[FINAL] Revenue-Based CELO Burn — Allocate 25% of Net L2 Sequencer Revenue to Permanent Burn

Governance
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[DRAFT] Revenue-Based CELO Burn — Allocate 25% of Net L2 Sequencer Revenue to Permanent Burn

Proposal Key Aspects

  • Receiver Entity: Celo Governance / Community Fund

  • Status: [DRAFT]

  • Title: Revenue-Based CELO Burn — Allocate 25% of Net L2 Sequencer Revenue to Permanent Burn

  • Author(s): [Forum username]

  • Type of Request: Network Decision / Tokenomics — Temperature Check

  • Funding Request: N/A

  • Proposed Burn Rate: 25% of net L2 sequencer revenue distributed under CGP-287

  • Community Fund Allocation: 75%

  • Initial Review Period: 6 months

Summary

This proposal seeks community support for allocating 25% of the net L2 sequencer revenue currently distributed to the Celo Community Fund under CGP-287 to a permanent CELO burn, while retaining the remaining 75% within the Community Fund.

The objective is to establish a simple and transparent long-term economic relationship between:

Celo network usage → protocol revenue → CELO value accrual.

CGP-287 has already established an important first step. Net sequencer revenue now flows to the Community Fund, and transaction fees collected in stablecoins are converted into CELO before distribution. This means stablecoin usage can already generate recurring market demand for CELO.

This proposal would add a second mechanism:

25% of net revenue → permanent reduction of CELO supply.

The proposal does not suggest burning the Community Fund’s existing treasury or reducing previously approved ecosystem budgets. It applies only to new net protocol revenue generated by Celo going forward.

The remaining 75% would continue to accrue to the Community Fund, preserving governance’s ability to invest in ecosystem growth, MiniPay adoption, developer incentives, infrastructure, liquidity and other strategic priorities.

1. Background

Celo’s transition to an Ethereum L2 created a new economic opportunity for the network.

Celo now generates sequencer revenue from network activity. Under the CELOccelerate tokenomics framework and CGP-287, this revenue is distributed to the Community Fund after deducting protocol operating expenses and Superchain revenue-sharing obligations.

An especially interesting component of this model is Celo’s fee abstraction.

Users can pay transaction fees in assets such as stablecoins. Stablecoin-denominated fee revenue is subsequently used to acquire CELO before being transferred to the Community Fund.

This creates a direct economic relationship between network usage and CELO:

Stablecoin transactions
↓
Stablecoin gas fees
↓
CELO purchased
↓
CELO transferred to Community Fund

Celo Core Co. deliberately chose not to hardcode what should happen with this revenue after it reaches the Community Fund. Instead, CELO holders retain governance control over whether these assets should be held, reinvested or burned.

Celo Core Co. has subsequently explicitly invited the community to submit a governance proposal should it wish to establish a burn mechanism.

This proposal responds to that invitation.

2. Proposal

I propose that Celo Governance adopt the following policy:

25% of all net L2 sequencer revenue distributed under the CGP-287 framework should be permanently burned. The remaining 75% should continue to be transferred to and retained by the Celo Community Fund.

For clarity, the burn should occur after the deductions already defined under the existing framework.

The calculation would therefore be:

Gross Sequencer Revenue

minus

L1 / Data Availability / Protocol Operating Costs

minus

OP Stack / Superchain Revenue Share

equals

Net Celo Chain Revenue

which would then be allocated:

25% → Permanent CELO Burn

75% → Celo Community Fund

This proposal does not seek to modify the calculation of gross revenue or the existing operating-cost/revenue-share deductions established under CGP-287.

It only determines how net revenue is allocated after those obligations have been satisfied.

3. Why 25%?

A permanent burn could theoretically range anywhere between 0% and 100%.

I believe 25% represents an appropriate starting point because Celo is still in an important growth phase.

A 100% burn would maximize scarcity but remove protocol-generated resources that could otherwise support ecosystem development.

A 0% burn preserves maximum treasury flexibility, but does not create a predictable mechanism by which increasing protocol profitability reduces CELO supply.

A 25% allocation attempts to balance both objectives:

Allocation Purpose
25% Permanent CELO burn / token value accrual
75% Community Fund / ecosystem growth

This preserves the majority of protocol revenue for reinvestment while establishing a meaningful and measurable link between network economics and CELO.

Importantly, the burn would only occur when the network generates revenue.

It is therefore not a fixed treasury expense.

If Celo generates less revenue, fewer CELO are burned.

If Celo generates more revenue, more CELO are burned.

This makes the mechanism directly proportional to the economic performance of the network.

4. What the Mechanism Would Have Produced So Far

The three sequencer-revenue distributions published under the current framework have transferred:

Distribution Net Revenue
Initial ongoing distribution 2,566,770 CELO
June 19 – July 15 1,324,344 CELO
July 15 – July 31 795,081 CELO
Total 4,686,195 CELO

These figures are based on the distributions published by Celo Core Co.

