Stabila Season 1 Funding Request: DeFi Flywheel Infrastructure & Incentives

Governance Governance Proposals
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Receiver Entity: Celo Governance
Status: [DRAFT]
Title: Stabila Season 1 Funding Request: DeFi Flywheel Infrastructure & Incentives
Authors: @MichaelKwan
Type of Request: Funding
Funding Request: 500,000 cUSD + 2,885,246 CELO

Summary:

On behalf of the Stabila Foundation, this proposal requests $1,380,000 USD equivalent in funding to support DeFi infrastructure and incentive programs from July to December 2025. This proposal falls under the “DeFi Flywheel Infrastructure & Incentives” category and directly supports Celo Governance Season 1 Intent to grow TVL on Celo.

Funding Breakdown:

  • 500,000 cUSD
  • 2,885,246 CELO (equivalent to $880,000 USD, using the 30-day trailing average CELO price of $0.305 from June 24 - July 23, 2025)

Key goals:

  • Deepen stablecoin liquidity and FX trading on Celo
  • Strengthen lending markets and collateral options
  • Launch and scale infrastructure critical to long-term DeFi growth

Motivation:

Celo’s Vision 2030 charts a path toward a trillion-dollar onchain economy - driven by real world use cases such as stablecoin payments, FX trading, lending, and identity. A composable DeFi stack is essential to realizing this vision, starting with stablecoins and expanding to borrowing/lending, perpetuals, and broader capital markets (e.g., blue-chip assets, RWAs).

Originally focused on accelerating stablecoin adoption, Stabila has already begun broadening its mandate, connecting the dots across DeFi infrastructure to support a more composable and capital-efficient ecosystem on Celo.

Since launching in May 2024, Stabila has:

  • Helped position Celo as the home of stablecoins with 25+ assets across 15+ currencies (e.g. BRLA, cCOP, vEUR, cCHF, COPM)
  • Coordinated incentives across 30+ Uniswap v3 pools to grow Celo’s onchain FX market to hundreds of millions in monthly volume
  • Co-launched a $750K liquidity incentive campaign with the Uniswap DAO (running through Oct 2025)
  • Supported Aave’s growth on Celo, including onboarding new collateral (e.g. wETH) and co-designing incentive strategies
  • Launching Celo’s first FX perpetuals platform, Lynx Finance
  • Built an active pipeline of perps, lending markets, and stablecoin issuers launching or scaling on Celo
  • (More in the → Stabila progress report)

With renewed funding, Stabila will continue scaling liquidity and expanding integrations - accelerating the DeFi flywheel and anchoring long-term TVL growth on Celo.

Specification

This proposal funds the first half of Stabila’s 12-month roadmap with efforts expected to continue and expand in Season 2 (January - June 2026).

Scope of Work Season 1:

1) DeFi Protocol Incentives:

  • Uniswap v3/v4: Deepen FX stablecoin pools using Merkl incentives and complete the ongoing Uniswap DAO co-incentive campaign (through Oct 2025). Explore launching Uniswap v4 on Celo to enable more advanced liquidity strategies.
  • Velodrome: Bootstrap liquidity for wETH and other blue-chip assets to enhance cross-chain liquidity between L2s.
  • Aave: Extend incentive support as part of Celo’s $3M, 3-year incentive commitment (targeting ~$1M for July 2025 - June 2026) with a focus on deepening lending markets and onboarding new collateral (e.g., stablecoins, wETH).
  • Morpho (pending launch): Support Morpho’s deployment on Celo and curate FX/stablecoin lending markets to complement Aave.

2) Ad-Hoc Initiatives & Marketing (w/ Buffer)

  • Scale FX-focused perpetuals on Celo, including the launch of a larger-scale platform to complement Lynx Finance
  • Collaborate with Self Protocol to pilot Sybil-resistant onboarding and targeted user incentives
  • Sponsor strategic ecosystem events aligned with DeFi, identity, or stablecoin adoption

3) Operational Capacity
Engage contractors/agencies to support program execution, partnerships, reporting, and community engagement.

4) Management & Administration:
Cover legal, compliance, and operational overhead required for program delivery.

Looking Ahead:
Season 1 activates core pillars of Celo’s DeFi stack, including FX perpetuals, lending markets, and onchain identity. As these initiatives scale, Stabila will focus on expanding blue-chip and real-world asset collateral, while advancing infrastructure that improves capital efficiency across trading and lending.

By deepening liquidity, broadening collateral, and increasing trading activity, Celo is positioned for sustained TVL growth and greater protocol usage in Season 1 and beyond.

