Abstract
The following is a governance proposal to establish Celo Ecosystem Liquidity Operation Guild (CELO-Guild) and allocate a portion of CELO reserve returned by Mento Labs to the Celo Community Fund to solve the liquidity challenges faced by Celo projects and to accelerate the growth of the Celo ecosystem, which was proposed as a solution to make a usage of the CELO returned. The CELO tokens will be administered by the “Double CELO-Guild Multisig’’ (referred to as DCGM), and will be deployed via Double, which will pair tokens from Celo projects, as liquidity on AMMs in the Celo ecosystem such as Uniswap v3.
Any token either natively issued on Celo or bridged onto Celo; either currently existing tokens or future tokens on Celo will be in scope to receive liquidity support from DCGM. DCGM should and must, after thorough research and due diligence, make final decisions regarding which AMM to deploy capital, which tokens to support, how much capital to deploy to support each project token, when to create and when to close a liquidity position, which price tik range to choose. Given Celo’s current focus on ReFi, it is expected that most CELO will be deployed to support ReFi projects including but limiting to Flowcharbon, impactMarket, GoodDollar, EthicHub, Plastiks, Toucan, etc. DCGM will focus on achieving strategic goals for the Celo community instead of financial returns, meaning that DCGM will support liquidity for Celo projects even though no interest from other sources of liquidity/capital that have financial return targets. To prevent whales of Celo project tokens from dumping and draining the CELO liquidity, DCGM reserves the right to ask those whales to publicly commit NOT dumping on Celo Forum.
This proposal requests disbursements of CELO from the Celo Community Fund in 4 stages (details below) with a cap at 10M CELO. DCGM will manage the operation for 2 years. At the end of the 2 years, unless voted otherwise by Celo governance, the operation will be closed orderly and from outstanding funds, up to the total amount of CELO disbursed from the Celo Community Fund will be returned back to the Celo Community Fund.
As a highlight, unlike most other Celo governance proposals, especially many recent ones, this proposal will deploy CELO disbursed from Celo Community Fund into AMM pools via Double. This usage of CELO (indirectly Celo Community Fund) not only solves the liquidity challenges faced by Celo projects but also increases TVL in the Celo ecosystem. More importantly, this proposal plans to return the total amount of CELO disbursed back to the Celo Community Fund.
Background
Liquidity challenge is a big pain point faced by all projects that have issued tokens or plan to issue tokens, either natively on Celo or bridged onto Celo. And the bear market makes things even worse for these projects as lots of liquidity has left the crypto market. To accelerate the growth of these projects and the whole Celo ecosystem, the Celo community really needs to take on the responsibility now to solve the liquidity challenge for those token projects.
Double is an AMM LP-side only DeFi innovation that adapts the widely used market making agreement model in CEX onto AMM, and as a result, it doubles ROI and significantly reduces impermanent loss for capital providers, while at the same time solving the liquidity challenge for token projects. Double recently launched on Celo and has formed partnerships with big Celo projects including Valora, Mento, impactMarket, GoodDollar, EthicHub.
By creating a virtuous (win-win-win) circle in the whole Celo ecosystem, Double not only empowers the Celo community to solve the liquidity challenge faced by token projects, but also creates a new external demand for CELO tokens and a new earning opportunity for CELO holders to compound their holdings.
Previously, similar to the practice used by other chains, CELO tokens were given out for free to attract liquidity, which is extremely bad to the CELO price in the bear market. With Double, a permissionless and trustless DeFi primitive, the Celo community now can and should supply CELO tokens into Double as strategic capital to solve the liquidity challenge for Celo token projects, especially the ReFi projects.
To achieve the above goal, this governance proposal is to request a portion of the CELO reserve in the Celo Community Fund to be used as strategic capital, which will be managed by DCGM. Unlike most other Celo governance proposals, especially many recent ones, this proposal will deploy CELO disbursed from Celo Community Fund via Double, which will pair tokens from Celo projects, as liquidity on AMMs in the Celo ecosystem such as Uniswap v3.