Had a 25% revenue-based burn already been active, the allocation would have been approximately:

1,171,548.75 CELO permanently burned

and:

3,514,646.25 CELO retained by the Community Fund.

This example illustrates an important distinction.

The proposal does not require Celo Governance to spend treasury reserves to support CELO.

Instead, it distributes newly generated protocol revenue between:

long-term ecosystem capital and permanent token value accrual.

5. Combining Buy Pressure and Supply Reduction

The existing CGP-287 mechanism already creates an important form of CELO demand.

Across the first three published distributions, approximately $167,139 in stablecoin-denominated sequencer fees were converted into CELO before distribution.

Those conversions resulted in approximately 2.285 million CELO being acquired during the relevant reporting periods.

This means Celo already has the beginning of an economic flywheel:

More network activity
↓
More stablecoin-denominated gas fees
↓
More CELO purchased

A revenue-based burn adds another component:

More network activity
↓
More protocol revenue
↓
More CELO acquired through stablecoin fees
↓
More net sequencer revenue
↓
25% permanently burned

The important feature is that the mechanism is based on actual economic activity, rather than an arbitrary burn schedule.

6. Why Burn Instead of Reinvesting 100%?

The strongest argument against a burn is straightforward:

Celo is still growing, and capital may generate greater long-term value when invested into MiniPay, developers, liquidity, infrastructure and user acquisition.

I believe this is a valid concern.

That is precisely why this proposal does not recommend burning 100% of sequencer revenue.

Under the proposed structure, 75% of net protocol revenue remains available to governance for ecosystem reinvestment.

Only 25% becomes permanently unavailable.

The question therefore is not:

“Should Celo burn revenue or invest in growth?”

The proposed answer is:

Celo can do both.

A successful network ultimately needs both a strong ecosystem and a credible economic relationship between network success and its native asset.

The Community Fund already represents the reinvestment side of that equation.

A modest revenue-based burn would introduce the second component.

7. Why Not Redirect the 25% to Staking Instead?

Another potential alternative is distributing sequencer revenue to CELO stakers.

This deserves serious consideration.

Network-funded staking rewards could:

  • increase the incentive to hold CELO;

  • strengthen governance participation;

  • reward active long-term participants;

  • create direct yield backed by real protocol revenue.

A burn has different properties.

It benefits the CELO asset collectively rather than rewarding only accounts participating in staking, and it permanently removes the allocated tokens rather than eventually returning them to circulating supply.

This proposal does not argue that revenue-backed staking should never be implemented.

In fact, future governance could potentially allocate protocol revenue between several mechanisms.

For example:

Burn + Community Fund + Revenue-Backed Staking

However, I believe the simplest first mechanism is preferable.

A 25% burn is:

  • transparent;

  • easy to measure;

  • easy for governance participants to understand;

  • independent of staking design;

  • proportional to actual protocol revenue;

  • irreversible once executed.

More sophisticated value-accrual mechanisms can still be considered separately.

8. Six-Month Review

I propose an initial formal review after six months of operation.

The purpose of the review would not automatically be to terminate the mechanism.

Instead, governance should evaluate whether the 25% allocation remains appropriate based on data gathered during the period.

The review should consider at minimum:

Protocol economics

  • gross sequencer revenue;

  • net sequencer revenue;

  • stablecoin-denominated fee revenue;

  • CELO acquired through stablecoin conversion;

  • operating expenses;

  • Superchain revenue-sharing obligations.

Network growth

  • transaction activity;

  • stablecoin transaction activity;

  • active addresses/users;

  • MiniPay-related network activity where measurable;

  • developer/application activity.

Token economics

  • total CELO burned through this mechanism;

  • Community Fund inflows;

  • Community Fund expenditure;

  • CELO supply dynamics.

Following the review, governance could choose to:

  • maintain the burn at 25%;

  • reduce it;

  • increase it;

  • pause it;

  • replace part of it with another value-accrual mechanism.

Unless governance explicitly approves a change, the 25% allocation should remain in effect.

This avoids requiring repetitive governance votes merely to maintain an existing policy.

9. Transparency and Reporting

The current bi-weekly sequencer-revenue reporting provides an excellent foundation for transparency. Celo Core Co. currently reports gross revenue, stablecoin conversion, costs, revenue share and net distribution.

If this proposal is implemented, I propose adding the following fields to each report:

Metric Example
Gross Sequencer Revenue X CELO
Operating Costs -X CELO
Superchain Revenue Share -X CELO
Net Celo Chain Revenue X CELO
25% Burn Allocation X CELO
75% Community Fund Allocation X CELO
Burn Transaction Onchain transaction
Community Fund Transaction Onchain transaction

This would make the mechanism completely auditable.