Metrics and KPIs

  • TVL Growth
    • Achieve +45% growth in Celo’s DeFi TVL (measured in USD) by December 31, 2025
    • Baseline: $65.65M TVL as of June 30, 2025 (DefiLlama), with the CELO portion normalized at $0.27 per token to account for price volatility
  • Morpho Deployment:
    • Successfully launch and scale Morpho on Celo with FX and blue-chip lending markets that complement Aave.
  • Perpetual Expansion:
    • Launch and/or scale a Celo-native FX perpetuals exchange, expanding use cases for leveraged onchain FX trading
  • Self Protocol Integration:
    • Deliver 2 live DeFi use cases that leverage Self Protocol’s identity primitives for Sybil-resistant onboarding or rewards
  • Seasonal Reporting: Publish forum update on spend, KPIs, and outcomes

Current Status

Stabila currently manages several active liquidity, incentive, and user onboarding initiatives, including:

  • Uniswap v3 Merkl incentives, powering Celo’s on-chain FX market, including a 6-month co-incentive campaign with the Uniswap DAO, running through October 2025.
  • Aave liquidity and incentive support, supporting stablecoin and blue-chip collateral markets:
  • Valora Learn & Earn campaign continues onboarding new users into the Celo stablecoin ecosystem.

See Progress Report for more details

Timeline and Milestones

Season 1 (July - December 2025):

Funding requested: 500,000 cUSD + 2,885,246 CELO
(2,885,246 CELO = $880,000 USD equivalent using 30D trailing average price of $0.305 from June 24 - July 23, 2025)

Funds will be withdrawn upon governance approval, with the exception of the $150K allocated for Uniswap incentives for November–December, which will not be withdrawn immediately.
These funds are reserved for later deployment and may be reallocated to other protocols based on a performance review of the ongoing Uniswap DAO co-incentive campaign.
This allows Stabila to direct incentives toward the protocols with the strongest ROI.

Key Milestones:

  • Launch and or scale protocol incentives across Uniswap, Aave, Velodrome, and Morpho
  • Deploy Morpho markets
  • Launch Celo-native FX perpetuals exchange
  • Launch 2 new DeFi use cases with Self Protocol
  • Publish Season 1 progress report and KPI review by early January 2026

Season 2 (January - June 2026):

Pending clarity on Season 2 Governance Intents and available budget, Stabila expects to continue scaling existing initiatives while potentially supporting new programs aligned with ecosystem priorities. A follow-up funding request may be submitted, refined based on Season 1 outcomes, TVL growth, and evolving ecosystem needs.

Detailed Budget

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Budget Notes:

Uniswap Incentives:

  • Stabila is midway through a 6-month, $750K co-incentive campaign with the Uniswap DAO (Stabila: $500K, Uniswap DAO: $250K), supporting 10 pools through October 2025. In parallel, ~16 additional pools are funded solely by Stabila. Pools with UNI token incentives are DAO-matched: Explore opportunities

  • $150K is allocated for November - December 2025 Uniswap incentives, but will not be withdrawn immediately. These funds are reserved for late Season deployment and may be reallocated to other protocols based on a performance review of the Uniswap DAO co-incentive campaign. This ensures incentives remain flexible and are directed toward the highest-performing protocols in the Celo ecosystem

Aave Incentives:

  • As part of Celo’s 3-year, $3M ecosystem incentive commitment to Aave, approximately $1M is targeted for deployment over the upcoming 12 months (July 2025–June 2026). Stabila has already deployed ~$50K in CELO incentives and holds an additional ~$250K worth of CELO from CGP 162, earmarked for this purpose.
  • This proposal requests $200K in additional funding to stay on track with the ~$500K target for Season 1 (July–December 2025), assuming a roughly linear distribution of incentives throughout the year.

Velodrome Incentives:

  • Velodrome, as the Superchain-native DEX, will play a key role in onboarding blue-chip assets such as wrapped ETH to the Celo ecosystem. To support this effort, Stabila is requesting $200K in funding.
  • Additionally, 750K OP tokens previously allocated to the Celo Foundation (CF) will be unlocked later this season and directed toward liquidity provision and incentive programs on Velodrome. Through this initiative, Stabila will support CF in fulfilling its commitment to Velodrome to help bootstrap growth in wETH and other native assets on Celo

Liquidity Incentives Flexibility: Allocations may adjust mid-season based on co-incentive opportunities, market conditions, and strategic priorities. Updates will be shared in the Season 1 report.

