[DRAFT] Celo Cosmo-Local Credit Network - Season 1 Funding Proposal

[chuta]

@WillRuddick

I had a great chat with @Brisa from Celo Africa DAO at ETHsafari on how DAOs could use this model for accountability and linkages (TVL and transactions). Looking forward to feedback to to extend these concepts!

How CELO DAOs Plug Into the Cosmo-Local Credit System

(Example: Celo Africa DAO = CAD) I will in general use CD (Celo DAO)

1) The Commons: Celo Cosmo-Local Credit DAO (CCLCD)

• A CCLCD multisig controls a Commitment Pool on Celo. (Similar to a static rate multi-token liquidity pool)
• DAOs apply to this pool with an ERC-20 voucher token as collateral and a brief use-of-funds proposal (along with guarantors).
• Credit is zero-interest and repayable in-kind (by fulfilling the DAO’s own vouchers) or by returning assets.

2) CD as an applicant (works the same for any CELO DAO)

Token: CD mints CT (Celo DAO Token) — an ERC-20 where 1 CT = 1 USD of CD goods/services (gift card).
Example Services covered: Celo Onboarding, Developer Support, Job Hunting, Project Incubation, Operations Support, DAO Training, University Onboarding, etc.

Proposal: CD states what funding is for and how they’ll fulfill CT (who gets what, where, and when).

Approval & Seeding: Upon CCLCD approval, CD stakes X CT into the pool (their endowment/collateral).

Then a credit line is approved by the CCLCD.

Credit line: CD may then swap up to Y CT into the pool to remove cUSD (or other approved pool assets).

Default policy: Y = 3 × X (i.e., credit line is 3× the seed).

Total exposure cap: Limit = X + Y = 4× seed (pool-level parameter; starts constrained by available liquidity).

Numbers at a glance

• Seed: X = 10,000 CT (=$10,000 of CD services)
• Borrowing capacity: Y = 30,000 CT → can be swapped in to remove $30,000 cUSD (or other approved assets)
• Total CT limit visible to the pool: $40,000 CT (this is a rotating line of credit)

3) How CD repays (three paths)

Once CT has been swapped out of the CCLCD pool, any CT holder can swap back in to remove resources (rotating line of credit). CD’s debt decreases as CT is reclaimed or fulfilled.

1. Stable-coin swap (“vending machine”) — preferred
   CD (or any participant) swaps stable coins into the pool to remove CT, then uses CT for CD services.
2. Other vouchers (“debt swap”) — preferred
   Any approved DAO voucher can be swapped in to remove CT. The new holder spends CT on CD services; the claim (debt) moves.
3. Certificates for completed actions (caution)
   CCLCD can allow certificate tokens that redeem for proof-of-work to remove CT.
   4.Note:* heavy use of certificates reduces Financial TVL and can stagnate the pool; #1 and #2 are preferred.

Governance note: The CCLCD seeds the top-level pool with cUSD/other assets upon vote. Credit lines (loans) are distinct from endowments (seeding). Any token’s swappability can be enabled/disabled by CCLCD vote (as are all Pool functions).

TVL lens: We will measure “more value on Celo” by how much remains in pooled escrow and how actively it circulates (Financial + Economic TVL) with quarterly reviews.

4) Reporting & reviews

• Monthly: CD files a short report tagging CT: activities, swaps/redemptions, fulfillment.
• Quarterly: CCLCD votes to increase, maintain, or reduce the CT credit line based on reports and on-chain activity.
• Example Reports and Data:
  • On Ukraine Pools and Vouchers: https://sarafu.network/pools/0x4393f9Caa41b48a43CC9A99123cF6224573bF10c
  • On University Vouchers: https://sarafu.network/vouchers/0xCC94aaFf278eEf04d4ba2f46Eac8C91f8914f644

5) Cascading this: CD creates its own pool

CD should (as per their proposal) use its $30k cUSD to seed their own CD Pool for local teams/nodes:

• Applicants (e.g., University Leads) mint their own ERC-20 vouchers (e.g., ULT) representing their services, submit a short application, seed their vouchers, and receive a zero-interest credit line.
• They swap ULT into the CD pool to pull out cUSD and deliver services; the pool fills with ULT and other CD-affiliated vouchers.
• The CD pool becomes a marketplace: people can swap cUSD in to pull vouchers for services, or holders swap vouchers among themselves.
• CD may issue certificates sparingly to settle specific completed actions.
• Monthly CD Pool Member reports tag their own vouchers; quarterly CD votes to adjust ULT ( or other voucher etc.) credit lines based on reports and on-chain fulfillment. (Same as CCLCD).

6) Why this fits CELO DAOs

• Zero interest, real accountability: repay in-kind via your own services.
• Rotating, recyclable liquidity: claims move voucher-to-voucher; lines refresh on fulfillment.
• TVL that stays on Celo: escrow remains; value circulates through swaps/redemptions. Long-tail - everyone makes erc-20 tokens and credit lines extend across the whole network (increasing daily transactions beyond Visa and Mastercard).
• Forkable & fair: the same pattern works for any CELO DAO by minting its own service voucher.

Thanks @WillRuddick for this great proposal initiative. Our current proposal is focused on strengthening community coordination, onboarding, and developer support to drive adoption and measurable TVL on Celo. In practice, those same activities naturally produce the kinds of “voucherable” services (training, incubation, onboarding, project support) that your Cosmo-Local Credit model would recognize as collateral.

In other words, what we are building now lays the groundwork for that next step: tokenizing and recycling the value of our services into a sustainable credit system that keeps liquidity on-chain. We’re excited about this direction and look forward to collaborating on how to bridge our community impact activities into such a model as the ecosystem matures.