This usage of CELO (indirectly Celo Community Fund) not only solves the liquidity challenges faced by Celo projects but also increases TVL in the Celo ecosystem. More importantly, this proposal plans to return the total amount of CELO disbursed back to the Celo Community Fund due to Double’s design to favor the capital provider side.
Projects Requesting Liquidity Support
This is the initial list of projects requesting liquidity support. Other projects and future projects can freely request liquidity support via the communication platform (Celo Forum) described below. To be super clear, projects can request any amount of liquidity support they want, however, it is up to the DCGM to make final decisions on how much liquidity to deploy and when to deploy for each project. For example, Flowcarbon requests 2M CELO liquidity support. It does not mean Flowcarbon needs all 2M CELO liquidity support for its initial token and at the time the token is launched. More importantly, it does not mean DCGM has committed to deploy 2M CELO for Flowcarbon.
Plastiks:
Plastiks verifies the recovery and recycling of plastic waste from the environment. We provide businesses with solutions to meet their sustainability goals, while funding plastic recovery entities through the purchase of plastic credits.
PLASTIK token: Market cap $15M
PLASTIKc liquidity support request amount: 2M CELO
Smart contract address: 0x27cd006548dF7C8c8e9fdc4A67fa05C2E3CA5CF9
Flowcarbon:
Flowcarbon has been part of the Celo community for a while. We are an active member of the Climate Collective & Credit Collective, have co-hosted events with Celo Foundation, and love being a part of the CELO ecosystem. Flowcarbon’s mission is to leverage innovative technology to scale the voluntary carbon market. We vertically integrate across the entire carbon offset lifecycle and offer strategies & solutions that span project origination, structured finance, project development, and carbon credit sales.
Flowcarbon intends to use DCGM’s support to establish a liquidity pool with one of our upcoming carbon bundle tokens. The specific bundle criteria for each token – provisionally planned as tech-based removals and nature-based solutions – will be finalized in line with carbon market policy updates from standards bodies.
Flowcarbon token estimated market cap (conservative): either $3M or $15M
Flowcarbon liquidity support request amount: 2M CELO
EthicHub:
EthicHub is a platform that enables investment in the productivity of small-scale farmers by financing their fieldwork and the export of their exceptional products. It also allows contributors to provide collateral to back loans, participating in the Web3 technological revolution to build a more inclusive financial system. EthicHub actively engages with the Celo ecosystem and collaborates with entities such as Celo Europe DAO, Credit Collective, Toucan, and Kolektivo
Ethix token: Market cap $15M
EthicHub liquidity support request amount: 2M CELO
Token ID: 0x9995cc8F20Db5896943Afc8eE0ba463259c931ed
impactMarket:
impactMarket is an application-layer protocol, governed by PACT holders through a DAO, designed to enable open access to finance & knowledge, drive economic development, and unlock human potential. It is now looking to become one of the most efficient and impactful user acquisition / retention channels for web3 solutions, powered by microfinance. It has been actively engaging with the Celo ecosystem and collaborating with entities such as Celo Europe DAO, GainForest, Opera MiniPay, Ammer, Huma, Credit Collective, and others.
PACT token: Market cap $1.3M (FDV)
impactMarket liquidity support request amount: 2M CELO
Token ID: 0x46c9757C5497c5B1f2eb73aE79b6B67D119B0B58
Glo Dollar:
Glo Dollar is a fiat-backed stablecoin pegged to the US Dollar that generates basic income for people living in extreme poverty. As the market cap goes up, extreme poverty goes down.
- Glo Dollar is pegged to the US dollar (much like Circle or Tether), meaning every Glo Dollar in circulation has one US dollar backing it;
- The US dollars are kept in a reserve backing Glo, and part of this reserve earns interest;
- Our earnings are donated to GiveDirectly, who run basic income programs.
With time, we expect every $20,000 of Glo Dollar in circulation to create basic income for one person in extreme poverty.
Glo Dollar (ticker: $USDGLO) is issued by brale.xyz and is available on Uniswap on Celo, Ethereum, Polygon, Optimism, and Base.