Anyone should be able to verify:

how much the network earned, how much was spent operating it, how much CELO was burned and how much remained available to the ecosystem.

10. Technical Implementation

This draft intentionally focuses first on the economic policy decision.

I welcome input from Celo Core Co., cLabs, the Governance Guild and other technical contributors on the safest and simplest implementation.

Potential implementations may include:

  1. a recurring governance-authorized transfer to an established burn address;

  2. an automated mechanism integrated into the existing sequencer-revenue distribution process;

  3. a configurable allocation parameter allowing governance to modify the burn percentage in the future.

The preferred implementation should minimize operational complexity while ensuring that governance retains ultimate control.

I would particularly welcome feedback on whether a configurable Revenue Burn Percentage parameter could be implemented safely.

For example:

revenueBurnPercentage = 25%

Governance could then modify this parameter through future proposals without redesigning the entire mechanism.

However, this draft does not prescribe a specific smart-contract implementation before technical review has taken place.

If this temperature check receives community support, a follow-up implementation proposal can define the exact onchain transactions and technical architecture required.

11. What This Proposal Does NOT Do

To avoid ambiguity, this proposal:

  • does not burn 25% of the existing Community Fund;

  • does not burn 25% of CELO’s total supply;

  • does not increase transaction fees;

  • does not modify existing ecosystem funding commitments;

  • does not alter the current Superchain revenue-sharing obligation;

  • does not change Celo’s stablecoin fee-conversion mechanism;

  • does not remove governance control over the remaining 75%;

  • does not guarantee or target any particular CELO market price.

It applies only to new net protocol revenue generated under the existing L2 sequencer-revenue framework.

12. Expected Benefits

A. Stronger relationship between usage and CELO

Celo’s stablecoin and payment adoption becomes more economically relevant to CELO when increasing network activity translates into measurable token value accrual.

B. Revenue-based scarcity

CELO would only be burned when Celo generates protocol revenue.

Higher economic activity therefore results in a larger burn.

C. Reduced future supply overhang

Burned CELO can never return to circulating supply.

D. Preservation of ecosystem funding

75% of net revenue remains under Community Fund governance.

E. Simple investment and ecosystem narrative

The mechanism creates an easily understandable economic relationship:

When Celo succeeds economically, CELO benefits economically.

F. Governance remains sovereign

The community retains the ability to modify the percentage in the future.

13. Risks and Trade-Offs

No tokenomics mechanism is without trade-offs.

Opportunity cost

Burned CELO cannot later be used for ecosystem investments.

Mitigation: limit the initial burn to 25%, leaving 75% available for reinvestment.

Revenue volatility

Sequencer revenue may fluctuate significantly.

Mitigation: because the allocation is percentage-based, the burn automatically scales with revenue.

Insufficient economic impact

At current revenue levels, a 25% burn may not materially affect CELO supply dynamics.

Response: the purpose is to establish the mechanism before revenues potentially become much larger. Its impact automatically grows with network economics.

Governance flexibility

Permanent burns are irreversible.

Mitigation: only 25% is burned and governance can modify the percentage prospectively at any time.

Technical complexity

Automating the allocation may require smart-contract or operational changes.

Mitigation: separate the policy decision from final technical implementation and involve Celo Core Co., cLabs and governance contributors before execution.

14. Why Establish the Mechanism Now?

There is an advantage to establishing revenue allocation while protocol revenues are still relatively modest.

Governance can design, test and evaluate the model without making a large immediate financial commitment.

If Celo’s payment, stablecoin and application ecosystems continue expanding, sequencer revenue may become considerably more meaningful over time.

Creating the framework now means that value accrual automatically scales alongside future network growth rather than requiring governance to redesign tokenomics once revenues have become economically significant.

CGP-287 created the infrastructure necessary for protocol revenue to reach CELO governance.

This proposal seeks to complete the next step:

turning a portion of that recurring protocol revenue into permanent CELO value accrual.

15. Proposed Governance Decision

This temperature check asks the Celo community whether it supports the following principle:

Allocate 25% of net L2 sequencer revenue distributed under the CGP-287 framework to a permanent CELO burn, while allocating the remaining 75% to the Celo Community Fund, subject to an initial six-month review.

YES

Support establishing a 25% revenue-based permanent CELO burn and proceeding toward technical implementation.

NO

Do not establish the proposed revenue-based burn.

ABSTAIN

Participate in quorum without expressing support or opposition.

16. Requested Community Feedback

Before moving toward a formal governance vote, I would particularly appreciate community feedback on five questions:

  1. Is 25% an appropriate starting allocation?

  2. Should the percentage be fixed until governance changes it, or automatically reviewed at defined intervals?

  3. Should the mechanism eventually include revenue-backed staking alongside burning?

  4. What is the safest technical implementation for recurring burns?

  5. What additional metrics should be included in the six-month review?

The intention of this draft is not to claim that burning is the only possible use of Celo’s protocol revenue.