Partner Matching Incentives:
Stabila has secured a 1:1 matching agreement with Mento Labs to co-incentivize Mento-issued assets across protocols such as Uniswap and Aave, aiming to amplify impact and deepen stablecoin liquidity.

Payment Terms

Season 1 Funding Total: 500,000 cUSD and 2,885,246 CELO (equivalent to $880,000 USD using the 30-day trailing average CELO price of $0.305 from June 24 - July 23, 2025).

Funds will be withdrawn immediately upon proposal approval and sent to the Stabila multisig wallet:

  • 0x9C257bDC314dc516e673728D70F45444F6e22412

However, the $150K allocated for Uniswap incentives (planned for November- December 2025) will not be withdrawn immediately. These funds are reserved for later deployment and may be reallocated to other protocols based on a performance review of the current Uniswap DAO co-incentive campaign.

Team

The Stabila Foundation manages fund allocation and oversight. At the time of this proposal, Stabila operates a 2-of-4 multisig composed of trusted Celo contributors and is in the process of onboarding an additional signer to expand to a 3 of 5 multi sig to strengthen operational security.

Current Signers:

  • Kevin Tharayil – 0x3489A2Fe2924275c6A4b05508C77802f272d6D00

  • Productmatt – 0x1f5979355411dF24c5Ce21Df5bD9f2fff418c194

  • Martin Volpe – 0x0159B8f51fA6eDEF721d6D87002587130CD8246c

  • Michael Kwan – 0x78670759E39E955E55EFA52d6d4BECa86F40b498

  • Tomer Bariach (pending) – General Partner at Flori Ventures and Chairman of Credit Collective. We will provide an update with wallet address once onboarding is complete.

Additional Support/Resources

N/A

4 Likes
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Hi @MichaelKwan,

The total size of this ask seems substantial relative to the current Celo Treasury resources and the mentioned KPIs.

For context, SuperStacks, a Superchain-wide DeFi program, had a comparable budget and managed to attract nearly 200M in deposits over 12 weeks. Adjusted to the 5 month duration of Season 1, we should be able to attract at least $50M in new TVL.

  1. Could you share more data on the enabled use cases and revenue generated from the current Uniswap campaign?

  2. Related to the above Q - why do you believe Stabila should spend another 150k this year to keep those incentives running?

  3. Velo Incentives: Over what timeframe will the 750K OP be spent, what pools will be targeted, and how will this not cannibalize the Uni incentives?

  4. Related to the above Q - why do we have to allocate $200K to Velo if we already have a budget of over $500K in OP set aside?

  5. Can you share more about the Morpho deployment? Will this be a native full launch of a Morpho Lite deployment? Who will be the Curator of these markets? What is the timeframe for the 500k in incentives?

  6. Could you share more about the contractors / agencies involved in these programs? The Superchain Eco team and I have experience and could likely provide better support at a reduced cost than what is earmarked now.

5

the receiver entity is incorrect should be stabilia foundation

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Hi Luuk,

Really appreciate the thoughtful questions and your broader framing around treasury efficiency.

To set context: while the SuperStacks program distributed OP tokens (converted from XP points), many participating chain ecosystems such as Unichain also layered their own incentives e.g., Merkl-based incentives for Uniswap pools. In contrast, Stabila’s incentives are distributed across multiple protocols and target a broader mix of assets: from blue-chip tokens like wETH to long-tail stablecoins that require higher risk premiums to bootstrap liquidity and utility.

A rough back-of-envelope estimate suggests that ~$1.8M in incentives (including the 750K OP, likely deployed over Season 1 and 2) could support ~$18M in TVL at 20% APY steady state.

  1. Uniswap v3 incentives helped catalyze:
  • The launch of 16+ new stablecoins on Celo, including fiat-backed BRLA (BRLA Digital), COPM (Minteo), and VNX-issued vEUR, vGBP, and VCHF alongside new Mento stables.
  • Oku Trade’s deployment on Celo, enabling institutional-grade FX arbitrage and execution.
  • Sustained FX trading volumes across incentivized pools, consistently ranging from $100M to $250M/month at peak.
  • Beyond arbitrage use cases, we’re actively exploring stablecoin integration into payment use cases for example, as MiniPay expands globally, we’re working to see if stablecoin partners can plug into remittance use cases.
  1. The Uniswap DAO co-incentives conclude in October 2025. Continued incentives could:
  • Maintain deep on-chain FX liquidity to support new issuer launches
  • Preserve optionality for future co-incentives with the Uniswap DAO or others
  • Enable reallocation if better ROI opportunities emerge (e.g., on Aave or Velodrome). We’ve intentionally designed flexibility into the incentive buckets - budgets can shift based on emerging opportunities/co-incentives.