Glo Dollar (USDGLO) market cap: $2.2M
Glo liquidity support request amount: 2M CELO
Smart contract address: 0x4F604735c1cF31399C6E711D5962b2B3E0225AD3
GoodDollar:
GoodDollar is a non-profit protocol that creates and distributes free money as a public good, distributed as UBI (Universal Basic Income). It’s governed by its members through the GoodDAO, working towards advancing decentralized financial education and ensuring access for all, by using decentralized blockchain technology. GoodDollar is one of the fastest-growing projects in the Celo Ecosystem, with over 100,000 monthly active users. It has been actively engaging with the Celo ecosystem and collaborating with entities such as HaloFI, Masa Finance, Opera MiniPay, Climate Collective, Detrash, Sivli and others.
Providing liquidity to the GoodDollar ecosystem plays a vital role in fortifying the GoodDollar economy and supporting hundreds of thousands of members worldwide, who utilize their G$ to convert into various crypto assets and currencies, and also experiment and learn about DeFI and web3 opportunities.
GoodDollar liquidity support: 2M CELO
G$ Token Address on Celo: 0x880c4641702D5E12d6a881BB6D8fC425E98Cb398
DeTrash Recy Network:
The Recy Network is a solution for a world without waste in nature. The network functions through an application and API where people and companies show they are delivering waste to the right (sustainable) path and receive rewards in cRECY tokens for it. Companies accept cRECYs for discounts and acquire tokens to stake it in exchange of the Friend of the Clean World status. The Recy Network started in 2021 and has worked with the Climate Collective, Gooddollar to name a few strategic Celo partners. The liquidity will be used to impact over 100 underserved families of the north and northeast region of Brazil to improve their health and life quality through recycling, repurposing and composting.
cRECY token: Market cap 398,660.439 USD
DeTrash liquidity support request amount: 600k CELO
Token ID: 0x34c11a932853ae24e845ad4b633e3cef91afe583
ImmortalX
ImmortalX is a next-generation decentralised perpetual exchange on Celo, enabling Celo users to trade cryptocurrencies such as BTC, ETH & CELO with up to 50x leverage, directly from their wallets without depositing. By leveraging our unique concentrated liquidity vault mechanism consisting of only cUSD stablecoins, our capital-efficient platform offers low slippage for traders and attractive yield farming opportunities for liquidity providers. Additionally, native token holders can also earn a portion of the protocol’s revenue with increment over time.
IMTX Market Cap: $600K
IMTX Liquidity Support: 1M CELO
IMTX Token Address on Celo: 0x84084b3a9ff2cb1f617355d0773eb37722ba1d49
Mento:
[Details of the upcoming Mento token will be provided later]
Operation Details
Multisig: The DCGM will be responsible for managing the operation and deployment of CELO tokens. Supplying liquidity into AMMs is a complex operation ranging from which tokens to support, how much capital to deploy for each token, when to create and when to close a liquidity position. Hence it requires a solid team with right domain knowledge to make right decisions. The DCGM will initially consist of 4 team members/signers (any tx will require at least 2 signers)
- Henry He - Double
- Alex Witt - Partner at APF/Verda, ex-CFO at Celo Foundation
- Isha Varshney - Head of DeFi at Celo Foundation
- Nikhil Raghuveera - Founder at Heimdall, ex-Head of Strategy at Celo Foundation
Communication Platform: Any token either natively issued on Celo or bridged onto Celo; either currently existing tokens or future tokens on Celo, will be in scope to receive liquidity support from DCGM. Given Celo’s current focus on ReFi, it is expected that most CELO will be deployed to support ReFi projects including but limiting to Flowcharbon, impactMarket, GoodDollar, EthicHub, Plastiks, Toucan, etc. DCGM plans to use Celo Forum (will request a dedicated category) for projects to express their token liquidity support requests and for DCGM to communicate its decisions regarding CELO deployments in a public and transparent manner. DCGM commits to communicate its decisions in the public form first and wait at least 3 days before starting to execute the transactions. One additional benefit of communicating publicly is that other CELO holders can easily copy the liquidity positions taken by DCGM if they like. This will make it easier to attract other sources of capital as liquidity to support Celo token projects.
