Mass rebalancing Value Distribution

Title: Mass rebalancing Value Distribution
Status: Open for comments
Author(s): Raphaël, JohnX, Ela
Created: March 23, 2022
Timeline: March 23th to April 4th (first payout)


Here, we are outlining how to allocate the funds secured by the BCT-NCT mass-balance exercise, based on the proposal put forth by KlimaDAO. Agreement on following this proposal has been reached by the multisig holders: members of Klima DAO, Regen Network, MOSS and BICOWG.


After coordinating the mass-rebalancing exercise in late January, we’ve received a lot of feedback from the community on how the secured value should be allocated or used. Now, we’ve reached agreement following a proposal submitted by Dionysus, and have developed a distribution methodology and schedule for the secured funds.

We’re thanking all those who’ve questioned, discussed and conversed openly with us about the events that happened and the implications they had – you as a community play a crucial role in moving us forward.


On Feb 4, Toucan has published a recap of events, disclosing all Toucan-affiliated accounts that were involved in executing the mass-rebalancing. Here, we’ve created a replicable estimate of the number of redemptions from the BCT pool by Toucan-affiliated accounts. As can be seen, Toucan-affiliated accounts redeemed 1137005.51975 nature-based credits from the BCT pool.

The agreement between Toucan and the liquidity partners performing the mass-rebalancing was as follows: The principal would be returned to the liquidity partners while any additional value would be distributed in a fair allocation. Liquidity partners therefore don’t profit from participating in this, but also shouldn’t lose money.

The distribution of excess value will be executed from a multisig account whose holders were tasked with discussing proposals put forward in our governance forum.

Proposed next steps

  1. Identifying the value to be distributed

‌First, the value to be distributed needs to be identified. We suggest taking the cost basis of Toucan’s liquidity partners as baseline. For the sake of simplicity, we propose to use the cost basis of account 0x0FF19EEf5baA01b363492e37FBc2d2B905Ea6ff5 (on Polygonscan →) on the weekend where most of the mass-balancing happened (Jan 29 and Jan 30), even though one liquidity partner has a slightly higher cost basis due to buying BCT at higher prices in the past. However, we have to assume their BCT was worth the market price in the moment of redemption. All the BCT buy orders can be found in this spreadsheet and conclude in a cost basis of $5.86 per BCT.

The excess value secured will be distributed as outlined by Dionysus:

80% - Nature-based TCO2 depositors
10% - Long-term carbon burning liquidity
10% - Toucan rescue bounty

The total dollar value of the rescued funds is a lot lower than anticipated because non-Toucan-affiliated actors who did front-run the operation sold a large amount of credits into the pool since NCT launch, pushing the price down roughly 40% at times.

  1. Distribution with following schedule

The multisig holders propose a multi-step distribution schedule: Tokens are distributed in 4 events, with 2 weeks between each distribution. This way, we get more price data and subsequently a more realistic NCT price. We propose to use the average price (drawn from Dexscreener) of the 2 weeks prior to the distribution event as the reference price for calculating the amount to be distributed, counting backwards from the time of each distribution.

Also, we propose to schedule distributions on a Monday. This way, we can use the average price of the previous week as a reference point.

You can visualize here how the distributed value changes based on the average NCT price.

:pushpin: EXAMPLE for an imaginary payout on Monday, March 21th

According to this chart, the average price for NCT was as follows:

Week from Mar 7: $6.1724
Week from Mar 14: $6.7234
→ Average 2 weeks: ($6.1724 + $6.7234)/2 = $6.4479

  • Cost basis BCT: $5.86
  • Total number Toucan-affiliated credits: 1137005.52
  • $-Value of all Toucan-affiliate credits: $5.86 * 1137005.52 = $6,662,852.35
  • $-Value of Toucan-affiliate credits at average NCT price: $6.4479 * 1137005.52 = $7,331,297.89
  • Surplus value: $7,331,297.89 - $6,662,852.35= $668,445.54
  • First distribution (25%): $668,445.54 * 0.25 = $167,111.39

Which trading data will be used as basis?

