Celo to Join Chainlink SCALE Program To Accelerate Ecosystem Growth

Governance
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Abstract

This proposal aims to accelerate the growth and long-term adoption of the Celo ecosystem by strategically allocating CELO from the Community Fund toward the Chainlink SCALE program (Introducing the Chainlink SCALE Program | Chainlink Blog). As part of the SCALE program, CELO tokens will cover operating costs (e.g. gas costs) for Chainlink oracle nodes operating Data Feeds on the Celo network.

Background

Celo has been built on the principles of accessibility, sustainability, and scalability. To continue building on this foundation, the ecosystemā€™s critical infrastructure for Web3 services, including oracles, must embody the same principles.

Itā€™s for these reasons we propose that the Celo Community Fund allocate a portion of its funds to support the Celo ecosystemā€™s participation in the Chainlink SCALE program, which will facilitate the launch of Chainlink oracles on the Celo network.

As the industry-standard Web3 services platform, Chainlink has enabled trillions of dollars in transaction volume across DeFi, insurance, gaming, NFTs, and other major industries including notable sustainability focused projects. As the leading decentralized oracle network, Chainlink enables developers to build feature-rich Web3 applications with seamless access to real-world data and off-chain computation across any blockchain and provides global enterprises with a universal gateway to all blockchains.

Chainlink SCALE Program

Chainlink SCALEā€”Sustainable Chainlink Access for Layer 1 and 2 Enablementā€”is an initiative that enables blockchain communities to fast-track smart contract innovation and support long-term sustainability in their native ecosystems by offsetting operating costs (e.g. transaction gas fees) of Chainlink oracle networks for a period of time.

In doing so, developers get native access to key oracle services, which can include conļ¬gurations speciļ¬c to the ecosystemā€™s needs, such as Data Feeds (https://data.chain.link/) with higher update frequencies to enable more advanced and low-latency smart contract applications. The SCALE program is also a determining factor in prioritizing blockchains for the integration of additional Chainlink services.

As blockchain ecosystems in the Chainlink SCALE program mature, the operating costs of oracle networks can increasingly transition toward being fully covered by dApp user fees. This moves dApp ecosystems toward a holistic and self-sustaining economic model that is more viable in the long term for all participants:

Celo can help grow its dApp ecosystem to attract a larger user base and support the networkā€™s long-term cryptoeconomic security.

Chainlink can help grow Celo via oracle services so Celoā€™s dApp ecosystem can power real-world use cases that generate value.

dApps have a runway to create sustainable fee-generation models based on real value-add services so they can eventually support the full backend costs of blockchain and oracle infrastructure through user fees.

Joining the SCALE program will establish a sustainable economic framework between the Celo and Chainlink ecosystems and provide a foundation from which Celo developers can build accessible, sustainable, scalable, and secure smart contract applications.

Proposal

To establish the SCALE Rewards and Fee Pool to support the operating costs of Chainlink node operators, we propose that the Celo Community Fund allocate 5,980,314 CELO to the node operators supporting Chainlink Data Feeds on the Celo network over a three-year term. The 5,980,314 CELO would be allocated in a one-time transfer on a date provided by Chainlink Labs. The CELO amount to be provided via this proposal was chosen based on the estimated operating costs of Chainlink Data Feeds on Celo over the anticipated lifetime of the program.

The funds will be made available to node operators periodically to support operating costs. At the end of the programā€™s existence, post renewals, any unused CELO will be returned to the Celo Community Fund.

Additionally, quarterly reviews will be conducted between Chainlink Labs and the Celo Foundation to ensure continual alignment on services provided to the Celo ecosystem.

Upon successful execution of this proposal, integration work on deploying Chainlink Data Feeds on Celo will scale up with a dedicated team within Chainlink Labs focused on the initiative. Additional Chainlink services including Veriļ¬able Random Function (VRF) and Automation are also being explored for deployment on Celo to further support the growth of the Celo ecosystem. As a part of Celo joining SCALE, Chainlink Labs will also provide dedicated monitoring support for Chainlink services deployed on Celo and deploy a rigorous testing process before service deployment.

