Celo Governance Guidelines and Public Goods Funding Strategy H1 2024 (Revised)

[LuukDAO]

This proposal was revised and re-uploaded on February 7th, following the request from Celo Governance Approvers to receive more time to evaluate the implications and functioning of the on-chain element of this CGP.

The initial discussion thread was published on January 11th can be viewed here. The original CGP thread was shared on January 24th and can be viewed here.

The revised CGP pull request is created here and the updated PR with Payload and tests can be found here.

Explanation of what happened to the proposal
CGP 115 reached the required quorum and YES votes (98.9% YES) on February 2nd; however, the Celo Governance Approvers, the Celo governance stakeholders involved in ensuring Celo Governance Proposals are safe to execute, requested more time to review the proposal properly.

After I, as the proposer, agreed with the additional review time, additional considerations started to emerge related to the ~81M CELO this proposal initially aimed to send from the Mento Reserve to the Celo Community Treasury. Various stakeholders shared their concerns with the Mento Reserve parameters post-transfer, the time-sensitive steps required to finalize the transfer and rebalance the reserve, and the effect the transfer could have on CELO utilization. As a result, the transfer of CELO from the Mento Reserve to the Community Treasury has been removed from this CGP and will be voted on in a separate, future proposal.

We intend to submit the revised CGP to Celo Governance on February 8, 2024.

To support the review of this proposal, we produced a FAQ with answers to the most frequently asked questions and two visuals to simplify understanding this proposal.

Background
This proposal directly results from the Governance Development Sprint ahead of CEL2, which started in October 2023, and considers the information from the Existing Governance Tools and L2 Governance Framework and Celo Community Proposals and Treasury Allocation from Apr 2020 - Nov 2023. The initial direction was shared in the Forum in November and presented in Kuneco in December. The draft has been up on the forum for community input for about two weeks. Now, all changes have been merged, and the proposal is ready to move towards a vote.

Description of the proposal
The proposal sets a new standard for Celo Governance operations and Public Goods funding.

There are three sections of this proposal that together aim to accelerate Celo’s vision of creating a regenerative digital economy that creates conditions of prosperity for all.

Establish the Celo Governance Guidelines v0.1
This section describes the Celo Governance Guidelines V0.1. The Governance Guidelines separate the Celo Governance Proposals into different categories and standardize the process for the voting, execution, and resubmission of proposals. It also transforms the role of Celo Governance Proposal Editors to a more active role that ensures proposers correctly follow the Celo Governance Guidelines, referred to as the Governance Guardians, and elects the first batch of Guardians. Finally, it raises the deposit for submitting a proposal from 100 to 10,000 CELO.

Read the detailed Celo Governance Guidelines document here.

Mento reserve: Return a combination of cUSD and CELO
The section describes the process for utilizing a share of the 95M CELO to be returned to the Community Treasury to mint cUSD to the Celo Community Treasury and return the remaining CELO. The Mento Reserve will mint 10,000,000 cUSD in exchange for the equivalent value of CELO using the 30-day moving average price on January 22nd, 2024, using CoinGecko’s price feeds. The remaining 81,633,000 CELO will be sent to the Celo Community Treasury at a later stage through a separate proposal (revised from the initial proposal to reduce complexity and risks). This minting of cUSD will grant the Celo Community Treasury a significant amount of stablecoins for operations, increase the distribution of cUSD, and increase the stability of CELO, which the Mento reserve also benefits from.

Read the detailed revised Return a combination of cUSD and CELO document here.

Fund the Celo Public Goods Budget H1 2024
The section describes the process of earmarking a budget of up to 1,600,000 cUSD and 700,000 CELO to fund Celo Public Goods in the first half of 2024 (H1) to streamline funding distribution to key Celo Public Goods, such as Celo Regional DAOs, Celo Project Incubation, and Celo Grants, run Celo-native Quadratic Funding (QF) and Retrospective Public Goods Funding (RPGF). The decision on which specific groups are funded from the budget will be made by Celo voters through a to-be-established Celo Public Goods Snapshot Space. A newly elected group of Celo Public Goods Stewards will administer and facilitate the distribution of resources in line with the decision made by Celo voters.

