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Overview for Liquidity Providers

Users can provide liquidity to support Klima’s market infrastructure and earn rewards for doing so.

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Liquidity Pools Overview

Robust liquidity is essential for the Protocol to service demand efficiently, minimise slippage, and maintain smooth entry and exit for all ecosystem participants.

Klima handles carbon routing internally. It does not rely on external carbon liquidity via order books, AMMs, or OTC venues.

In Klima, “liquidity pools” therefore refers specifically to the pools involving kVCM and K2: the tokens users acquire to participate in governance or execute carbon transactions.

There are two liquidity pools that support the ecosystem and that Liquidity Providers can participate in:

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

  • kVCM / K2: protocol token pairing, allowing users to enter or exit the K2 governance token via kVCM.

Klima hosts its liquidity on Aerodromearrow-up-right's infrastructure. Aerodrome the leading decentralised exchange on the Base network.

Users who wish to provide liquidity and earn trading fees and/or protocol incentives can do so in two ways.

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1. Provide Liquidity on Aerodrome Only

Users may supply liquidity on Aerodrome in the standard way, without interacting with the Klima Protocol:

kVCM / USDC Pool:

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

  • Liquidity providers receive 90% of these fees.

  • Example: If you supply 10% of pool liquidity and the pool generates $10,000 in weekly fees, you earn $900.

kVCM / K2 Pool:

  • The pool charges a 0.1% fee on every trade.

  • Liquidity providers receive 90% of these fees.

  • Example: If you supply 10% of pool liquidity and the pool generates $10,000 in weekly fees, you earn $90.

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The full protocol and app are scheduled for release by the end of December 2025. The actions described below will become available at that time.

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2. Providing Liquidity Through the Klima Protocol

Users may deposit their Aerodrome liquidity positions into the Klima Protocol at standard maturities.

These positions become eligible for protocol-native incentives paid in K2 and kVCM (see Yield & Governance Handbookarrow-up-right).

They will also continue to accrue the trading fees via Aerodrome. However, they will forfeit any Aerodrome token emissions.

This route is suited to users seeking both trading fees and Protocol incentives in the form of kVCM and K2.

Summary:

  • Trading fees are claimable via the Aerodrome UI.

  • Klima incentives are claimable via the Klima dashboard.

  • Incentive distribution follows the rules outlined in the Protocol’s Whitepaperarrow-up-right.

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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.

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

PreviousContract AddressesNextLiquidity Design in Klima

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