pay coins to the government, which burns them by sending to address 0, or we can put a "burn" function in our contract which reduces our account balance, and adds to our "burned tons" total based on the current coin/ton ratio; then we can just provide a proof that we control the address which burned the coins.

Another advantage of this method is that even if some of the offsetters had been shaky in the past, it doesn't really matter. As long as the current offsetter list is reputable, burning coins pays for real new offsets.



David Hiel

Oct 26, 2017


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A Belgian Entrepeneur, working and living in Tokyo, Japan for over 15 years.

I have spent the last 6 years setting up the most unique Biomass project in Sri Lanka,

of which we will supply all to Japan and lift 300,000 families out of poverty in Sri Lanka.

Have been working with METI here on carbon credits, RED ++,... but the whole system is unorganized. And a Price on carbon should come soon.

and I thought exactly down the same line as your project.

So I have unlimited funding from the Japanese Government, Green Climate Fund,

InfraCo, Etc. so I am very interested in supporting an official Climate Coin.

Would love to discuss if we have an opportunity to collaborate.

Best Regards,

  David Hiel

Chad Knutsen

Nov 28, 2017


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Hello there mate, very cool concept. Are you the fellow behind: . ?

If so, well done and I would very much like to speak with you about collaborating on numerous fronts.