Read the detailed Fund the Celo Public Goods Budget H1 2024 document here.

See the Flow chart and Sankey diagram below for a visual representation of this process.

PR with Payload
The PR with Payload for this proposal has been written and tested in collaboration with Mento Labs. Please find the JSON with descriptions and a test here.

Risks

• Minting an additional 10,000,000 cUSD will decrease the overall Reserve Ratio to
  approximately 3.51. This means each cStable would still be backed by over triple the value. As long as the share of Stablecoin collateral equals or is larger than the outstanding amount of cStables, which is currently the case, the new Reserve Ratio should not lead to significant
  additional risks for cStable users.

• Budget Deficit Risk: By adding a spending cap on certain categories, Celo might potentially miss out on funding valuable initiatives that weren’t proposed in time or exceed the available budget. This risk is reduced by weeks of conversations with the groups who were previously funded by the Celo Community Treasury to have reasonable indications of budget requirements.

• Centralization Risk: By establishing the Celo Public Goods Multisig, some centralization risk is created as a smaller group of individuals have temporary custody over some Celo Community Treasury resources. These risks are reduced by having a diverse set of individuals with major skin in the game involved, providing monthly reports backed by on-chain data, allowing the Celo Community Treasury through Celo Governance to redeem its assets at any point, and committing to return any left-over resources by July 31st latest.

Useful Links

Governance Development Sprint
Existing Governance Tools and L2 Governance Framework
Celo Community Proposals and Treasury Allocation from Apr 2020 - Nov 2023
Potential Celo Governance improvements
Celo Governance Guidelines
Return a combination of cUSD and CELO
Fund the Celo Public Goods Budget H1 2024
CGP 102: Mento Reserve Returning CELO
Simulation - Mento Reserve Returning cUSD and CELO
Celo Reserve Website

[pcbo]

Gm Luuk. I believe this proposal will take us to the next level!

The Mento proposal is a no-brainer. Everyone benefits.

Future Celo Governance Guidelines versions would benefit from having some complementary visuals on governance flow. Maybe even add a use-case example to facilitate reading. But, overall, it’s sounds like the path forward.

The Celo Public Goods Budget looks great and would be nice to present all these at the next Celo-centric IRL community event.

Lastly, I’d like to show my interest in becoming a (passive) Celo Public Goods steward. I think that I make a fairly worthy candidate to the role because I already act as a unofficial Celo contributor / ambassador (I do it because I like Celo, it’s people and community), and I also know some of the active stewards like Luuk or Marco, and have worked closely with them in my previous experience as CELO Europe DAO co-creator… This way I will be able to provide feedback and insight to the active stewards.

Let’s do this!

[MontyMerlin]

It’s been a pleasure working alongside you in the past weeks and thinking about the future of Celo public goods & ReFi. Thanks for all you do @LuukDAO, very much looking forward to the next stage!

[Nadiem]

I wanted to raise some concerns about the introduction of a submission minimum, recognizing the balance between simplifying mechanism design and the potential introduction of privileges that demand careful consideration.

In this context, I advocate for the creation of a structured list, detailing current pain points alongside proposed features, with an additional field explicitly outlining the rationale behind how each feature addresses a specific pain point. This comprehensive approach can provide valuable insights for individuals not deeply engaged in the ongoing discussions and lowers the barrier for discussion. At the moment I do not fully understand which issues have been flagged in the current setup and which measures in the proposal are meant to mititgate them.

I believe one critical issue within the current governance setup is the ratio of stakeholders who fulfill their ‘responsibility’ to vote. I think it is important to understand whether the low participation is a result of numerous unclear proposals or a lack of awareness regarding the heightened importance of individual contributions within a decentralized governance structure. While passive investment behaviour might be less problematic in traditional setups (e.g. stocks) where the equity aspect is stronger than the governance aspect. But for decentralised protocols it can kill the system.