3)/4) Regarding Velodrome:

  • The 750K OP tokens are expected to be deployed gradually across Season 1 and 2.
  • The $200K CELO buffer allows incentives to begin immediately on Velodrome, rather than waiting for OP tokens to unlock.
  • We’re coordinating closely with the Velodrome team to minimize overlap with Uniswap.
  • For context, the Celo Foundation committed $1M in incentives over 12 months to support Velodrome’s rollout. Stabila’s contribution helps coordinate and execute against that commitment.
  1. Regarding Morpho:
  • This will be a native Morpho Lite deployment on Celo, focused on FX borrow/lend markets underserved by Aave.
  • Stabila is in the process of finalizing a curator partner to manage market onboarding and risk parameters, and we expect to confirm a selection in the coming weeks.
  • The Celo Foundation committed $1M in incentives over 12 months to support the deployment, and Stabila’s $500K contribution helps advance that commitment.
  1. Stabila has engaged vendors for incentive optimization, reporting, and liquidity strategy, including exploring vendor partners who can bring their own LP user base onto Celo. As Season 1 scales, program complexity will increase, and we expect vendor collaboration to be important in maximizing impact and tracking.

That said, Stabila is absolutely open to collaborating with the Superchain Eco team to improve cost-efficiency, share tooling, and expand reach. Happy to coordinate a working session to explore areas for collaboration!

3 Likes
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Hi @MichaelKwan, thanks for the quick and detailed reply!

On the topic of TVL
A. 20% APY is far above the market rate of nearly all Lending (Morpho/AAVE) and most DEX pools. There are sizeable USD opportunities at the 7-11% range (e.g. 72M on Unichain yielding 7,5%) which I believe we should be able to target without needing to pay double the price. On other assets, such as ETH, the rates are even lower (4-7% range). If TVL is the main metric, there are ways to 2x or more the set target.

B. You mentioned that the incentives will cover Season 1 and 2 - but from my POV, no proposal should scope beyond Season 1 in this current cycle, as we don’t know yet what the intent and priorities will be in Season 2. We may shift focus or find better ways to accomplish the same outcomes.

1. Uni V3: I reviewed your report, and while the FX volume numbers are high, I’m curious to what extent these pools contribute to improving value prop to end users and network revenue for Celo.

Most of these pools are 0.01% fee stable pools that don’t provide significant arb opportunities and, as a result, drive limited revenue from the Data I have (Grow The Pie shows only ~3,5k in Gas Fees paid by Uni contracts on Celo).
2. From my POV, the Velo incentives should be enough to cover Nov and Dec, which would also give us relevant data on the efficiency of Velo incentives vs Uni Merkl incentives (esp if Uni is not co-matching) and drop off rates in the absence of incentives. Allocating 200k here while we already have large amounts of Velo incentives feels inefficient.
3 +4. Is the 750K OP + 200K CELO from Stabila covering a part of the $1M, or is this on top of the $1m?
5. Check, I have been closely observing Morpho Lite deployments on some other OP chains and am aware that for this to work, we need deep liquidity on those markets on DEXs, which is synergistic with the Velo deployment. It would still be key to ensure we optimize for the markets (and only grow those) that generate organic fees and high gas fee usage. 1M over 12 months only makes sense if we have a clear sense of which markets have demand and will drive $$ value to Celo.
6. Happy to discuss further and review vendor selection criteria - agreed that close collaboration is key and eager to play a role to help optimize the strategy.

To summarize, I am in favor of increasing DeFi incentives on Celo, but want to make sure we do this in the smartest way possible, where we prioritize protocols and assets in a data-driven way that maximizes (long-term) end user value and Celo network revenue - and avoid getting trapped in a vanity metric game with other chains that have deeper pockets.

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Hi @LuukDAO, appreciate the detailed follow up and candid conversation during the recent governance call.

On the topic of TVL: It’s totally fair to push on the TVL target. The original +25% target was meant as a conservative floor, based on an assumed ~20% APY across deployed incentives.

That said, we absolutely agree there’s room to stretch that target upward. Celo does require a bit of a risk premium to attract liquidity relative to larger ecosystems especially for long-tail assets but we believe ~12–13% APY is a strong blended target that could support ~45% growth in TVL (updated in the main forum post).

There’s a balance to strike here, especially as Morpho will likely serve more tail end assets/FX markets, while Aave continues to anchor blue-chip liquidity. We’re aiming to calibrate incentives accordingly.

