Strengthen Tokenomics: Accelerate stCELO

Governance
1

TL;DR on stCELO
“StakedCelo is a Celo-native open source liquid staking protocol developed by cLabs to encourage the active participation of users in the protocol. It allows anyone to stake CELO, thus supporting the network and receiving the Epoch Rewards associated with staking, and at the same time to keep these assets liquid so that they can be used to participate in and engage across other applications in the ecosystem.”

Benefits of stCELO for the Celo ecosystem

  • Enhanced Liquidity: stCELO lets users earn staking rewards and use their tokens across DeFi apps (lending, trading, yield farming). This will likely result in a larger share of validator rewards recirculating and being invested into the Celo ecosystem.

  • Increased Network Security: Staking more CELO through stCELO results in stronger validator participation and enhanced future network resilience.

  • Ecosystem Growth: stCELO unlocks composability—developers can build new products (e.g., yield aggregators, collateral markets) that attract users and capital to Celo.

According to Mondo, there is currently about 106M CELO staked (18% of circulating supply), with only 1.575M of that CELO being staked through stCELO. These numbers are relatively low compared to Ethereum, which has over 29% of its supply staked.

Propose Feature improvements

  • Enable Celo Governance Voting Power Delegation: Currently, stCELO holders can only delegate their validator votes, but cannot yet delegate votes to governance delegates. Enabling this function would further strengthen Celo governance resilience and enhance the utility of stCELO.
  • Adopt a Contribution/Quality-Based Vote Allocation for the Most Aligned Validator Groups: At present, validator votes are distributed randomly among 8 validators selected over three years ago. By implementing a new mechanism that leverages proven technologies—such as using Karma GAP to account for and measure positive contributions to the Celo ecosystem—we can create a system that (semi-)automatically rewards validators for contributions to the network’s security and growth. For instance, validator rewards could be reinvested into Celo-related initiatives.
  • Brand, Platform, and Documentation Refresh: The current stCELO token icon and platform are not yet aligned with the new Celo brand. We propose updating the design to make it feel like a more integrated part of the ecosystem. Enhanced documentation and integration guides will also make it easier for developers to adopt and build with stCELO.

How the Ecosystem Can Help Accelerate stCELO
As these proposed changes are reviewed and hopefully implemented, we propose that CeloPG and other Celo Ecosystem programs, such as Stabila and Prezenti to set aside some budgets for stCELO-specific innovation.

6 Likes
2

When Celo transitioned to an L2, base-layer security was effectively outsourced to Ethereum. Ethereum validators are now the ultimate security backstop for the network. CELO “validators” no longer secure consensus; their role has shifted to providing RPC services.

In this context, staking more CELO through stCELO does not materially increase network security in the way the post suggests. Instead, stCELO provides holders with staking yield while enabling fractional on-demand transfers and secondary trading on DEXes, assuming sufficient liquidity exists when compared to standard CELO locking.

The added benefits of stCELO over standard locked CELO are limited, while introducing extra “middle-men” (no fees, yet) smart contracts that add complexity and additional points of failure.

An argument could be made that an EigenLayer-style approach could allow restaked assets to secure additional protocols, but unlike Ethereum restaking, there are no meaningful security guarantees attached to restaking CELO.

4 Likes
3

Hi @yomfana

The thread specifies FUTURE network resilience, as to our understanding, it is still the goal to decentralize (part of) the validator stack of Celo to the Celo validators.

stCELO doesn’t charge a fee, and given it’s built for Celo as a public good, would likely never have fees. The smart contract at some extra complexity and risk, but we’re confident this is a worthy trade-off given the additional utility it would bring to the Celo ecosystem.

Is there an alternative design you feel we should accelerate instead of stCELO?

3 Likes
4

One benefit I can see to increasing stCELO adoption (assuming that the validator voting system is transparent, provably fair and operationalized), is that it could automate some of the Foundation/early adopters/large CELO holders staking choices.

While the Foundation voting program has officially and publicly ended, many of the groups still have similar-ish voting counts as they did during the program. I don’t know where these votes are coming from per se, but I understand they are all being voted for by individuals in an individual capacity not tied to the Foundation.

For the sake of removing person-hours from the time and effort spent on each individual analysing the validator groups and their relative performance and risks, it would nice if the stCELO voting cohort was updated to be relevant to the L2 and 2025’s validator/RPC landscape.

Then, anyone holding large CELO units from the early days could safely just land it in stCELO - knowing that the rotating voting process is clear and public, and managed by cLabs.

Of course, all of this assuming validators actually have something to do that is meaningful to the protocol in 2026 and beyond. If not, then the only benefit to stCELO is just increasing locked CELO and automating the yield. Which is not nothing, but as a validator it would be nice to see a large chunk of CELO being automatically rotated between good performing groups.

4 Likes