Strategic Capital: When making decisions to deploy CELO to support liquidity requests from Celo token projects, DCGM will factor strategic goals of the Celo community instead of solely based on financial returns. AMM LPing could be unprofitable or could not meet the return targets of financial capital. Hence when financial capital is not available to Celo token projects, the Celo community needs to step up to fill the void by supplying CELO as strategic capital to bootstrap the liquidity for Celo token projects, and gradually to attract financial capital to replace strategic capital eventually.
Disbursement Schedule: The CELO token requested from the Celo Community Fund will be disbursed in stages.
- Stage #1: 1M CELO
- Stage #2: 2M CELO
- Stage #3: 3M CELO
- Stage #4: 4M CELO
Stage #2, #3, #4 disbursements will be triggered when CELO tokens disbursed in previous stage(s) have been fully deployed. Predicting the crypto market and planning the liquidity accordingly are super hard. This disbursement schedule design does factor the market dynamic prediction, liquidity request estimation, and the schedule for Celo’s transition to L2, but has the flexibility to support liquidity requests when big projects like Mento launch their tokens.
Of the 1M CELO disbursed in Stage #1, 0.5M CELO will be granted to Double to compensate its contributions and services for the next 2 years:
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Double will be in the core operator of the DCGM. It will engage Celo projects to assess their products, evaluate their liquidity requests, and make recommendations to DCGM to execute liquidity positions. It will also handle all communications with projects and the entire Celo community.
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Double will delegate its corporate DDC allocation to DCGM. DDC is a utility NFT token that is required to supply capital into Double. DCGM does not own any DDC and delegation from Double solves the problem. However, by delegating DDC to DCGM, Double will forfeit the benefits of using or delegating the same DDCs to other entities.
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Double will support and integrate with other and future AMMs launched on Celo such as Uniswap v4 Hooks. Supporting other AMMs, especially new types of AMM like Uniswap v4 requires significant R&D effort and investment.
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Double will maintain and update existing products including both front-end and back end smart contracts.
As a key Celo ecosystem project, Double has a strong desire to deepen its participation in and contributions to the Celo community, especially on helping Celo’s transition to CEL2! To achieve the goals, Double wants to become a validator in the existing Celo blockchain as well as in the upcoming CEL2. Double plans to use the grant of CELO tokens to participate in the validation service besides deploying CELO tokens via Double to support liquidity for Celo token projects.
Different from most other Celo governance proposals to use Celo Community Fund, especially many recent ones, this proposal plans to return up to the total amount of CELO disbursed back to the Celo Community Fund at the end of the operation. As an illustration, if the Celo Community Fund disburses a total of 10M CELO during 4 stages, at the end of 2 years, the proposal plans to return up to 10M CELO back to the Celo Community Fund.
Profit Distribution: It is quite likely that the DCGM operation will generate profit. At the end of the operation, after returning the total amount of CELO disbursed back to the Celo Community Fund, the remaining profit will be distributed as grants to fund Celo projects. For legal reasons, profit can NOT be returned to the Celo Community Fund. Projects to be considered for grants including a project that will develop smart contracts to replace the multisig that will make future similar operations more efficient, and other public goods work. Which projects to fund will be discussed at the time of closing the operation.
Known Risks
The CELO tokens distributed from the Celo Community Fund will be used to interact with a DeFi protocol. Like any usage of CELO in any DeFi protocol, the CELO tokens are exposed to risk associated with interacting with smart contracts. However, Double smart contracts have been audited by a professional auditor selected by Celo.
It is well-known that supplying liquidity into AMMs also faces some financial risks such as market risk, impermanent loss risk, and could be unprofitable. This is exactly why financial capitals don’t like to take the risks sometimes and hence the Celo community needs to step up to fill the void by supplying CELO as strategic capital to bootstrap the liquidity for Celo token projects. Double has an innovation with a novel design to make AMM LPing profitable and DCGM expects to pay back the principal disbursed from the Celo Community Fund.
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