How It Works (Core Mechanics)
- Core Primer: Cosmo Local Credit (must read).
- Animated Video: Dip your Toe in Commitment Pooling.
- Example: LuKenya University student loans.
(See below for a full Example in Kilifi Kenya.)
Borrower flow: Application → Seeding → Credit → Swap → Redemption → Impact
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Application: purpose, outputs/impacts, repayment period, guarantors, voucher collateral, requested credit line. Never a donation, always an endowment-style loan.
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Seeding: member/endorsed group deposits their own vouchers into the pool (endowment).
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Credit Line: up to 3× seed as borrowing (swap) capacity (configurable by pool).
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Swap (Borrowing): Loan = Swap member’s voucher in; needed asset/cUSD out.
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Debt: the value of the member’s own vouchers held by the pool.
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Redemption:
- Borrower swaps back equivalent assets to pull out their vouchers; or
- Others swap approved tokens to remove borrower’s vouchers (taking on the claim), then redeem directly with the borrower.
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Reporting & Continuation: short Outcomes & Impact report; limits adjust based on fulfillment.
TVL Invariance: On-chain Financial TVL (escrowed cUSD in top-level + regional escrows) stays stable; when cUSD is disbursed to merchants/beneficiaries, an equal value of tokenized commitments is staked. Economic TVL = Financial TVL + Mark-to-Index Value of Vouchers Held in Pools.
Illustrative Example: Kilifi, Kenya (Schools & Shops Pool)
Purpose: Demonstrate how a place-based network applies for a regional/community pool and operates within the protocol.
Applicant Entity (illustrative): Kilifi Schools & Shops Collective (community association; ToT-led).
Regional Champions (ToTs): 2 facilitators rooted in Kilifi; trained in pool ops, guarantor verification, and reporting.
Constituency (initial): ~5 schools (tuition & meals), ~30 neighborhood shops (food, repair, transport, clinic hours), 3 market associations.
Seed Commitments:
- Schools mint tuition-credit and meal-credit vouchers (term-limited; redemption on campus).
- Shops mint goods/service vouchers (face value, redemption at point of service).
- Target combined seed (illustrative): set per pool policy; each issuer stakes an initial tranche of own vouchers.
Credit Lines:
- Per issuer: up to 3× seed (pool-configured), capped during pilot.
- Guarantor-gated: PTAs and market committees act as guarantors for issuers.
Swap Use-Cases:
- A school swaps its staked vouchers for cUSD to procure textbooks; later redeems by accepting vouchers from parents at fee payment.
- A grocer swaps in own goods-vouchers to draw cUSD for inventory; redeems when neighbors present vouchers at checkout.
Operational Flow:
- Application → Seeding → Credit → Swap → Redemption → Reporting, with all events on Celo. Paper-first QR cards and USSD flows available for low-tech phones.
Parametric Triggers (defaults):
- ≥25 active issuers by month 3; ≥1,000 active wallets and ≥600 daily tx by month 6; ≥95% fulfillment (rolling 90d); utilization 30;80%.
Reporting & Dashboards:
- Public dashboards show tx counts, utilization, fulfillment, Financial/Economic TVL; monthly human-signed summaries.
Risk & Mitigation:
- Staged limits; guarantor replacement; voucher auction path for persistent non-fulfillment; pause rules via oracles and Council.
Tranche Path (pilot):
- Tranche 0: minimal operational grant-in-escrow for QR/USSD kits and training (from the 5% Training/Monitoring allocations).
- Tranche 1: initial regional liquidity buffer released upon issuer roster + dashboard live + oracle endpoints verified.
Governance, Risk, & Ethics
Constitutional Framework (forkable)
- Templates: applications, guarantees, MoUs, impact reports.
- Quarterly & annual reports: on-chain proofs + narrative.
- Clawback: tranche-based release; non-performance triggers return of unspent cUSD.
- Retroactive accountability: persistent non-fulfillment → auction/exit of borrower’s vouchers, limit drops to zero, guarantor engagement.
Administrative Plan (pilot)
- Tooling-first: automate attestations and reports; minimize manual approvals.
- Thin stewardship: Council acts as neutral oversight; no private fee flows.
- Standard templates: applications, guarantor forms, MoUs, impact notes to keep ops lean.
- Capacity building: ToT training reduces central admin load by Month 3-6.
Intent - Humanitarian & Faith Alignment
- No interest (riba); fees (if any) are transparent, minimal, and routed to maintenance/social funds (no private gain).
- Inclusion: extremely vulnerable members join via proxy issuance + guarantors; no one excluded for lack of smartphones or cash.
- Data minimization: public-but-minimal ledgers; consent for any personal data.