The intention is to establish a balanced framework in which Celo can simultaneously:

invest in growth, preserve governance flexibility and create measurable long-term value accrual for CELO.

I welcome criticism, alternative structures and technical feedback from the community.

The network earns. Governance allocates. A portion of that success should permanently accrue to CELO.

3 Likes
Celo Governance Call #96 | Sep 3rd, 2026
Celo Governance Call #96 | Sep 3rd, 2026
Celo Governance Call #96 | Sep 3rd, 2026
2

This is one of the most well-constructed governance proposals I’ve seen on this forum, and I’m strongly in favor of moving it forward to a formal vote.

The mechanism design is exactly right. By establishing the burn framework now at modest revenue levels, governance creates infrastructure that automatically scales alongside MiniPay adoption, card spending growth, and broader network expansion. The 25% allocation strikes a sensible balance — meaningful enough to create real supply compression over time, conservative enough to preserve 75% for ecosystem reinvestment.

The transparency framework proposed in Section 9 is particularly valuable. On-chain verifiable burn transactions with published reporting fields would give CELO investors the kind of direct accountability that has been missing. Every holder should be able to verify exactly how much the network earned and how much was permanently removed from supply.

To the author’s five questions — my answers would be: 25% is appropriate as a starting point, the percentage should remain fixed unless governance explicitly changes it, revenue-backed staking deserves separate consideration rather than being bundled here, and the six-month review metrics proposed are comprehensive.

The network earns. A portion of that success should permanently accrue to CELO. I support this proceeding to formal vote.

4 Likes
3

Hi, we agree with this proposal in general as it’s in-line with community discussions.

Please add to the upcoming Aug 20th, 2026 governance call agenda Celo Governance Call #96 | Aug 20th, 2026 .

In answer to your open questions:

  1. Is 25% an appropriate starting allocation? Yes 25% is a great starting point to burn the “Net Distributed to the Community Fund”, as per ongoing cello chain revenue transactions. The community can vote to increase or decrease this in the future.

  2. Should the percentage be fixed until governance changes it, or automatically reviewed at defined intervals? We suggest it is automatically reviewed at 6-month intervals, and it remains at the most recent % (as ex. 25% in this case) until a new vote changes the %. If this can’t be automatically reviewed, then fixed until governance vote changes it.

  3. Should the mechanism eventually include revenue-backed staking alongside burning? We suggest this is a separate topic, not to be included in the proposal to burn %.

  4. What is the safest technical implementation for recurring burns? Please confirm this with Celo Core Co. and the Governance Working Group individuals (@0xj4an-work @Wade @0xGoldo @KateNora) since it seems the Bi-Weekly L2 Sequencer Revenue Distribution is a manual posting by @KishanP: kindly advise if the net distributed to the community fund is currently automated. And if you’d be willing to manually generate the burn transactions on a bi-weekly basis.

  5. What additional metrics should be included in the six-month review? For now, manual vs. automatic burn processing.

1 Like
4

There are more holders who do not vote. It seems like a good idea to burn 25%, distribute 25% as staking incentives, and operate only the remainder as a development fund. The reason is that the development fund is already included in the regular circulating supply. If the price is maximized, that circulating supply alone might be sufficient. Why are you unwilling to make any sacrifices?

5

Thanks for the thoughtful suggestion. I’m definitely not unwilling to make sacrifices — the 25/75 split was intentionally chosen as a conservative starting point, mainly to establish a clear revenue-based burn mechanism without changing too many parts of Celo’s tokenomics at once.

That said, I think your 25% burn / 25% staking incentives / 50% Community Fund structure is genuinely interesting. In particular, I like the idea that staking rewards could eventually be backed by actual protocol revenue rather than simply token emissions.

My initial thought was to keep revenue-backed staking as a separate discussion so that this proposal remains focused and easier to evaluate. But if there is broader community support for incorporating staking into the revenue allocation framework, I’m absolutely open to exploring it.

I’d be interested to hear what others think as well: 25/75 versus 25/25/50 could be an important design choice for this proposal.

6

hi @Westermali , kindly confirm you’ll be advancing your burn proposal on the weekly governance call?

1 Like
7

Hi @ttghi ,

Unfortunately I’m not available to present the draft during the governance calls due to my work schedule. Is there someone who wants to be a Co-Author and present on my behalf? Perhaps @Ginsburg ?

Thank you in advance guys!

8

ENA is currently discussing a buyback of up to 95% of its recent profits. I am not asking for that extent, but I hope the Celo team will implement this soon, even if on a small scale.