As clariļ¬cation, the work contemplated above is being made available to the Celo blockchain and not to the Celo Community Fund (which would only be voting to support these beneļ¬ts).

Governance & Multisignature

The Rewards and Fee Pool keys will be initially jointly held by Chainlink Labs, the Celo Foundation and a Celo Community Fund representative (such as the Climate Collective) via a smart contract vault or wallet, where Chainlink Labs and eventually representatives of the Celo community will hold sufļ¬cient keys to effect transactions from the pool. We hope the transition to full community key management (from Celo Foundation) will occur within [6] months of launch and we will follow up with a post on the process for community input. The Celo Community Fund members will only use their keys if the funds in the pool are not supporting node operator costs.

Representatives of the Celo Community Fund will be jointly selected by the Celo Foundation and Chainlink Labs, who will be disclosed to the Celo Community Fund.

Conclusion

Joining the Chainlink SCALE program presents a unique opportunity to supercharge the Celo ecosystemā€™s growth by providing developers increased access to the external data resources required to power increasingly advanced smart contract use cases within DeFi, ReFi, and beyond. After community feedback has been provided, a vote will be initiated to enter into the program.

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Chainlink on Celo is definitely highly anticipated. :heart_eyes: :rocket:

One issue though is the community fund currently does not have 5,980,314 CELO available. see https://www.celocommunityfund.xyz/

in fact that is about the same as the total amount spent.

Now since this is over three years and the community fund currently receives about 17k CELO a day over (6 Million a year if my calc is correct) maybe this could work or it could be broken down into per year proposals.

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@aaronmgdr The governance contract also owns the 120M+ CELO in the Mento reserve which are no longer necessary given that the reserve also backs stablecoins 1:1 with USDC and DAI. Regardless, as you saidā€“and I think your math is correctā€“ these extra funds wouldnā€™t be necessary over the 3 year horizon.

Iā€™m supportive of this proposal given that it unlocks such an important building block for Celo developers, one that is frequently requested. Additionally, as I understand it these funds would be used primarily for covering transaction fees to bring oracle feeds onchain, and so under todayā€™s gas model, the majority of the CELO would be returned to this community fund (since the base fee goes to the community fund).

Of course, should the community move to burning base fees ala Ethereum 2.0 in the future, this might change, but if so, the majority of funds would then be burned which would still bring additional value to the Celo ecosystem.

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Thank you @tobiju & DT T-Systems for bringing this proposal forward. From my conversations with ecosystem projects I know several teams are eagerly awaiting the deployment of Chainlink on Celo. We at the Celo Foundation, in close collaboration with Chainlink Labs, are looking forward to any further comments & feedback on this proposal.

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Very excited about this proposal! Chainlink is of the most requested integrations from the community! Great to see this moving forward and the new services that will be available for builders. :heart:

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Thrilled to see this proposal live. Echoing others on the thread, Chainlink is possibly most requested infrastructure from climate projects given the strong link to real world data. It will unlock a range of use cases on Celo, from real-time digital MRV systems to insurance against adverse weather events. Their tooling around Chainlink Automations will save time and increase security for several ecosystem integrations. I think it would be a good use of the on-chain community fund, especially given that it will be receiving an influx from Mento.

In essence - supremely excited to support this proposal!

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Indeed, as an active developer, I think Chainlink is the most requested integration on Celo discord server.

A couple of game projects including ours (https://twitter.com/IntoTheVerse_) are looking at possible integrations with Chainlink solutions like Chainlink VRFs, to build solutions using dynamic NFTs, and also create automation based on certain parameters.

As a chainlink advocate and a founder in the celo ecosystem from India, I have been trying to seek updates from the Chainlink community! Super excited for this, chainlinkā€™s data adapters, and more over the recently introduced Chainlink Functions, could be potentially huge use cases for ReFi founders building projects on Climate Action, Impact and parametric insurances, to support small communities, empowered by Celoā€™s mission aligned, widely accessible mobile stack, which is helping to bank so many communities across Africa, South America with robust on/off ramp solutions being developed on the network

Have a look at one of our projects for ETHIndia hackathon back in college days, here: DAOInsure | Devfolio , it was an idea, but I think it does have huge implications for insurances for small unbanked communities.