Additionally, it’s worth noting that innovative proposals may not necessarily come from large stakeholders. Larger stakeholders often focus on stability and securing their investments, and their primary objective may not align with creating new innovations or does not leave them sufficient time to do so. Therefore, introducing a submission minimum, even if the bar is lowered by allowing delegation via large stakeholders, could inadvertently act as a brake on innovation within the system.

[ReFiMexico]

This is great. We are ready to rock n’ roll. We are actually working on Web3 development internally and support would means to build for CEL2.

We have some many projects to help and bring more impact globally.

[PaulBurg]

Excited to see such proposal! Right direction

[LuukDAO]

Thanks, @pcbo, for reviewing and sharing your perspective.

You’ve been a driver of innovation in the Celo ecosystem and have relevant builder experience + skin in the game, with Talent being one of Celo’s main projects.

I believe you could be a great addition to the Public Goods Stewards. I’ve added your name to the draft for now.

Given the current proposed Stewards are all gentlemen, it would be great to have at least one of the remaining two Stewards be a female to ensure proper representation and diversity.

[Thylacine]

Thanks again @LuukDAO for all of your work.

I wanted to have a go at creating it myself (apologies, haven’t got to it yet) as a personal exercise to ensure I fully understand the details of the proposal… but an org chart for the hierarchy and accountable persons / organisations is really needed here. At a casual glance it might look like our solution to governance woes is to create more committees and sub-committees, and this is definitely not the intention!

Perhaps the tabulated “problem / solution” style that @Nadiem suggested could also be great here. Could also detail the existing ecosystem partners like cLabs, Foundation, Celo Camp & Prezenti to some degree, and how they fit in / don’t fit in. I definitely don’t want to water down the documents you’ve created, but pulling the dependencies out and making them super clear would be great.

I’ll reply more in detail later, just wanted to pop in with some brief comments!

[LuukDAO]

Hi @Nadiem,

Thanks for reviewing the documents and taking the time to write out your feedback in such detail.

In relation to your first suggestion - I’ve made an initial overview based on comments in the threads I shared. I might have missed a couple, but this should give a better understanding.

Current Pain Point	Feature in the Proposal
The current Governance submission process needs more rigor as too many misinformed applications (1).	Create governance guidelines with a straightforward proposal process and a group of Guardians that ensure submitters are aware of and follow these guidelines.
The current submission threshold (100 cUSD) is too low and doesn’t prevent anyone from submitting unaligned submissions (1).	Increase the minimum submission requirements for proposals.
There is a need for a cool-down period as current failed proposals can just continue to apply without making meaningful changes (1).	We defined a clear cool-down process in the governance guidelines.
Uncertainty around the Approval process (1).	Clarify the process in the Governance Guidelines and ensure all documents are updated and easy to find.
There is a need for clarity around the usage of Community Treasury to ensure application quality, aligned with a larger strategy (1).	We defined a clear Public Goods Funding strategy with budget caps that consider Celo ecosystem needs, community treasury holdings, and runway.
There needs to be a clear overview of the Community Treasury’s current commitments and assets (1).	Created and will continue to update a Celo Community Treasury accounting dashboard and H1 2024 budget.
No clear accountability on some proposals and uncertainty around budgets as they are proposed in CELO, but denominated in USD (1).	Gaining cUSD through the Mento Reserve proposal to be able to allocate cUSD instead of CELO and adding clear accounting and payment terms in all proposals.
Community Treasury primarly holding CELO, which results in CELO sales pressure every time a proposal is funded (1).	Increasing diversity of the Community Treasury by attracting $10M cUSD via the Mento Reserve proposal to be able to fund 14-24 months of developments with Stablecoins.
Overall Transparency and Approachability of the Community Treasury (1). The overall process is difficult to grasp and guidelines are hard to find.	The development of a Celo Public Goods website with the latest Celo Community Treasury and Governance resources and activities.
Need of a clear strategy behind resource allocation (1).	Initial Public Goods Budget for H1 with clear buckets that can be further iterated on.
Democratization of Votes and Transparency of Voters (1).	Experimenting with more accessible governance solutions, including Snapshot, that can update voter profiles and delegate votes.
Need for temporary and permanent use cases and operation logic for the Celo Community Treasury (2).	Initial temporary use cases as identified in the H1 Celo Public Goods Budget, which can be validated to develop a more continuous/permanent funding strategy.

