On-Chain Offsets

Hi all,

Spirals Protocol, Mercy Corps Ventures, and the Climate Collective would like to jointly raise a proposal to update Celo’s carbon-offsetting mechanism to include on-chain carbon offsets, further mitigating the environmental impact of the Celo Platform. Our rationale for this change is that tokenized carbon offsets will allow for increased transparency, accountability, and liquidity as the market matures. Bringing Celo’s commitment on-chain offers several key improvements for:

  1. the general public to verify the network’s carbon neutrality
  2. the community members to help govern which assets are used
  3. emerging climate projects to anticipate consistent demand

We believe that an end-to-end digital carbon market will be superior to today’s analog version. While probably not perfect in its first iteration, we think of this proposal as an important step towards increasing quality and confidence in blockchain enabled decarbonization.

Specifically we propose the following first steps as we initiate this transition:

  • Reduce from 100% to initially 80% (first phase) and eventually 50% or less (second phase) of the epoch rewards from the on-chain Carbon Offsetting Fund to go towards Wren as quality of on-chain assets increase.
    • As it stands currently, 65.7 tCO2 eq/month are offset off-chain via Wren; this accounts for 9.5x of the Celo platform’s monthly average emissions from transactions at the protocol layer (estimated that ~6.88 tonnes are emitted by the validator network each month), making the Celo platform carbon-negative.
    • Even at 80%, Wren will still offset more than the full amount of estimated carbon emissions of the Celo blockchain.
    • This new proposal will account for initially 52.6 tCO2 eq/month, eventually 32.9 tCO2 eq/month
  • Direct the other 20% - eventually 50% or more as high quality credits become available - of epoch rewards from the on-chain Carbon Offsetting Fund towards retiring high quality TCO2 tokens (representing Verra carbon projects) each month—performed by the “Celo Carbon Neutrality Multisig” (CCNM) with representatives from the Spirals Protocol, the Climate Collective, Mercy Corps Ventures, and the Celo Foundation.

The inaugural Celo Governance Proposal enabled “epoch rewards and carbon offsetting,” allocating 0.1% of block rewards to the on-chain Carbon Offsetting Fund. Though most Proof-of-Stake (PoS) chains have or aim to become carbon neutral, the Celo Platform has been carbon negative from inception and this commitment to the environment has set the Platform apart in the regenerative finance (ReFi) space.

CGP#1 was executed on April 27, 2020, at which time no on-chain offsets existed. Celo then partnered with Project Wren (cf. their current dashboard), which was implemented on a protocol level by redirecting block rewards to a wallet administered by Wren, which periodically purchases carbon offsets for tech-enabled rainforest protection in the Peruvian Amazon and community tree planting in Kenya, Uganda, and Tanzania.

To date, 3,844.8 tons of CO2 have been automatically offset by Project Wren on behalf of the Celo Platform, which greatly exceeds the estimated 247.7 tonnes of CO2 emitted by the network by a factor of 15.5x. The Celo ecosystem has also grown to include a thriving group of ReFi projects, such as Flowcarbon, Thallo, and Senken, preparing to launch on-chain offsetting on Celo, while Toucan Protocol and CarbonPath have recently deployed this functionality.

As quality has become a major issue for the VCM, and dMRV and digitally native assets have been identified as a potential antidote to the concerns around quality and integrity of the market, the Climate Collective has partnered with Rocky Mountain Institute to get more clarity around how to assess quality and what Web3 tooling that can aid in the assessment of quality. A dedicated framework for this is forthcoming and will be of much use to this new phase of Celo’s climate commitment.


On-chain offsets

As a natural next step for the Celo community to continue to demonstrate carbon-neutral leadership and bring our commitment on-chain, we propose reallocating 20% of the Carbon Offsetting Fund, sourced from CELO block rewards, to on-chain offsets offered by the Toucan Protocol through its TCO2 tokens. We aim to prove out a system for utilizing on-chain offsets, and establish initial guidelines for future governance proposals to include new assets and adjust percentage allocations.

Funds will be administered by a “Celo Carbon Neutrality Multisig” (CCNM) including representatives from the Spirals Protocol, the Climate Collective, Mercy Corps Ventures, and the Celo Foundation. CCNM’s mandate is to use CELO allocated to the CCNM to purchase and retire high-quality tokenized carbon offsets on-chain, and continue credibly offsetting the emissions generated by the Celo Platform.

Based on current epoch rewards, the Celo Carbon Offset wallet receives roughly 68 CELO per day. We propose that the 80% of this is allocated to Wren offsets and the other 20% is allocated towards buying and retiring high quality [defined in “Quality” section below] TCO2 tokens.