Iā€™m really thrilled to see this proposal live!

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Thanks for proposing this @tobiju

If I understand the program correctly, then it sounds like this would earmark CELO from the Celo Community Fund to subsidize oracle node operations on behalf of dApps.

Is there a process to decide which projects get to draw from the subsidy?
Are there limits on how much a project and consume?
Whatā€™s the math behind the ā€˜estimated operating costsā€™?
I assume that oracle node operators are incentivized by a profit motive to maintain their infrastructure, is there any data or proposed parameters on how much oracle node operators will earn from this program?
How does Chainlink decide which oracle nodes get to publish requested data (links to any docs here would be appreciated)?
How does the Chainlink multisig work (reference) and what powers would it inherit over dapps on Celo that use Chainlink?
How long is the program anticipated to exist and what are the terms for renewing/terminating the program?

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6M celo grant to node operators over 3 years is a lot. Is the operating cost of a Chainlink node that exorbitant or is the margin very high on running a Chainlink node?

We have a few independent Celo oracle reporters already, I run one of the independent report, but we keep the grant much lower and the operating overhead is not high. Are you going to onboard the Celo native oracle reporters into the Chainlink SCALE system as well?

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I agree with the proposal. Chainlinkā€™s infrastructure will enable a variety of use cases for ReFi founders, as well as unlocking new functionality for NFTs.

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As a Celo smart contract developer, one thing Celo is missing is chainlink and its services like VRF, data feeds, external adopters and new functions.

Using chainlink we create new use cases in celo ecosystem and help us scale and adopt ReFi.

Integrating Chainlink into the Celo ecosystem could offer several benefits:

  1. Secure and Reliable Data Feeds: Chainlinkā€™s decentralized oracle network can provide reliable and tamper-proof data feeds that can be used to trigger smart contract executions on the Celo blockchain. This could enable the development of more complex and sophisticated financial applications on the Celo platform.
  2. Cross-Chain Interoperability: Chainlink also supports cross-chain interoperability, which means that it can connect different blockchains and enable them to share data and execute transactions. This could help the Celo blockchain to interact with other blockchain networks and expand its reach.
  3. Increased Adoption: Chainlink has a strong and growing community of developers and users. Integrating Chainlink into the Celo ecosystem could help to attract more developers and users to the platform, which could ultimately drive adoption and growth.

Due to the above reasons, I am 100% in favor of this proposal.

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Iā€™m totally in favor of this proposal. Oracles are a base building block and Iā€™ve seen around much requests for it. It will unlock many new use cases.
I was not aware it would need that much CELO (also curious about operation costs), but I see that, if not used is returned.

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Could you give a breakdown of how you came up with that number? Transactions on Celo are rather cheap and with OCR the chainlink network also saves gas costs by only letting one node put the price on-chain. Even if we would run data feeds on celo at deviations similar to polygon or arbitrum it seems rather overpriced asking for (at current prices) 1.3M USD / Year, when weā€™re probably looking at 25-50k USD costs per year (and iā€™m being generous here).

This proposal seems disingenuous and as @diwu1989 mentioned the actual costs of accomplishing this are far lower than what is being asked for here.

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Hey Celo community,

Michael from Chainlink Labs here. Weā€™re excited about the opportunity for Celo to join the SCALE program and glad to see the great feedback, engagement, and support.

The CELO tokens proposed to be allocated to the Chainlink SCALE program in connection with the Community Proposal would go to Chainlink node operators who secure the Data Feeds operating on the Celo blockchain to cover their operating costs (e.g. gas costs). dApps on Celo do not draw on the funds allocated, but rather benefit from increased access to data provided by Chainlink Data Feeds. This includes both existing dApps on Celo, as well as newly deployed dApps that are made possible due to more readily available data from Chainlink oracles. The anticipated result is the expansion and growth of the Celo dApp ecosystem.

