Season 2 Tokenomics Call Recap – Focused Recap & Next Steps (Jan 8, 2026)
Thank you to everyone who joined the Season 2 tokenomics call on Thursday, January 8th, and for sharing your collective feedback above. The Celo community has shown up strongly for this, making time to share what fuels their work, their perspectives on the current economic structure, and ideas for the future of CELO. Discussed topics have focused on a core question facing Celo in 2026: how can CELO’s economic design better reflect and reinforce the real momentum and adoption being created on the network? The resulting takeaways have surfaced several concrete tokenomics levers and design directions, alongside open questions that the initiative will further explore.
Framing the Problem
The tokenomics call began by discussing the disconnect between network adoption and token performance. Last year, Celo reached new all-time highs in usage with 840K+ daily active users (showing up consistently as the #1 L2 by DAUs), $4.4B monthly stablecoin transaction volume (also becoming the #1 chain for Weekly Active Users of USDT with over 3.3M+), and onboarding 5.2M new users to the network in 2025 alone. Despite this, CELO’s price remains near historic lows.
Celo will continue to strengthen its position as a leading network for stablecoin payments (~77% of network activity), building on last year’s ecosystem progress, notably including MiniPay’s milestone 11M+ wallets activated and 300M+ lifetime stablecoin transactions. With the recent advancements in agentic payments and commerce, significant real-time merchant integrations (building on MiniPay’s expansion last year to PIX, Mercado Pago, and Nigeria Bank checkout) and forthcoming expansion of supported payment processors, the discrepancy between CELO price and network traction is urgent. Participants broadly agreed that ensuring usage aligns with CELO economics is central to Celo’s long-term sustainability.
The discussion emphasized the need for holistic evaluation of value accrual, demand drivers, and incentive alignment across users, builders, liquidity providers, and token holders.
Key Tokenomics Directions Discussed
- Value Accrual to CELO Holders
A key takeaway was the need to more clearly articulate and strengthen the value proposition for holding CELO.
- Low inflation has supported long-term supply discipline, but also led to relatively low staking yields.
- Increased network activity currently does not translate clearly into holder upside.
Proposals discussed included:
- Introducing additional revenue streams that flow into CELO-aligned reserves, such as staking assets in the native bridge
- Exploring buyback, burn, or hybrid mechanisms tied to chain revenue and/or price, potentially in a dynamic rather than fixed form.
- Using such mechanisms to support higher or more competitive staking yields without relying on inflation.
- Programmatic Mechanisms Tied to Chain Activity
Several participants emphasized that future tokenomics should be mechanically linked to usage, rather than discretionary or manually administered. Some examples discussed include:
- Funding public goods, builders, or stakers through formulas tied directly to transaction volume or protocol revenue.
- Designing systems that scale automatically with adoption, reducing governance overhead and predictability risk.
- Liquidity and Capital Formation
Liquidity was identified as a constraint in scaling both DeFi and real-world asset use cases. Solutions raised here included:
- Token models that reward liquidity providers with direct or indirect exposure to network fees.
- Designing mechanisms that allow CELO holders to gain diversified exposure to successful ecosystem projects, effectively functioning as an index or basket of onchain activity.
- Demand Generation Through Network Usage
Additionally, participants emphasized that demand for CELO must ultimately be driven by token usage. The discussion highlighted:
- The importance of increasing transaction volume and composability across tokens, apps, and RWAs.
- The potential role of internal primitives or flagship use cases that generate consistent, non-speculative demand.
Proposed Next Steps
To kickstart the broader tokenomics overhaul, the first step proposed is to implement a profit-linked, programmatic CELO buyback-and-burn policy that more directly aligns CELO with network activity. Under this approach, protocol earnings would be allocated to CELO repurchases after first covering essential onchain and operating costs (including data availability, Optimism revenue share, critical infrastructure, devops, engineering and security costs).
The framework sets a long-term minimum goal of allocating a minimum of 50% profit to buybacks, with the allocation able to flex over time based on valuation: when CELO is trading low relative to protocol earnings (e.g., the market is assigning a lower-than-benchmark price for a given level of profit), a higher share of profit would be directed toward buybacks; when CELO is trading in line with or above comparable benchmarks, more profit could be routed toward ecosystem growth. Celo is uniquely positioned to be able to execute on such a mechanism because roughly 50% of sequencer fees are paid in stablecoins using Celo’s fee abstraction mechanism.
To ensure these buybacks translate into durable value accrual**, a majority of repurchased CELO would be permanently burned (e.g., 50–100% burned, with a strong default toward the upper end), while any remaining portion could be directed into a time-locked growth vault for structured, transparent ecosystem incentives** rather than immediately returning to circulation. The intent is that, in steady-state conditions, fee burns plus buyback burns substantially offset growth emissions, keeping net issuance near neutral (or deflationary) while still creating a clear and sustainable budget to drive usage and revenue.
Recent network revenue performance helps illustrate the growth trajectory powering this profit-based buyback-and-burn policy. Monthly network revenue increased 10x from January 2024 to November 2025 (Source: Token Terminal), establishing a foundation for meaningful buybacks today while signaling the potential for exponentially greater impact as network activity scales.
Increasing protocol revenue also remains a key priority. Teams are actively testing models to unlock this growth. A strong option to accelerate this could include the introduction of a tiered fee system that maintains ultralow gas fees for use cases such as stablecoin microtransfers and increases the cost for high-value transactions. This model maintains accessibility for real-world applications while unlocking stronger network benefits from large transactions, with incremental revenue flowing into the same profit-based buyback-and-burn flywheel described above, in line with the existing mechanisms leveraged by payments L1s and L2s.
With the momentum in AI, Celo is also especially well-positioned for agentic payments and commerce, a key potential driver of activity growth. Our mobile-first payments infrastructure, global on-/off-ramp support, and portfolio of 25+ stablecoins across 15 currencies can power diverse AI-enabled financial transactions. With this foundation in place, x402’s integration in bringing agentic payments to Celo could significantly bolster revenue via increased activity.
To further support network activity growth and drive onchain revenue, we propose piloting rewards mechanisms, including ProsperOn and an expanded Proof-of-Ship season.
- ProsperOn includes converting gas fees into non-transferable usage credits, backing those credits with yield from stablecoin reserves, and allowing yield to be directed toward users, builders, or public goods without creating sell pressure.
- With 576 total projects and 29% retention across two or more seasons, Proof of Ship was a valuable builder engagement tool in 2025. Taking learnings from previous seasons and expanding to focus on projects that drive everyday usage can optimize the program for onchain profit.
Community members are encouraged to respond in this thread with feedback, including alternative mechanisms that directly address value accrual, demand generation, and long-term sustainability for CELO. This will be incorporated into a future Celo Governance Proposal, posted on the forum, presented on a governance call, and submitted for an onchain vote.
In the meantime, we invite the community to continue discussions regarding buyback-and-burn mechanisms, tiered fee systems, onchain revenue growth activities, and additional efforts to further drive CELO economic growth. This marks the next evolutionary phase of CELO tokenomics, turning our community’s collective ideas into concrete, high-impact designs.