CGP#1 was executed on April 27, 2020, shortly after mainnet launch, at which time the validator network was rapidly expanding. Consequently, initial estimates for the protocol’s carbon footprint were very conservative, accounting for the energy usage of 200 carbon-intensive validators. This proposal uses an updated methodology from cLabs informed by data from Google Cloud, extrapolated to the number of elected validators. Note that the calculations also include testnets (Alfajores and Baklava), which are not considered in most blockchain accounting frameworks.

cLabs’ most recent calculation, included below, found that a highly conservative annual carbon footprint for all Celo validators is approximately 82.57 tonnes of CO2. This assumes validators are not using any carbon neutral platforms to run their validators (e.g. Google Cloud). cLabs, with the support of the Celo community and institutional partners, strives to increase accuracy over time and consider all scopes of emissions.

Google’s Report Value
2022 Total Emission (TCO2) 2.3
2022 Dec Total Emission (TCO2)
2022 Dec Mainnet emission (4 Validator)
2022 Dec Baklava emission (1 Validator)
Applying the % on the 2022 emission to get per validator annual emission Value
1 Mainnet Validator (TCO2) 0.4504608295
1 Baklava Validator (TCO2) 0.498156682
Applying the per validator emission metric to all validators Value
# of Validators in Mainnet 128
# of Validators in Alfajores 10
# of Validators in Baklava 40
Total Validator Emission in Mainnet 57.65898618
Total Validator Emission in Alfajores 4.98156682
Total Validator Emission in Baklava 19.92626728
Total Validator Emissions 82.56682028

Celo currently offsets 65.7 tons of CO2 monthly via Wren, or approximately 10x more than the estimated 6.88 tons of CO2 emissions Celo platform’s monthly average emissions. Moving forward, if this proposal is passed the Celo protocol would offset ~53 tons of CO2 each month with Wren. Given that the current amount of offsets facilitated by Wren are much greater than Celo validators’ carbon footprint, reducing to 80% will still ensure that the validators’ carbon footprint is offset. Additionally, Celo has offset 3,844.8 tons of CO2 thus far, and as a result, has offset its carbon footprint for subsequent years.

Based on the price history of individual on-chain nature-based carbon offsets, such as Toucan’s TCO2’s listed on Senken, we estimate a price per tonne of TCO2 would be between $2.60 and $3.50. At current CELO prices, this would mean TCO2s would be used to offset approximately 121 tons of CO2 every month. The analysis can be seen below for anticipated offsets each month for 2023.

A number of higher priced higher quality credits between $10-$30 per tonne are also making their way to markets in the coming months, which we intend to incorporate into offsetting and consistently strive for higher quality. One of the benefits of this iterative approach with a CCNM advising on purchase strategy is the opportunity to mix in higher quality credits in the mix going forward. A lot of [experts are advocating for a blended portfolio and Web3 functionalities allow us to do this in a much easier way.

End of Month Celo tCO2 Emissions Wallet Amount Wren tCO2 Toucan tCO2 Total tCO2 Retired
May 6.88056835667 2108 52.56 70.27 122.83
June 6.88056835667 2040 52.56 68.00 120.56
July 6.88056835667 2108 52.56 70.27 122.83
August 6.88056835667 2040 52.56 68.00 120.56
September 6.88056835667 2108 52.56 70.27 122.83
October 6.88056835667 2040 52.56 68.00 120.56
November 6.88056835667 2108 52.56 70.27 122.83
December 6.88056835667 2040 52.56 68.00 120.56
Annual tCO2 emissions for all Celo validators 82.56682028
Amount of CELO epoch rewards per day for offset 68
Current Wren tCO2 per month 65.7
Wren % 80%
TCO2 % 20%
CELO Price Assumption $0.50
Toucan tCO2 price $3.00
Wren price per tCO2 $15.00

Note these projections vary with the price of Celo—CCNM will make best efforts to utilize the monthly 2,108 CELO budget for the highest quality of offsets that will exceed the 6.88 tCO2e emitted by the protocol.

In terms of the mechanics of CCNM, tokenized carbon offsets will be purchased using CELO deposited to CCNM by Celo epoch rewards. Specifically, CCNM members would swap CELO to NCT using Uniswap or Ubeswap, at competitive prices and minimal slippage. Using Toucan’s “Selective Redemption” feature, the fungible token would then be “unbundled” on the Toucan platform into a specific high-quality “TCO2” carbon offset, then retired to claim the carbon credit.

This ‘unbundling’ on the Toucan platform is the primary reason that the process requires manual steps from a multisig, rather than an automated purchase on Uniswap or Ubeswap. Note that in the future for carbon offsets that are already non-fungible, we could directly purchase from a marketplace on Celo, such as Senken, and retire the credit.

