Overview for liquidity providers

Provide liquidity to kVCM pools to support market infrastructure, participate in trading fee distribution on Aerodrome, and become eligible for protocol incentives.

Providing liquidity is a voluntary activity to support market operation. Liquidity provision is not an investment product and does not guarantee returns.

Liquidity pools overview

• All carbon is exchanged with the Klima Protocol via the kVCM token.

• The protocol is designed to operate with sufficient liquidity in kVCM trading pairs to support efficient market access and execution.

• The protocol uses incentives to encourage liquidity provision in two primary kVCM trading pairs:

  • kVCM<>USDC: a stablecoin pairing that allows all users to enter or exit the ecosystem.

  • kVCM<>K2: a protocol token pairing, allowing users to enter or exit the K2 token via kVCM.

• Anyone who holds the two tokens provided in the pairing can become a liquidity provider.

• Klima hosts its liquidity on Aerodrome’s infrastructure. Aerodrome is the primary decentralised exchange on the Base network.

Participating in liquidity pools

1. Provide liquidity on Aerodrome only

Users may supply liquidity directly on Aerodrome by following its standard user journey. This can be done without interacting with the Klima Protocol.

Users who do so will be eligible to capture a portion of Aerodrome's trading fees.

kVCM<>USDC Pool:

• The pool charges a 0.3% fee on every trade.

• Liquidity providers receive 90% of these fees.¹

• Example: If you supply 10% of pool liquidity and the pool generates $1,000 in weekly trading fees, your position would be entitled to approximately $90 of those fees, subject to pool conditions.

kVCM<>K2 Pool:

• The pool charges a 0.01% fee on every trade.

• Liquidity providers receive 90% of these fees.¹

• Example: If you supply 10% of pool liquidity and the pool generates $1,000 in weekly trading fees, your position would be entitled to approximately $90 of those fees, subject to pool conditions.

_{¹ This assumes user positions are not “staked” on Aerodrome. User positions that are staked on Aerodrome will receive 100% of trading fees, denominated in Aerodrome's native AERO token instead of the principal deposit tokens. Learn more.}

2. Provide liquidity through the Klima Protocol

The full protocol and app are scheduled for release in January 2026. The actions described below will become available at that time.

Users may deposit eligible, unstaked Aerodrome liquidity positions into the Klima Protocol, where they are subject to predefined lock-up terms. Deposited positions remain on Aerodrome and continue to accrue trading fees via Aerodrome’s mechanisms.

Separately, deposited positions may be eligible for protocol incentives, distributed according to transparent, rules-based criteria (see the Stakeholder’s handbook).

Summary:

• Trading fees are claimable via the Aerodrome UI.

• Klima incentives are claimable via the Klima dashboard.

• Incentive distribution follows transparent, predefined rules outlined in the protocol’s white paper and does not confer ownership, profit rights, or claims on protocol-held assets.

Risks

Providing liquidity involves several risks, including:

• Token price volatility: The value of assets in the pool may rise or fall.

• Impermanent loss: LPs may incur losses if the relative prices of pooled tokens diverge significantly.

• Smart contract risk: Liquidity is managed by open-source smart contracts deployed on Base.

• Market risk: Trading volumes, incentives, or pool depth may change over time.

• Regulatory risk: Participation may be subject to jurisdiction-specific regulatory considerations.

As with all markets, participants should understand these risks before providing liquidity.