9

I fully agree. Ethena has been pushing token buybacks and burns quite aggressively, and ENA price has risen by more than 90% over the past month as a result. If the team is willing to act, it can absolutely improve tokenomics and help support the token’s price.

Unfortunately, Celo team seems to have a much more passive attitude: just keep growing network usage and hope that someday the market will recognize it and the token price will eventually follow

1 Like
10

I can do it if no one else is able. I would definitely want to chat with you before the call though to make sure I present it properly. Maybe we can link up via email or Whatsapp. Let me know :ok_hand:

1 Like
11

Thanks again for presenting the proposal, @Ginsburg Josh! I’ve just listened to the call recording, and there doesn’t appear to be any significant opposition to the proposal from the Community Governance Guild.

Kate Gielty from the Community Governance Guild/Celo Core offered to help with a potential script that would automatically burn the designated portion of the net sequencer revenue after it has been transferred to the Community Fund.

Once the technical implementation has been worked out, I’ll update the draft into its final version and submit it as an on-chain proposal. I’ll also include concrete figures to clearly show how much CELO would currently be burned under the proposal.

I believe the final version should explicitly address the following points:

1. Which transaction constitutes the official burn?

This should be executed through a canonical burn address or an existing contract-based mechanism.

2. Who operates the script?

Possible options include Celo Core Co., the Community Fund multisig signers, governance tooling, or—eventually—fully permissionless automation.

3. When does the script run?

Preferably immediately after each bi-weekly distribution.

4. What happens if the script fails?

The 25% should not simply remain in the Community Fund without this being addressed. There should be a retry mechanism or a manual fallback procedure.

5. Which amount is used as the basis for the calculation?

This must be defined very clearly as 25% of “Net Distributed to the Community Fund”, not 25% of gross revenue.

6. Transparency

Each bi-weekly report could include a breakdown such as:

Net distributed: 723,708 CELO

25% burned: 180,927 CELO

75% retained: 542,781 CELO

Burn transaction: 0x...

I would definitely include all of these points in the final version of the proposal.

2 Likes
12

Hi, when can we vote on this final proposal?

1 Like
13

Following the governance call, I contacted the Governance Guild because Katie Gielty, who is part of both the Guild and Celo Core, offered to help with the technical side of the proposal.

We have since created a Telegram group with Katie, and I am currently awaiting her response. Below are the questions I sent her.

Once I receive her answers, I can finalize the proposal on the forum. After the required one-week review period, we can submit it for an on-chain vote.

  • What would be the safest trigger for the burn script — the receipt of each bi-weekly net sequencer revenue transfer?
  • What is the canonical mechanism/address for permanently burning CELO?
  • Who would ideally run and sign the burn transaction?
  • Could the burn percentage be configurable through governance, so it starts at 25% but can later be changed through a vote?
  • Can we explicitly define the calculation as 25% of the “Net Distributed to the Community Fund” after operating costs and Superchain revenue share?
  • How should failures or retries be handled if an automated burn does not execute correctly?
  • Could the burn amount and transaction hash be included in the existing bi-weekly revenue reports?
  • Would this require a new smart contract/audit, or could it be implemented using existing tooling and an off-chain script?
  • Is there existing CGP-287 distribution tooling or code that could be extended for this?
  • Finally, what technical/onchain actions would need to be included when we formalize the governance proposal?
1 Like
14

FINAL] Revenue-Based CELO Burn — Allocate 25% of Net L2 Sequencer Revenue to Permanent Burn

Following community feedback, Governance Call #96, and subsequent technical review with Katy Gielty, I am posting the FINAL version of the proposal below.

This version supersedes the original DRAFT at the top of this thread.

The core proposal remains unchanged:

25% of future Net L2 Sequencer Revenue will be permanently burned, while the remaining 75% will continue to the Celo Community Fund.

The temperature check and subsequent technical discussions have now clarified how this can be implemented using Celo’s existing infrastructure.

Key changes since the temperature check

  • The existing 2-of-5 Operations Safe will execute the burn and Community Fund allocation within the same Safe batch.
  • The burn will use the CELO token contract’s existing burn() function.
  • No new smart contract, signer set, or audit is required.
  • The burn will be calculated on Net Sequencer Revenue after L1 operating costs and the OP Superchain revenue share.
  • Burn amounts, transaction hashes, and the cumulative burned amount will be included in the bi-weekly reporting.
  • Any future change to the 25% allocation requires a new governance vote.
  • Revenue-backed staking remains outside the scope of this proposal and can be considered separately.

Thanks to everyone who contributed feedback during the temperature check and Governance Call, and special thanks to Katy for helping clarify the technical implementation.