The CCNM multisig will be linked to a dashboard prepared by cLabs. This dashboard will show the ongoing carbon footprint of the Celo protocol updated per block and the amount that has been offset. Additionally, the CCNM multisig members will be responsible for reporting to the community on the specific offsets projects (real world sites) are associated with the carbon tokens retired.

Risk Management

Toucan’s TCO2 will require purchasing on Uniswap or Ubeswap. In the case of any security issues or vulnerabilities to the decentralized exchanges on Celo, the CCNM will instead utilize 100% of the Carbon Offset Fund towards purchasing offsets via Wren.


The definition of “Quality” and the integrity of the wider carbon markets has been the topic of much debate recently. While previous iterations of this market didn’t allow for dynamic data and more precise quantification and verification of climate impact, digital transformation is opening up new opportunities. ‘Quality’ is made up of a number of different metrics, and are somewhat subjective, depending on the desired climate impact (permanence versus co-benefits, additionality versus biodiversity restoration, to mention a few trade offs. As a result, the Climate Collective and its network of experts, including the Rocky Mountain Institute, are building a quality assessment framework to make quality assessment easier for a buyer of carbon credits. RMI is a highly respected institution in the carbon markets and broader sustainability sector, with a nuanced understanding of a variety of methodologies, registries, and credit types.

The key feature of this guide is that it will enable the comparison of carbon credits from numerous standards, including credits sourced from “Big 4” registries, regional jurisdictional registries, and web3-native “self-certified” credits. This is particularly important to compare the quality of disparate carbon assets “apples to apples”— though several registries are increasingly supportive of tokenization and more projects use digital MRV tools to self-certify their credits, there is currently no framework with which to analyze quality of credits agnostic to the accreditation body.

The framework is expected to be ready for public use in July ‘23. In the future, we envision assets for on-chain carbon offsets can be proposed by the Celo community and approved by governance by utilizing this framework. An analogous comparison is gauge proposals on Curve.

As a first step, we plan to utilize established ratings criteria from BeZero Carbon for Verra certified projects tokenized as Toucan TCO2s, and will only purchase projects with ratings of BBB or higher.

Once the CC-RMI framework is established in July ‘23, all on-chain offsets can be considered subject to quality review by the Celo ecosystem. In the future, other assets, such as those by Flowcarbon, Thallo, and CarbonPath, might be assessed and proposed by governance to also be used for on-chain offsets through the Carbon Offsetting Fund.

Future Governance Process Process for adding and changing on-chain assets

Several members of the Climate Collective mentioned above are launching new tokenized carbon assets through ‘23. As more high-quality assets are green-listed for inclusion, we expect the Celo ecosystem to seek to purchase more offsets of higher quality.

As stated above, this proposal serves as the first step towards the larger vision of engaging the Celo community to collaboratively govern how the network should offset its emissions. A roadmap for how to improve on this in the future is outlined below:

  1. April 2023: Establish CCNM system to receive epoch rewards from the Carbon Offset Fund to utilize Wren (off-chain) and Toucan (on-chain) for Celo validator offsets and prove the model for on-chain offsetting
  2. April 2023: Launch Celo carbon accounting dashboard with cLabs
  3. June 2023: Climate Collective & Rocky Mountain Institute publish quality assessment framework and a rubric for prospective carbon assets/projects
  4. July 2023 onwards: Celo ecosystem use rubric to prove quality of assets and utilize new assets for offsetting the Celo protocol’s carbon footprint, with the goal of moving to 100% on-chain assets

The details of the quality rubric required for asset proposals will be published once #3 is completed, as well as expectations around the timeline for proposal review. But the proposal format will resemble governance processes at MakerDAO and Aave to include assets or change parameters, requiring detailed analysis on the part of the proposer to prove their carbon asset meets the quality guidelines from the CC/RMI framework. The process will also include common technical, financial, legal questions with examples below:

  1. What percentage of Celo’s Carbon Offset Fund are you requesting to allocate to your assets?
  2. How is the asset retired on Celo? Can a fungible token be directly offset, or does it require ‘unbundling’ into a specific carbon project?
  3. What are the main liquidity pools to purchase the asset? Provide a link to the DEX analytics page(s).
  4. What legal entity holds/claims the credits?
  5. What geographical areas / municipal jurisdictions are involved in the underlying credits?

Multisig Members
CCNM would consist of the following members:

  1. Helena Merk (op), Spirals Protocol
  2. @ken, Mercy Corps Ventures
  3. @nirvaan Nirvaan Ranganathan, Climate Collective
  4. @nraghuveera, Celo Foundation

Configuration Change:

factor: 1
partner: 0xCe10d577295d34782815919843a3a4ef70Dc33ce


Thanks @helenamerk!!!

