Introduction
Governance is essential to Celo’s long-term sustainability, but the mechanics behind how proposals pass or fail can be complex and not immediately intuitive (as far as I know, there is little to no documentation around this).
In this thread, I aim to break down how proposals either pass or fail, based on my technical review of the underlying smart contracts (Please correct me if I am wrong in my analysis). More importantly, I’d like to open a discussion on whether these mechanisms are serving the community effectively, or if there’s room for improvement.
How it works today
1. Quorum and quorum padding
Celo uses a dynamic quorum system. The quorum is not fixed, it adjusts over time based on recent governance participation and is mathematically defined as:
Quorum = baseline × quorumFactor × networkWeight
Where:
- baseline: A moving average of past participation (Usually hovers around 14% - 17%)
- quorumFactor: Fixed at 50% (so quorum becomes 50% of the baseline)
- networkWeight: The total locked votes eligible to participate at the time of the proposal
To check if quorum is met, the protocol sums all Yes, No, and Abstain votes. If this total falls short of the required quorum, “quorum padding” kicks in:
Additional No votes are synthetically added to make up the difference.
This effectively penalizes low turnout, even if nearly all votes are in favor.
2. Approval
Once quorum is satisfied, the protocol checks if the proposal has sufficient support based on constitutional thresholds i.e. whether the share of Yes votes is high enough to pass i.e.
Approval = (yes/yes+no) > constitutionalThreshold
If quorum was not achieved, the “yes+no” above includes synthetic “no” votes.
In my opinion, the Mondo UI is a bit confusing when it comes to displaying this information.
Constitutional thresholds
Each transaction in a proposal must meet a threshold, which can vary depending on its risk level:
- 60% support: For most standard governance actions e.g. Community Fund grants
- 90% support: For sensitive or high-impact actions e.g. modifying core contracts
If even one transaction falls short of its required threshold, the entire proposal fails.
Drawbacks of the current model
Before diving in, it’s worth noting that all listed delegates on the Mondo platform collectively hold around 4.6 million in voting power. This helps illustrate the dynamics at play:
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Quorum requirements are steep: Even if 100% of listed delegates voted, they would only account for roughly 40% of the quorum needed for a proposal to pass. When you factor in quorum padding, it gets even more extreme.
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Effective veto power by large holders: Any account (or group of coordinated accounts) holding X% (equal to approval requirement) of the quorum-weighted voting power can unilaterally veto any proposal. As the time of writing this thread, any account holding roughly 7.1 million locked CELO can single-handedly sway the outcome of any low requirement proposal (60% constitutional threshold). This assumes that the NO votes are less than 4.7M.
Time to rebalance?
Given these realities, perhaps it’s time to explore adjustments to the governance parameters to better reflect Celo’s evolving community while keeping the following in mind:
- Make governance more inclusive: Encourage participation from smaller holders who may currently feel their votes don’t matter.
- Whales should NOT be alienated from governance participation: Governance should remain relevant and valuable to major stakeholders.
Ideally, rebalancing the existing governance parameters without requiring major changes to the smart contracts would be the most straightforward path forward. However, given that we now have meaningful data on Celo’s tokenomics and voting behavior. it might be time to consider a deeper evolution of the governance referendum model.
I’d love to hear what others think. The goal is not to change things overnight, but to explore how we can make Celo’s governance more accessible, fair, and future-ready.