To your second point, I agree completely that more active governance participation is required. As a result, this proposal aims to A. Make governance more predictable and accessible, B. Streamline the process by having roles scoped that provide critical support, such as Accounting and Governance Guardians, and C. Start to explore new Governance tools and features, such as creating a Snapshot space that has Voter profiles and the ability to have Delegation from the get-go.

To your final point, this proposal does not aim to limit the ability of any Celo stakeholder to propose and make changes to Celo. While putting a proposal up for vote is an essential element of decentralized governance, it’s an action that doesn’t have to be taken by the individual who wants to drive change. In practice, this proposal makes it easier for anybody to propose changes, as they can follow the Governance Guidelines, and a Governance Guardian can submit the proposal for them, reducing the current technical skill set needed to submit a proposal.

The proposed 100,000-locked Celo balance is somewhat steep. Despite being on the lower end compared to other L1/L2 ecosystems, we can imagine another setup to accomplish the same goal, such as increasing the current deposit amount to 1,000 or 10,000 CELO. This way, proposers still have more significant skin in the game to submit a proposal that follows Governance guidelines and is relevant for Celo Governance, given deposits are forfeited if a proposal has been in the queue for more than 4 weeks following the current logic.

[LuukDAO]

Thanks for your input and for playing an essential role in this process, @Thylacine.

I agree that creating these visuals and charts can help get the message across better, and I have already started drafting some visuals that I hope to share tomorrow!

I also made an initial list, as requested by @Nadiem - but please feel free to expand it.

[LuukDAO]

After more consideration and two meetings, I believe a 10,000 CELO deposit for Celo Governance Contracts proposal submission is the better threshold as it leverages the existing deposit logic, reducing smart contract changes and likely accomplishes the same goal of ensuring some skin in the game for proposal submitters.

[Airu]

Hi @LuukDAO thanks for this extensive write-up! I go by the alias Airu (Translates to, air in my native tongue) but you can call me Ruben. I am interested in testing out these governance guidelines and improving them in the areas that are needed. Therefore I am open to assisting and guiding Celo governance with their operations and finding better ways to ‘build together and prosper’. I will leave a short resume of my experience and track record in the space of web3, ReFi, and digital collective governance (DAOs), and what I believe I can bring to Celo governance.

The references to my web3 life:

I am navigating the web3 world while currently immersing myself in a Master’s in sociology. Hailing from the vibrant but often overlooked Curacao, I’ve lent my skills to DAOstack, PrimeDAO, PolkaDAO, Kolektivo, Breadchain and Token Engineering Commons. My journey isn’t just about web3 tech; I’m also part of the scalable collective ownership & governance movement. This passion stems from my roots in a marginalized nation, shaping my values around fairness and equality. Over the past 6-7 years, I’ve contributed to pioneering DAO governance, led unique Caribbean-based DAOs, and advocated for regenerative finance solutions in web3.

What I can bring to CELO governance:

Varied Background and Values-Driven Vision:
My experience outside the web3 realm in social sciences, coupled with a multicultural upbringing, provides me with the tools to interpret human behavior. These insights are particularly valuable for any space advocating for collective governance. My steadfast commitment to fairness and aversion to nepotism guide my approach to badgeholding. I prioritize long-term vision execution, avoiding short-term favors.