  • On Uniswap:

    • While Uniswap v3 network gas fees have been modest so far, Season 0 was focused on establishing liquidity rails by supporting a broad range of stablecoins to launch and support Celo.
    • Season 1 now will shift focus to consolidating and deepening liquidity in the most impactful pools - with pairs like USDT/USDC forming a core foundation.
    • Stablecoin pools at the 0.01% fee tier generally outperform higher-fee tiers in terms of LP fee capture, helping sustain organic yield over time. As arbitrage activity and integrations increase, we expect transaction counts and gas fees to rise naturally alongside usage.

  • On Velodrome:

    • To clarify: the $200K CELO from Stabila and 750K OP from the Celo Foundation are both part of the $1M incentive commitment to Velodrome - the $200k CELO from Stabila is not an addition on top.
      • We anticipate that approximately 375K OP will be deployed during Season 1, based on current price levels.
      • Stabila’s incentive contribution will need to be deployed first, to begin bootstrapping liquidity in advance of the OP token unlock

  • Agreed - for Morpho markets to succeed, they’ll need deep and organic DEX liquidity, ideally in pools with strong fee performance and frequent trading activity for liquidity providers to participate. We see value in testing both Uniswap and Velodrome side-by-side over Season 1, and scaling efforts on the protocol that proves more efficient in fee generation and capital deployment. The upcoming launch of a larger-scale FX perps platform should also complement on-chain FX trading, further driving sustainable, organic TVL and usage on Celo.

  • That being said, I’ve updated the main proposal to reflect your feedback (payment terms, milestones, and budget notes). The $150K allocated for Uniswap incentives will not be withdrawn immediately. Instead, we’ll first conduct a comparative analysis of performance retain flexibility to reallocate based on which protocol proves more effective.

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Thanks for adding these clarifications and updated targets @MichaelKwan - I’ll be around to provide input and support when the season starts, but for now, all my Qs are answered.

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Hi this is Michael - confirming I’m a signer of the Stabila multi-sig and my address: 0x78670759E39E955E55EFA52d6d4BECa86F40b498

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I confirm 0x0159B8f51fA6eDEF721d6D87002587130CD8246c is my address, it hasn’t changed since previous proposals.

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Confirming I’m a Stabila multi-sig signer with address: 0x3489A2Fe2924275c6A4b05508C77802f272d6D00

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confirming im on the multisig with 0x1f5979355411dF24c5Ce21Df5bD9f2fff418c194

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Thanks @MichaelKwan and team for the proposal, at my end this proposal is fulfilling all the requirements:

  • Post a proposal in the Celo Forum and leave it for discussion at least for seven (7) days.
  • Present Proposal in a Governance Call and address the feedback received: Proposal was presented during Celo Governance Call #72 | Jul 17th, 2025

With the above said, from my end the proposal is ready to move into the voting phase when proposer wants to move forward or consider is appropriate.

:bangbang: Remember Current Celo Governance Overview & Procedures

To proceed to the submission and voting phase at least two Celo Governance Guardians must post explicitly that the proposal fulfills the requirements to be able to move into the Voting Stage in the proposal thread on the Celo Forum.

Remember next steps

  • Submission of PR to Celo Governance Repository
    Proposers needs to fork the Celo Governance Repository and add a PR including the proposal .md file and json file.
  • Approval of PR by Celo governance Guardians and merge into main branch of Celo Governance Repository.
    Celo Guardians are responsible for conducting a comprehensive review of every Pull Request (PR) to ensure that there is complete alignment and consistency between the final proposal posted in the forum post and the specific files that are being requested to be merged.
    This review process is strictly technical in nature, focusing solely on verifying the authenticity and good faith of the proposers. It does not involve any personal opinions or biases regarding the merits or content of the proposal itself. To maintain the integrity of the Celo Governance repository, it is mandatory to obtain approval from a minimum of two Governance Guardians for each PR before it can be merged into the main branch.
  • OnChain Submission of Proposal
    After PR is merged into main Governance Repo the proposers needs to fork locally the Celo Governance Repository and submit the proposal onchain using the guidelines described in the Celo Docs.

CC: Governance Working Group (@annaalexa @Wade @0xGoldo)

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From my point of view, the proposal now fulfills all the required criteria:
• It has been shared on the Celo Forum and kept open for discussion for a minimum of seven (7) days.
• It was presented during the Celo Governance Call #72 on July 17th, 2025, and the feedback provided during that session has been incorporated.

Given this, I believe the proposal is ready to advance to the voting stage whenever the proposer chooses to move forward.

1 Like