SushiSwap Votes to Let Traders Offset Carbon Emissions

The decentralized exchange SushiSwap is partnering with blockchain-based carbon credit protocol, KlimaDAO, to allow traders to offset their carbon emissions on the Polygon network.

A SushiSwap governance proposal outlining the partnership closed on July 4 with more than 99% of voters pledging support. The proposal paves the way for Sushi users to offset their carbon footprint via an optional toggle that will be integrated in the exchange’s user interface.

Carbon Offsets

KlimaDAO launched on Polygon in October 2021. Its native Base Carbon Tonne (BCT) tokens represent carbon offsets that have been removed from the traditional carbon market and migrated to Klima’s treasury on-chain, with the project bringing more than 18M metric tonnes (19.8M tons) of carbon on-chain.

Klima also teamed up with Polygon in April and has helped the network to retire roughly 105,000 metric tonnes of tokenized carbon credits.

The deal addresses one of the urgent issues in crypto — ensuring the industry doesn’t worsen global warming. Yet carbon offsets are a fraught response to the crisis and have been criticized as a form of greenwashing.

In a June 9 forum post initially laying out the proposal, KlimaDAO argued that decentralized exchange protocols are the most frequently used blockchain-based applications and largest consumers of gas, making DEXes “a critical point of leverage for combatting carbon emissions on the blockchain.”

Klima’s native KLIMA and BCT tokens represented the second, third, and fourth deepest liquidity pools on Sushi’s Polygon deployment, with USDC-BCT comprising nearly $8M, USDC-KLIMA totaling $4.1M, and BCT-KLIMA containing $3.6M. The pairings are also the sixth, tenth, and ninth-ranked pools by weekly trade volume.

Governance Forum

The proposal received widespread support from the Sushi community in the project’s governance forum.

“I am fully in support of this proposal… Sushi can be seen as a social leader in the space, paving the way for others,” said ShimonD. “The cost for Sushi would be negligible developer coordination overhead and will benefit its user base and the Polygon ecosystem as a whole disproportionally.”

However, marsxr criticized the use of carbon offsets altogether, citing activist Greta Thunberg — who described the schemes as greenwashing. The user also highlighted comments from Jennifer Morgan, Greenpeace International’s former executive director, who has criticized carbon offsets as a false solution.

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The Defiant

On Twitter, TheodoreLAllen criticized the projects for making little effort to promote the proposal. “I even hold KLIMA and I have no clue what’s going on between SushiSwap and Klima. You guys need to work on communication,” they tweeted.

Other users said the move was a step in the right direction. “One of the main criticisms of blockchain, keeping it from gaining wide acceptance, is how terrible it is for the environment,” commented classwar. “Now that Polygon has committed to be carbon negative, I think every other piece in the DeFi world should do the same to try and get ahead of this environmental impact criticism.”

Mainnet Volume

The bear market has taken a heavy toll on SushiSwap, with its cross-chain total value locked (TVL) sitting at $602M, down from an early-November all-time high of more than $7B, according to DeFi Llama.

Three-quarters of Sushi’s TVL is locked on the Ethereum mainnet, which also represents $13.6M in 24-hour volume. Sushi’s mainnet volume peaked at $2.93B in May 2021.

The protocol’s Polygon deployment is its second-largest with $64M locked, ranking above Arbitrum’s $47M. Sushi is driving $530,000 in daily volume on Polygon, down from a record $161.6M in October.