Proposal Key Aspects

  • Status: FINAL
  • Title: Revenue-Based CELO Burn — Allocate 25% of Net L2 Sequencer Revenue to Permanent Burn
  • Type: Network Decision / Tokenomics
  • Funding Request: N/A
  • Burn Rate: 25% of Net L2 Sequencer Revenue
  • Community Fund Allocation: 75%
  • Initial Review: After 6 months
  • Start: First full bi-weekly sequencer revenue distribution following governance approval and operational implementation

1. Summary

This proposal asks Celo Governance to allocate 25% of future Net L2 Sequencer Revenue to a permanent CELO burn, while directing the remaining 75% to the Celo Community Fund.

The objective is to establish a simple and transparent relationship between:

Celo network usage → protocol revenue → permanent CELO value accrual

The proposal does not affect:

  • the existing Community Fund balance;
  • previously approved funding commitments;
  • existing Community Fund allowances;
  • or the Governance Reserve.

It applies only to new Net L2 Sequencer Revenue generated going forward.

Following the temperature check, community discussion, Governance Call #96, and subsequent technical review, the proposed implementation can use Celo’s:

  • existing revenue-distribution infrastructure;
  • existing Operations Safe;
  • and existing CELO burn() function.

No new smart contract, signer set, or audit is required.

2. Background

Following Celo’s transition to an Ethereum L2, the network generates sequencer revenue from transaction activity.

Under the existing CGP-287 revenue framework:

  • CELO-denominated fees contribute directly to protocol revenue;
  • stablecoin-denominated fees are converted into CELO;
  • L1 operating costs are deducted;
  • the OP Superchain revenue share is deducted;
  • and the remaining amount becomes Net Sequencer Revenue.

This has established a recurring protocol-revenue stream under the control of Celo Governance.

The current process already creates an important relationship between Celo network activity and CELO, particularly because non-CELO fee revenue is converted into CELO before distribution.

This proposal adds an additional value-accrual mechanism:

25% of Net Sequencer Revenue will be permanently burned.

The remaining 75% will continue to support the Celo Community Fund.

3. Proposed Allocation

For every bi-weekly revenue distribution:

Net Sequencer Revenue = Gross Sequencer Revenue − L1 Operating Costs − OP Superchain Revenue Share

Net Sequencer Revenue will then be allocated as follows:

25% → Permanent CELO Burn

75% → Celo Community Fund

The burn therefore occurs only after all operating costs and Superchain obligations have been satisfied.

This proposal does not modify the calculation of Gross Sequencer Revenue or any existing cost obligations.

4. Why 25%?

The proposed 25% allocation is intended to create meaningful CELO value accrual while preserving the majority of protocol revenue for ecosystem development.

Allocation Purpose
25% Permanent CELO burn
75% Community Fund / ecosystem reinvestment

A higher percentage would reduce the amount of protocol revenue available for ecosystem development.

A lower percentage would create a weaker relationship between protocol profitability and permanent CELO supply reduction.

Starting at 25% therefore provides a balanced starting point.

The mechanism is also automatically proportional to network performance:

  • if Celo generates less revenue, fewer CELO are burned;
  • if Celo generates more revenue, more CELO are burned.

There is no fixed treasury expense.

5. Technical Implementation

Following technical review after Governance Call #96, the proposed implementation is intentionally simple.

The existing revenue-distribution process remains unchanged until Net Sequencer Revenue has been calculated.

The existing 2-of-5 Celo Operations Safe:

0x7A1E98FC9a008107DbD1f430a05Ace8cf6f3FE19

already executes the recurring revenue distribution.

For every distribution period, the Safe batch will include two actions.

Action 1 — Burn 25%

Call burn() on the CELO token contract:

0x471EcE3750Da237f93B8E339c536989b8978a438

for an amount equal to:

25% × Net Sequencer Revenue

The CELO token’s existing burn functionality permanently removes these CELO from circulation.

Action 2 — Transfer 75%

Transfer the remaining:

75% × Net Sequencer Revenue

to the Celo Community Fund.

Both actions will be included within the same Safe batch.

This means the distribution is atomic:

Either the burn and Community Fund transfer both execute successfully, or neither executes.

This prevents a situation where the Community Fund allocation is executed while the corresponding burn is not.

6. Burn Mechanism

The burn will use the existing burn() functionality of the CELO token contract.

Burned CELO are sent to the burn/dead address:

0x000000000000000000000000000000000000dEaD

The cumulative amount of CELO burned can be independently verified through:

getBurnedAmount()

on the CELO token contract.

This creates a publicly verifiable onchain record of the cumulative CELO supply permanently removed through the mechanism.

7. Precision and Calculation

The 25% allocation should be calculated using CELO’s native 18-decimal token precision rather than rounding the calculation to whole CELO.

The implementation should ensure that the amount burned never exceeds the governance-approved 25% allocation.

Any remainder resulting from the smallest representable token unit should remain with the Community Fund allocation.

