> For the complete documentation index, see [llms.txt](https://docs.klimaprotocol.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.klimaprotocol.com/reference/token-distribution.md).

# Token Distribution

The Klima Protocol uses two native tokens and onchain carbon tokens to operate its infrastructure.

### Summary

#### kVCM

* Floating supply (starting at 20 million), expanding and contracting as carbon is acquired or retired.
* Serves as the medium of exchange for all carbon trades with the Protocol. 
* Can be locked to influence carbon class execution rates. 

#### K2 

* Fixed supply of 100 million, distributed programmatically as incentives.
* Can be locked to vote on carbon class capacity. 

#### Carbon tokens 

* Tokenised representations of specific carbon credits.
* Grouped into carbon classes for efficient pricing and allocation.
* Acquired by the protocol and retired when users redeem certificates.

#### Shared mechanics

* All carbon is priced and executed in kVCM terms only only.
* Participants can engage with, or withdraw from the ecosystem, via the kVCM<>USD liquidity pool 24/7.
* Vote-locked kVCM, user-locked K2, and liquidity providers may receive protocol incentives in accordance with pre-defined rules.

### Initial State

#### &#x20;**kVCM**

* Initial kVCM token distribution: 20 million.
* Floating supply.&#x20;

| Cohort                                        | Proportion | Quantity (M) | Note                                                                   |
| --------------------------------------------- | ---------- | ------------ | ---------------------------------------------------------------------- |
| KLIMA Holders (Fair Launch participants)      | 77.5%      | 15.5         | Via Fair Launch claim function                                         |
| Latecomers migration contract (KLIMA holders) | 10%        | 2            | To enable remaining KLIMA conversion to be converted at a reduced rate |
| Treasury                                      | 10%        | 2            | For liquidity & future carbon allocation needs.                        |
| 01X Consulting FZE (“01X”) -                  | 2.5%       | 0.5          | Per contractual agreement, compensation for model development.         |

#### K2

* Initial K2 token distribution: 7 million.
* Final distribution: 100 million.
* Fixed supply.&#x20;

| Cohort                   | Proportion | Quantity (M) | Note                                                                                              |
| ------------------------ | ---------- | ------------ | ------------------------------------------------------------------------------------------------- |
| Treasury                 | 4.5%       | 4.5          | Locked in kVCM/K2 LP (24 months), or held in reserve.                                             |
| 01X                      | 2.5%       | 2.5          | 24 month lock providing LP in kVCM/K2                                                             |
| Fair Launch Participants | 40%        | 40           | Allocated proportionally against Fair Launch (distributed over 48 month period — see white paper) |
| Programmatic Incentives  | 40%        | 40           | Protocol native incentive (distributed over 48 month period — see white paper)                    |
| Ecosystem Grant Reserve  | 5%         | 5            | TBD                                                                                               |
| Product Development Fund | 5%         | 5            | TBD                                                                                               |
| pKlima Holders           | 3%         | 3            | Distributed over 48 month period — see white paper                                                |


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