As mentioned above, CELO tokens proposed to be allocated to the Chainlink SCALE program would not be drawn by dApps, but rather go to Chainlink node operators to cover operating costs. Any Chainlink Data Feeds on Celo supported by the SCALE program would be callable by any dApp on Celo. Consumption will be reviewed regularly by the Celo Foundation and Chainlink Labs as part of an ongoing review process. The amount of Data Feeds deployed on Celo will depend on user demand for oracle data and will be subject to Chainlinkā€™s security and economic evaluation processes to target a high level of data quality and tamper-resistance.

The operating costs of Chainlink oracle networks supporting Data Feeds depend on a number of factors that include but are not limited to: (1) gas costs of the underlying blockchain that data is being delivered to (based on anticipated future demand/supply of Celo blockspace), (2) the update frequency of the Data Feeds which is configured based on user demand and consist of a heartbeat and deviation threshold, (3) market volatility of the assets a Data Feed is reporting the price on (high volatility = more updates), and (4) the number of deployed data feeds to support the Celo ecosystem based on user demand.

Due to the number of unpredictable variables involved with Chainlink Data Feed operating costs, an exact number is difficult to provide. However, note that the proposal was structured such that at the end of the programā€™s existence, post renewals, any unused CELO from the Rewards and Fee Pool will be returned to the Celo Community Fund.

@diwu1989 and @0xViVi, this should also answer your questions.

Chainlink node operators supporting oracle services such as Data Feeds are provided a margin of profit to ensure there are sufficient incentives for reliable and honest performance. The exact margins and amount of CELO provided to node operators supporting Data Feeds on Celo will depend on a number of cost factors, some of which have been described above.

Chainlink Data Feeds are operated by a geographically distributed collection of Sybil-resistant, security-reviewed node operators with significant experience running mission-critical infrastructure (across cloud services and self-hosted bare-metal infra). Node operators come from a diverse range of backgrounds and industries that combine their experience and expertise to secure the delivery of oracle reports on-chain.

Different categories of Chainlink node operators include: (1) DevOps nodes from organizations that specialize in operating blockchain infrastructure such as PoS validators, PoW mining pools, and full node RPC providers, (2) Enterprise nodes from institutions around the world that currently operate backend infrastructure for the traditional Web2 economy, and (3) Community nodes run by Organizations from the Chainlink community that are focused on supporting the ecosystemā€™s growth and have proven high levels of reliability.

Node operators are selected for Data Feeds based on a number of factors including their historical reliability as an infrastructure provider, their performance on other Chainlink Data Feeds live in production, their operational expertise in managing mission-critical infrastructure, and their ability to consistently maintain uptime even during extreme market volatility and gas price spikes.

The node operators supporting Chainlink Data Feeds currently live in production across various blockchain mainnets can be seen on the Data Feed visualization page. More information about Chainlink node operators can be found in this blog post.

In order to meet user demand and continuously improve performance, Chainlink services are updated from time to time to introduce new features and functionalities. Due to the dynamic nature of off-chain environments, swift updates may also be required in response to various externalities (e.g. token migrations, protocol rebrands, extreme market events, and upstream issues with data or node operations). In alignment with software development best practices, updates can encompass off-chain and/or on-chain processes.

On-chain updates take place at the smart contract level, where a multi-signature safe (multisig) is used to modify on-chain parameters relating to a Chainlink service. This can include replacing faulty nodes on a specific oracle network, introducing new features such as Off-Chain Reporting, or resolving a smart contract logic error. The multisig-coordinated upgradability of Chainlink services involves time-tested processes that balance collusion-resistance with the flexibility required to implement improvements and adjust parameters, and allows for a safe, secure, and rapid response to black swan events and other potential incidents on the order of minutes, minimizing service interruption for users.

More information regarding the on-chain/off-chain upgradability of Chainlink services can be found in the Chainlink FAQ and Chainlink documentation. For more information about the defense-in-depth approach to security for Chainlink Data Feeds can be read in the following blog.