8. Existing Operations Safe

The mechanism will continue to use the existing 2-of-5 Operations Safe:

0x7A1E98FC9a008107DbD1f430a05Ace8cf6f3FE19

The same existing signers responsible for the current bi-weekly sequencer-revenue distribution will therefore also execute the burn.

This means the proposal requires:

  • no new signers;
  • no new private keys;
  • no new multisig;
  • and no new trust assumptions.

9. No New Smart Contract or Audit Required

The proposed implementation does not require:

  • a new smart contract;
  • a new multisig;
  • additional signers;
  • new private keys;
  • modification of the sequencer fee vault;
  • a new CELO token contract;
  • or a new smart-contract audit.

The mechanism uses:

  • the existing CGP-287 revenue-distribution process;
  • the existing Operations Safe;
  • the existing CELO token contract;
  • and the existing burn() functionality.

The recurring tooling that already calculates Net Sequencer Revenue and prepares the Safe distribution batch only needs to add the burn action to the existing process.

10. Failure Handling

There is no separate autonomous burn process that can independently fail after revenue has already been distributed.

The burn and Community Fund transfer will be executed within the same Safe batch.

If the Safe batch reverts:

  • no CELO is burned;
  • no CELO is transferred to the Community Fund;
  • and the signers can correct and resubmit the batch.

If a bi-weekly distribution is skipped operationally, the missed amount can be included in the following distribution period.

The corresponding burn amount should then also be included in that next batch.

11. Example Using Recent Sequencer Revenue

For the September 1–15, 2026 reporting period:

Net Sequencer Revenue

673,236 CELO

Under this proposal:

25% Permanent Burn

168,309 CELO

75% Community Fund

504,927 CELO

Therefore:

168,309 CELO burned

504,927 CELO allocated to the Community Fund

=

673,236 CELO Net Sequencer Revenue

This demonstrates that the proposal does not eliminate ecosystem funding.

The majority of Net Sequencer Revenue continues to accrue to the Community Fund.

12. Reporting and Transparency

The existing bi-weekly sequencer-revenue report should be expanded to include the burn mechanism.

Each report should disclose at minimum:

Metric Amount
Gross Sequencer Revenue X CELO
L1 / Operating Costs −X CELO
OP Superchain Revenue Share −X CELO
Net Sequencer Revenue X CELO
Burned — 25% X CELO
Community Fund — 75% X CELO
Burn transaction 0x...
Community Fund transaction 0x...
Cumulative CELO burned X CELO

The cumulative burned amount can be independently verified through getBurnedAmount() on the CELO token contract.

This allows the community to verify:

how much the network earned

↓

how much was burned

↓

how much remained available to governance

13. Governance Control

The initial burn percentage will be:

25%

This percentage remains in effect unless Celo Governance explicitly approves a different percentage through a future governance vote.

The Operations Safe signers or operational contributors cannot independently modify the burn percentage.

For example, changing:

25% → 20%

or

25% → 50%

would first require a new governance decision.

The distribution tooling would then be updated to reflect the newly approved percentage.

14. Six-Month Review

The mechanism should be formally reviewed approximately six months after implementation.

The review is intended to evaluate the mechanism using real data.

It does not automatically terminate, pause, or modify the 25% burn.

Unless governance approves a change, the 25% burn remains active.

The review should consider:

Protocol Economics

  • Gross Sequencer Revenue
  • Net Sequencer Revenue
  • stablecoin-denominated fee revenue
  • CELO acquired through stablecoin conversion
  • operating costs
  • OP Superchain revenue share

Token Economics

  • total CELO burned
  • Community Fund revenue
  • Community Fund expenditures
  • CELO supply dynamics

Network Activity

  • transaction activity
  • stablecoin activity
  • active users and addresses
  • payment activity
  • FX activity where measurable

Operational Performance

  • reliability of the Safe-batch process
  • failed or delayed distributions
  • reporting quality
  • whether additional automation would provide meaningful benefits

Following the review, governance may choose to:

  • maintain the 25% rate;
  • increase the burn percentage;
  • decrease the burn percentage;
  • pause the mechanism;
  • or consider additional revenue-allocation mechanisms.

Any change requires a new governance decision.

15. Revenue-Backed Staking

During the temperature-check discussion, community members also raised the possibility of directing a portion of protocol revenue toward CELO staking incentives.

This proposal intentionally does not include revenue-backed staking.

Revenue-backed staking introduces separate questions around:

  • eligibility;
  • distribution mechanics;
  • lock periods;
  • reward allocation;
  • smart-contract implementation;
  • and potential governance effects.

Revenue-backed staking may be worth considering through a separate governance proposal.

Keeping it outside this proposal allows governance to evaluate the burn mechanism independently and keeps the initial implementation simple.