- Small/Medium Sized businesses
- Universities (Student loan programs)
- Humanitarian Actors
- Regional Actors (Local DAOs)
- Celo Vision 2030
Parametric Triggers (Tranche Unlocks & Clawbacks)
Per‑region defaults (Council‑adjustable):
| Metric | Trigger | Evaluation Window | Effect |
|---|---|---|---|
| Daily Transactions | ≥ 600/day by month 6 | rolling 30‑day | unlock next tranche; continue monitoring |
| Wallet Onboarding | ≥ 1,000 active wallets by month 6 | 90‑day active | unlock next tranche |
| Merchant Issuers | ≥ 25 active by month 3 | rolling 30‑day | unlock / maintain tranche |
| Fulfillment Rate | ≥ 95% | rolling 90‑day | maintain credit limits; <95% → haircut/index review |
| Liquidity Utilization | 30;80% band | rolling 90‑day | <30% → reallocate: 50% to high‑performing regions; 50% to local incentives |
| TVL Reporting | weekly Financial & Economic TVL | weekly snapshots | gatekeeper for tranche release |
Tracking: KPI data attested via Dune, Divvi or the GrassEcon tracker/indexer stack.
Automation: KPI oracles sign aggregate proofs; exceptions require Council sign‑off. Failure modes (late data, oracle discrepancy) default to pause‑and‑review.
Application Process (for Groups & SMEs)
- Intent & Fit: one-pager on purpose, outputs, seasonal timing, requested line.
- Endowment: initial voucher seed (min/max by pool).
- Guarantors: named, verified; pictures of paper ledgers acceptable where relevant.
- Credit Terms: target line (≤3× seed), timeframe, collateral type.
- Approvals: champion pre-screen → pool committee review → Council (for larger lines).
- Penalties: late/non-fulfillment → temporary suspension; guarantors redeem/replace; auction route available; repeat defaults → limit zeroed.
Technical Architecture (Celo)
- Voucher Registry (ERC-20) with metadata for issuer, type, face value, expiry, and redemption rules.
- Pool Contract: tracks Debt = issuer vouchers held, Credit = limit − debt, enforces swap parity/indexing, records redemptions.
- Release: hold cUSD; tranche releases bound to KPI oracles (Working indexer/tracker stack).
- QR / USSD / POS: alias/ENS payments, paper QR cards, NFC cards. merchant POS apps.
- Solvers & Routers (roadmap): cross-pool pathfinding (D→B→C→A), future flash-swap/flash-loan for atomic routing (no borrower interest; protocol-level swap fee applies).
- Open & Forkable: repositories, schemas, and governance docs under open source licenses.
Training & Regional Champions
- ToT Program: local champions trained in pool curation, credit limits, swaps, reporting, dispute resolution.
- Vision & Practice: experiential simulations, market-day activations, festival onboarding.
- Materials: ledgers, QR kits, POS how-tos, USSD scripts, AI reporting assistants.
Adoption Plan (Seasonal & Place-Based)
- Seasonal intents: time credit to agricultural cycles, school terms, holiday festivals.
- Regional markets: grocery shops, repair kiosks, barbers, eateries; everyone onboarded to Celo.
- Examples: weekend market “voucher fairs,” school-fee campaigns, clinic days, neighborhood clean-ups.
Note: All activity must touch Celo: voucher mints/transfers, swaps, redemptions, escrow releases, KPI proofs.
Incentives & Fees (Beyond DeFi, but compatible)
- Swap Fee (bps): optional, minimal; split between maintenance fund, council ops, and public goods (Celo PG).
- Liquidity Incentives: Council may allocate fee-share to liquidity supporters (non-extractive design; no borrower interest).
- ROI & SROI:
- ROI for Celo: TVL retention, transaction growth, wallet growth, merchant retention.
- SROI for communities: crisis bridging, job-hours fulfilled, food/care delivered, local spend recirculation - with active impact reporting on sarafu.network.
KPIs (Tracked On-Chain; Gate Tranches)
- Daily Transactions: ≥600/day/region by month 6
- Wallets: ≥1,000 active wallets/region by month 6
- Merchants: ≥25 active voucher issuers/region by month 3
- Fulfillment Rate: ≥95% rolling 90-day
- Liquidity Utilization: 30;80% target band; reallocation below 30%
- Inter-Pool Trades: ≥3 cross-regional swaps by month 12
- TVL Reporting: weekly Financial & Economic TVL
Reporting & Transparency
- Public dashboards: tx counts, TVL, utilization, fulfillment, geo-tags (optional), stories.
- Monthly reports: auto-generated with AI (DeepGov); human-signed; council-reviewed.
- Yearly synthesis: ROI/SROI including Seasonal Intent outcomes.
Risks & Mitigations
- Default risk: guarantor design, staged limits, fast routing to replace debt, retroactive auctions.
- Under-utilization: parametric reallocations; local incentives (merchant promos, swap fee rebates).
- Complex UX: USSD/QR/POS support; ToT field training; paper-first fallbacks.
- Ethics: no interest, transparent fees, minimal data, inclusive access.
Why This aligns with the Season 1 intent
- TVL doesn’t erode: escrowed cUSD stays; commitments come in as measurable collateral.
- Daily transactions by design: every step is on-chain.
- Long-tail vision: A local merchant/grocery shop is a first-class citizen.
- Interoperable & forkable: aligns existing Celo groups into a connected commons with high TVL and transactions.