This proposal is scoped to a three year term. Any renewals requiring more funds in the Rewards and Fee Pool from the Celo Community Fund would be submitted as an additional proposal. The goal of the SCALE program is to support the growth of participating blockchain ecosystems, such as Celo, such that ultimately that oracle operating costs can transition toward being fully covered by dApp user fees. This moves dApp ecosystems toward a holistic economic model that is more viable long-term for all participants.

Quarterly reviews will also be conducted between Chainlink Labs and the Celo Foundation to ensure continual alignment on services provided to the Celo ecosystem. Furthermore, as previously noted, at the end of the programā€™s existence, post renewals, any unused CELO from the Rewards and Fee Pool will be returned to the Celo Community Fund.

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Hey @CLL_Michael, thanks for the thorough writeout, but it still doesnā€™t explain your insane ask here.

Let me break it down for you as iā€™ve taken a little bit of my time to create a dune dashboard that shows costs on a similar network, like FTM.

https://dune.com/0xvivi/chainlink-transaction-count-and-gas-costs-on-fantom

Iā€™ve taken samples in FTM (the native asset, which in our case would be CELO) ran at a 0.1% deviation, ETH also at 0.1% deviation, a random altcoin in LINK ran at 0.5% deviation and a forex feed with CHF at 0.3% deviation. The first row shows all price feeds on Fantom.

With 0.1% on FTM and ETH, we have 2 outliers that do the bulk of the transactions but they get evened out by the relatively modest updates by other feeds like the forex ones or even altcoins.

Overall a typical update to a pricefeed consumes 200,000 gas and FTM averages somewhere at 40-50 gwei. Overall you have roughly 28 price feeds available on fantom and youā€™re averaging roughly something in the ballpark of 100k transactions per month in the last 6 months.

If we consider these variables in the last 6 months (~October2022), weā€™re looking at the following costs for you:

month cost in ftm cost in usd
Oct-22 4180 901
Nov-22 54377 10980
Dec-22 12390 2926
Jan-23 5140 1926
Feb-23 4758 2533
Mar-23 11986 4569

The November numbers even include catastrophic industry wide black swan events and and insanely volatile month this march. Despite that you averaged 15471 FTM per month or 3972.5 USD in the past 6 months.(the USD number is FTM converted to USD at the time of transaction)

Now, letsā€™s consider the fact that weā€™re not Fantom and that our average gwei (despite the increase in minimum gas fees here) comes in at roughly half of that. The EVM equivalence means weā€™d also consume roughly the same gas per transaction as Fantom or any other EVM chain (~200,000).

This means that the same consumption above would have translated into the following numbers in CELO:

month cost in celo
Oct-22 2090
Nov-22 27188
Dec-22 6195
Jan-23 2570
Feb-23 2379
Mar-23 5993

Or an average of 7735 CELO per month.
Youā€™re asking for 166119 per month.

Now i understand that there are development costs and that running this service obviously needs to be a profitable business otherwise the node operators wouldnā€™t jump on this. Whatā€™s profitable enough though? 2x? 3x? even 5x? Iā€™d get all of that, but youā€™re asking for a whooping 21.5x of what it actually costs you to operate this from a gas perspective. (i donā€™t even want to get into the part what this would mean in USD terms when crypto prices are trending up again)

I want to underline again that i understand that there are development costs, that node operators need to be profitable and that there are other costs like running infrastructure (RPCs etc), but i can only repeat what i said above. This proposal seems disingenuous.

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Great proposal from @chainlink. Iā€™m excited about it and hope it gets passed soon for these reasons:

  1. The majority of the most used protocols rely on Chainlink oracles; Aave, Lyra, GMX, etc.

  2. Forking protocols on Celo is not sustainable. Smart contract risk is a massive impediment to user adoption and brands like Uniswap and Aave immediately convey trust and security. Having chainlink on Celo accelerates the deployments of blue chip protocols.

  3. DeFi on Celo has been stagnant. If you discount the Mento TVL, then the aggregate liquidity on Celo comes out to $40.35M (source: defillama). Thatā€™s really bad. For majority of DeFi users including myself, DeFi is about engineering the highest returns on my capital which becomes significantly easier to if there are more protocols/primitives on the blockchain along with the liquidity.