16. What This Proposal Does Not Do

For clarity, this proposal:

  • does not burn 25% of the existing Community Fund;
  • does not burn 25% of CELO’s circulating supply;
  • does not affect existing Community Fund balances;
  • does not affect previously approved funding commitments;
  • does not affect existing Community Fund allowances;
  • does not modify the Governance Reserve;
  • does not increase transaction fees;
  • does not change the OP Superchain revenue share;
  • does not modify the calculation of Net Sequencer Revenue;
  • does not introduce a new smart contract;
  • does not introduce a new signer set;
  • does not automatically expire after six months;
  • does not guarantee or target any particular CELO market price.

The mechanism applies only to:

future Net L2 Sequencer Revenue.

17. Expected Benefits

Revenue-Based Supply Reduction

CELO is burned only when Celo generates actual protocol revenue.

Stronger Alignment Between Usage and CELO

Increasing network economic activity results in increasing protocol revenue and therefore a larger permanent burn.

Preservation of Ecosystem Funding

75% of Net Sequencer Revenue continues to accrue to the Community Fund.

Simplicity

The mechanism uses infrastructure that already exists.

Transparency

Every burn can be independently verified onchain.

Governance Control

Celo Governance retains full authority over the burn percentage.

18. Risks and Trade-Offs

Opportunity Cost

Burned CELO can no longer be used to fund ecosystem initiatives.

Mitigation: 75% of Net Sequencer Revenue remains available to the Community Fund.

Irreversibility

A completed burn cannot be reversed.

Mitigation: the initial allocation is limited to 25%, while future revenue allocation can be changed prospectively through governance.

Revenue Volatility

Sequencer revenue may fluctuate significantly over time.

Mitigation: the burn is percentage-based and therefore automatically scales with actual revenue.

Operational Execution

The recurring distribution remains dependent on the existing Safe-signing process.

Mitigation: the proposal introduces no new signer infrastructure, while the burn and Community Fund allocation execute atomically within the same process.

19. Start Date

If approved, the mechanism should begin with:

the first full bi-weekly sequencer revenue distribution following governance approval and operational implementation.

This avoids partially applying the policy to a revenue-reporting period that is already in progress.

The first report after activation should clearly identify the mechanism as active and include the corresponding burn transaction.

20. Governance Decision

Celo Governance is asked to approve the following policy:

Allocate 25% of future Net L2 Sequencer Revenue to a permanent CELO burn and allocate the remaining 75% to the Celo Community Fund.

The burn will be executed through the existing Operations Safe using the CELO token’s existing burn() function as part of the same bi-weekly Safe distribution batch.

The 25% allocation remains in effect unless changed through a future Celo Governance vote.

YES

Approve the 25% revenue-based CELO burn mechanism.

NO

Do not implement the proposed burn mechanism.

ABSTAIN

Participate without expressing support or opposition.

21. Closing

CGP-287 established a recurring stream of protocol revenue controlled by the Celo community.

This proposal does not replace that framework.

It adds a simple allocation policy on top of it:

Celo generates protocol revenue

↓

L1 operating costs and Superchain obligations are paid

↓

Net Sequencer Revenue is calculated

↓

25% is permanently burned

75% continues funding the Celo ecosystem

The mechanism is:

  • proportional to network performance;
  • transparent;
  • technically simple;
  • governance-controlled;
  • and does not require new smart-contract infrastructure.

The network earns. Governance allocates. A portion of that success is permanently reflected in CELO supply.

4 Likes
Celo Governance Call #97 | Oct 15th, 2026
Celo Governance Call #97 | Oct 15th, 2026
15

thank you very much @westermali for putting this together. We would support this and ask it be moved to vote asap.

(thank you @ginsburg and Kate as well.)

4 Likes
16

@Westermali what are next steps to get this approved? Conscious the next weekly governance call is coming up as well Celo Governance Call #97 | Oct 8th, 2026

3 Likes
17

Hi @Westermali,

@ttghi presented the proposal today at Governance call #97, thank you @ttghi!

We are following up to help with an outline of the next steps:

Next steps for this proposal is to submit a PR to the Github Repo

Use Format:

After PR approved and merged, proposal can be submitted on chain.

You need 10K Celo to be able to submit it on chain.

Guide on Governance Proposal
https://forum.celo.org/t/current-celo-governance-overview-procedures

If you do not have the 10K needed or need assistance, please reach out

3 Likes
18

Hi all!

Hi everyone, I’ve submitted the proposal as Draft PR #848 in the Celo governance repository:

Could you please review it and help confirm:

  • The provisional CGP number, 257.
  • Whether the empty transaction list ([]) is appropriate for this policy vote.
  • The implementation through the existing Operations Safe and the first eligible revenue period.

Please let me know if any changes are needed before I mark the PR as ready for review. Thanks again for your guidance and support!