Enthusiasm for Collective Governance:
The opportunity to participate in an extensive collective governance experiment is tremendously thrilling. My social scientific perspective is bubbling with ideas and inquiries that align with the evolving narrative that Celo is shaping.

Conflict Resolution Expertise:
Equipped with conflict resolution skills, I excel at steering dialogues towards fruitful outcomes, serving as a valuable asset in the intricate landscape of collective governance.

Proficiency in Group Governance:
Leveraging my varied encounters in collective governance within the web3 domain such as being a DAO delegate within PrimeDAO for TEC, Giveth, and Commonstack. Managing the first DAO on Curacao and A mini-grant DAO for early Polkadot contributors.

Please let me know further details after the proposals have gone through the decision-making process.

Looking forward to being part of Celo governance’s future.

Bless Airu.

[Sov]

As a representative of Gitcoin I support this proposal and look forward to working with @LuukDAO and the wider Celo team on their goals for Public Goods Funding in the year ahead.

[cmdexe]

Exciting news. I’m very new in terms of knowledge in general, so I can’t make a technical comment. I follow your work with pleasure. Good luck.

Cmd.exe

[tim]

@LuukDAO Really appreciate all of the time and effort you and the team have put in to making this a proposal with wide community backing.

On the return of the Mento reserve – the details you’ve provided sound good to me. I think we will also want to follow-on to establish a set of stewards to consider how to “invest” that amount and maximize returns and benefit to the community while minimizing risk. At risk of feature creep of this proposal, it’s something I’d be interested in your and @roman’s take on.

On the public goods budget – it’s super-hard to get this kind of number right, but it feels about right to me, and I think we can adjust for successive periods.

I added some comments in the doc on the level of proposal deposit, and now reading the comments here, it sounds like you’re already addressing some of that. TL;DR governance proposal deposits may not be what you expect them to be and the current 100k level feels very high for what they can accomplish. Overall though I think this is not that important to the overall proposal.

Looking forward to seeing this out to vote on!

[Nadiem]

Hi @LuukDAO ,
thank you so much! It helps me and hopefully others a ton to get an overview of all the thoughts you have put behind the proposal. I appreciate that you have reconsidered the submission minimum.

With regard to participation I believe it is very important that we lower the bar for proposers to activate votes. In the past activating votes has been very often linked to having the private telegram handle of major stakeholders in contacts.

Also - and I am aware that it is too much for this first governance revamp - I think it would be important to introduce some sort of vote distribution system that is based on actual participation. Some high level ideas:

1. [Voting Value Reward System]: Initially 1 Celo equals 1 vote. If a voter is not participating over time her votes get redistributed by lowering her voting value and attributing it to voters that shows good participation. This way the voting power will be concentrated on active voters.
2. [Monetary Value Reward System]: Participation can be rewarded or abstention can be penalised. For example by conditioning staking rewards on voting behaviour.

[LuukDAO]

Thanks for the input! I like the suggestion to have more voting power and rewards go to active participants. The likely first step in the coming months is to create a good Delegation infrastructure that allows votes to flow to active participants. At the same time, we should continue to look into the options of Voting Rewards Systems!

[LuukDAO]

Hi @Airu - it’s exciting to reconnect through this initiative. Having worked with you in the past on some projects, I’m confident you could be a good Guardian!

[LuukDAO]

In the coming days, I’ll be taking the following steps to progress this proposal:

• Currently working with Mento Labs and cLabs to ensure the on-chain element of this proposal is specified as intended. After completing the JSON file with transactions, we’ll test it on Alfajores Testnet first and validate its functioning before moving to a proposal submission.

• Taking in the final feedback on the proposals and having conversations with prospective Stewards and Guardians to submit an updated proposal and a list of changes made from the initial drafts.

• Creating a short FAQ list with the main questions and considerations and making visual schematics of the proposed Governance system.

[rene_celo]

Really awesome to see the active discussion around this. Thank you so much @LuukDAO for driving this effort!