Simply put, more primitives leads to higher yields and higher yields leads to more liquidity!

Bridging on Celo has already improved significantly. Curve on Celo alone supports nearly $20M in USDC/cUSD liquidity from Ethereum through wormhole so Celo just needs more protocols.

I love Celoā€™s mission to make the things we build on blockchains useable to everyday people and many can agree that Celo has done a fantastic job fostering that spirit. But all of it depends requires deep on-chain liquidity! Without it, users are limited in what they can do and developers are limited in what they can build. That said, Celoā€™s path to becoming a major L1 like Polygon is clear and short. A few more primitives and the capital will flow in. Therefore, I hope Chainlinkā€™s proposal despite the cost will be pass swiftly.

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We can all agree that Chainlink joining Celo would be a benefit to the ecosystem.
On the other hand, literally, everyone sees that the number of 6 Million Celo is inflated severelyā€¦

Therefore, we need to ask specific questions to the Chainlink team, and please, this time answer them with calculations and facts, not vague answers:

  1. What tokens & other data feed with what heartbeat and price divination would be delivered for that price? Why these tokens you specify in the answer and others not? Can you provide a specific list?
  2. Historically from the last X period, i.e. 1 year, what has been the average margin of node operators & of Chainlink?
  3. Can you share a similar proposal/estimation for another ecosystem? Isnā€™t Celo charged significantly more than other blockchains for welcoming Chainlink?

And questions to Celo Foundation:
A. What specific teams need Oracle data and what type of data? Can we have a list of people / projects waiting before committing to almost $4M over 3 years?

Thank you all!
Lucas

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Thanks for your thoughtful reply to my questions. :pray:

The intention of my questions are to ensure that we are efficiently allocating scarce community resources, understand how they will be spent, and what the security assumptions are when using Chainlink oracles.

Is it fair to assume that all existing Chainlink Data Feeds would be made available to Celo?
What is the process for requesting and approving new subsidized Data Feeds that are not already supported by Chainlink?

This seems to be the most contentious part of the proposal because 5.9m CELO is a large ask without much transparency on how that number was calculated or how exactly funds will be spent.

Anecdotally, an oracle that Moola Market ran cost ~5-15 CELO per day in gas fees plus ~$27/month in server expenses. My back of the envelope math suggests that 6m CELO should support ~250 data feeds, every block, for three years.

Are there any initial or ongoing costs, other than payments to oracle nodes, that will be paid from these funds (i.e. setup fees, integration fees, marketing spend, etc.)?
How is the reimbursement payment to oracle node operators calculated?
Is the reimbursement formula ā€œcost plusā€ where the reimbursement amount equals gas fees spent plus some pre-defined multiplier to cover operating expenses?

Who decides which nodes are selected to provide Data Feeds that would be subsidized with this grant?

If I interpreted the docs correctly, then the Chainlink multi-sig can add/remove oracle nodes, update parameters, and add brand new features. That sounds like a major source of centralization risk.

Would subsidized Celo network Data Feeds rely on an existing multi-sig or would a new one be established and maintained by Celo community members?
How many signers are on the current multi-sig ?
Are all the signers publicly known persons or anons?
Can Data Feeds operate without multi-sig oversight?

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I donā€™t think anyone is disputing that Chainlink is useful and should be deployed to Celo.

Why not just deploy chainlink and start with a minimal amount of Celo grant to start with?
100k Celo, and then see how it goes for a few months first before asking for a few million dollars worth of Celo?

Iā€™d be happy to start running Chainlink oracle reporters on my servers for a fraction of the proposed 6M celo ask. Once we have Chainlink running on Celo for a few months, weā€™ll have real world data on exactly how much infra + gas + overhead costs, and then you can request for a bigger grant to cover the full 3 years.

Does this make sense? Iā€™m trying to propose a practical solution that doesnā€™t involve committing 6M celo straight away.

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Hey Patrick, saw this and thought Iā€™d add it to the convo.

PS I canā€™t wait to see this happen and am in agreement that getting a bit more detail on expenditure makes sense.

Especially for a smaller social/environmental impact oriented chain like Celo.

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