We propose drawing data from Dexscreener, as it appears to be the most accurate tool, but we welcome alternative suggestions for price data. To gain alignment on price data, we suggest the following settings:

  • Time Interval: 1 Week
  • Time zone: UTC
  • Price Source: (O+H+L+C)/4

See below :point_down:

‌The distribution will happen in either NCT–USDC LP tokens or NCT. The policy team at Klima DAO prefers raw NCT in order to pair it with KLIMA, so the multisig holders will do their best to honor that wish.

KlimaDAO has developed a Bridger Analytics Document outlining two different strategies on identifying which bridgers are eligible to have value returned.

Assuming the more “forgiving” scenario 1 (simply taking the difference between initial BCT bridged and BCT balance at the time of NCT rebalancing) laid out in KlimaDAO’s analysis, the KlimaDAO treasury would receive approximately 82% of the value distributed to eligible bridgers (not including the rescue bounty and permanent liquidity).

We welcome further clarification of this methodology by the KlimaDAO team, as well as discussion of the proposed allocations in the comments of this proposal.

Proposed timeline

We will leave this RFC open for feedback until March 28th. If no major concerns are surfaced by the community, the first distribution is scheduled for Monday, April 4th.


Please vote below for or against this proposal, or leave your thoughts in the form of a comment.

  • I am in favor of this proposal
  • I am not in favor of this proposal

0 voters


Thanks for posting this Ela, excited to move forward with the value distribution!

We’ve just updated KlimaDAO’s NCT Bridger Analysis with the exact % breakdown according to Strategy 1 on the “Proposed Allocation Breakdown” sheet: KlimaDAO NCT Bridger Analytics - Google Sheets

For context, we considered two different strategies in our analysis:

  1. Forgiving: Take the difference between initial tonnage bridged and BCT held at the time of the NCT rebalancing
  2. Stringent: Only count the amount of net BCT that was not sold after bridging; disposing of bridged tonnage and then buying back the same amount of BCT later does not count toward your eligible tonnage.

Strategy 2 cuts out wallets which transferred any of their originally bridged tonnage. So for instance, a wallet that bridged 1000 tonnes, but then was at a loss on their position at the end of the tax year and conducted tax loss harvesting, would no longer be eligible for any returned value - even if they were still holding 1000 BCT at the time of the rebalancing.

Strategy 1 is more forgiving: tax loss harvesting, for example, would not disqualify a bridger from receiving returned value. Given the difficulty of identifying the reason each wallet disposed of and later repurchased BCT, it seems reasonable to just give eligible bridgers the benefit of the doubt. All in all the difference in strategies results in a change from KlimaDAO receiving 82% of returned value under Strategy 1 to receiving 92% of the value under Strategy 2 - not a huge difference all things considered.

Happy to answer any other questions about the bridger analysis KlimaDAO conducted :green_heart:


Will there be a public list of accounts shared that will be eligible for the BCT → NCT swap?

aka, if I was one of the BCT holders that didn’t swap or sell but held, how would I know if I can be eligible?


tagging @MarcusAurelius here, he will be able to answer the question @dan asked

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Hey mate, see the spreadsheet I linked to in my previous comment: KlimaDAO NCT Bridger Analytics - Google Sheets

It has a list of eligible bridger wallets as well as the % of the returned value we proposed returning based on the amount of tonnage each wallet was holding relative to their amount bridged at the time of the rebalancing

The actual distribution will be conducted via airdrop directly from the wallet currently holding the LP to the wallets that are eligible to receive distributions (as listed in that sheet)

Let me know if you have any concerns about the analysis or think a wallet is missing that should be eligible based on bridging NCT-compatible tonne and depositing it into BCT then holding.

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I do see my wallet there. If the distribution of NCT will be done via airdrop, how is trust ensured that the BCT holders send back for redemption?

Is the process:

  • airdrop receives NCT
  • wallet sends back BCT

or some other way?

Great to see this saga coming to a close. Just in general - great job everyone. I’m looking forward to having this be a closed chapter in ReFi history.

PS: Great job on the bridger analytics @MarcusAurelius & co

Lilly Singh Yes GIF by A Little Late With Lilly Singh


So the idea is that the bridgers who held through the rebalancing will receive the NCT directly (or possibly NCT/USDC LP, depending on logistics) - they don’t have to give up their BCT.

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i think everyone involved deserves a beer. really excited to see this being resolved in a way that everyone is happy!