Since the forum limits the number of links allowed in posts, adding those we intended to include for context below:


Excited to see this proposal up!

1 Like

Excited to help get this proposal up for discussion on next governance call. Please reach out if you need help with proposal creation: GitHub - celo-org/governance: Governance Repository for Celo


Thanks for posting this, Helena!

The Toucan team is ecstatic to be apart of this journey to generate climate action on Celo. The phased approach gives the opportunity for high-quality carbon to come on-chain, digital carbon market to keep innovating, and appropriate framework to be finalised by CC & RMI.

Wonderful things are happening :seedling:


Hi my name is A. Nirvaan Ranganathan and my wallet address for the multisig is 0x42B4a02f79438D558AB33E326638ed752b94D187

Nikhil Raghuveera here from the Celo Foundation. My wallet address is 0x530CF34EE4977D375493D29Fb9cE194F138b4693 for the multisig

Hi everybody!

On behalf of Mercy Corps Ventures, I’m Kenneth Kou - our wallet address for the multisig is: 0x590f636a0E62A1D72eE78a292134eF82fdB5D954

Looking forward to keeping this moving.

Hey all - on behalf of Spirals, I’m Helena Merk and my wallet address for the multisig is:

Would make sense to also consider a % to support UBI distribution through impactMarket and GoodDollar? Maybe having some buyback or just redirecting cUSD while earning PACT? I believe this would have a positive wheel effect on onboarding more users and supporting local vulnerable unbanked communities while scaling Celo network.

PS: In our case, as we’ve recently launched Microcredit, it would both benefit UBI and access to credit (as we call it “UCA” - Unconditional Credit Access)

cc @therealstone

@mbarbosa Great proposal. I would love to see a % of all block rewards to support UBI projects and pools.

Celo stands apart from other blockchains due to its commitment to carbon neutrality and inclusion. As more and more L1s and blockchains lean in to gaming and gambling, Celo has a unique opportunity to define itself as the core chain for UBI. With the emergence of players like Sam Altman’s WorldCoin on the scene, more and more attraction will be placed on UBI systems, and Celo is well positioned to get ahead of other L1s, L2 and scaling solutions in making this play.

1 Like

Perhaps I’m missing something, but I fail to see the connection between 1) the suggestion put forth by @mbarbosa @therealstone and 2) the on-chain offsets initiative.

This initiative is focused on the Carbon Offset Fund first created in CGP#1, which @nirvaan linked above. This meant explicitly directing epoch rewards towards climate action and ensuring that the Celo blockchain remains carbon neutral/negative. Our vision here with this new proposal is to improve the quality of web3 carbon credits and begin to slowly add on-chain options to the portfolio. Thus, this initiative is solely focused on Celo’s carbon-offsetting mechanism and how we continue to keep the Celo blockchain carbon-negative.

While a nice initiative, UBI does not fit the core purpose of this structure in place, and so I think it’s better for us to stay on the topic of ‘how we keep the Celo blockchain carbon-negative’

In the spirit of community governance, I would advise @mbarbosa or @therealstone to submit your own proposals and allow the community to decide if they want to fund your projects.

Hi @ken - I don’t want to speak for @mbarbosa , but for myself my comment was meant in the spirit of a community discussion around how we want to use block rewards and what do we want to incentivize as an ecosystem at the proposal discussion phase. You and the team have drafted an incredibly well-rationalized proposal for how to use the block rewards to extend / augment Celo’s support to remain carbon-negative. My comment is meant to expand the conversation of “what do we want block rewards” to support.

Given Celo’s governance process, I understood this proposal to still be in the discussion phase and not yet finalized to be prepared for an on-chain vote. Apologies if I misunderstood, but we are trying to initiate the conversation amongst the active members of the governance forum. I do appreciate your suggested @mbarbosa and I will work on our own proposal for block rewards to fund UBI, but we are taking the temperature of the community on the topic.

As a non-voting member of the community, wish you luck in getting this approved! And happy to continue the conversation on block rewards for UBI.

1 Like

Chiming in! Definitely space for further discussion. Just to flag here that this proposal was passed to start doing on-chain offsets in addition to the existing off-chain one Celo Governance by Staking Fund

I’m completely aligned with @therealstone response, and was just trying to see if this is something the community would consider (as UBI is part of the fundamental core Celo’s mission). @ken Apologies if my comment does not fit in the context of this proposal. Maybe I was just misled by @marek’s comment on this tweet response.

As an additional note, just want to share that most of our UBI and Microcredit communities (and I believe a relevant part of GoodDollar too) are farmers and local entrepreneurs working for significant environmental and sustainable outcomes. Looking forward to working with @therealstone on this.