I love Celo products and the general mission of the project, but I feel like the business model, tokenomics, fee structure, etc.are not what we need to compete effectively in the current environment.
In my opinion, it would be better to go with an ultra simplified version of Tron style transaction fees: your account automatically gets a certain amount of bandwidth/energy, and you can get more bandwidth/energy by freezing CELO coins in your wallet, or by having bandwidth/energy transferred from another account to yours.
This type of fee structure has worked out extremely well for Tron–but I think if we implement it in a certain way, it can be even better for Celo. We will be the only Ethereum L2 to offer free transactions, our usage of the whole bandwidth/energy concept will be much simpler and easier to understand than Tron’s, and it will be custom tailored to benefit the Celo ecosystem and economy.
Let’s say we go with something like this:
Instead of having both bandwidth and energy, Celo’s system simplifies the whole thing to one resource–let’s call it cFuel
each stablecoin transfer uses 100 cFuel (while a CELO coin transfer uses 10 cFuel, approval of a new token is 20 cFuel, and a token swap is 300 cFuel)
an account (wallet address) is automatically given 100 cFuel (enough to cover one token transfer) at the start of each week; however, if a mobile phone number is tied to the account via SocialConnect and the mobile phone number is in a low income country, the number increases to 700 cFuel per week (which will be rough to cover 7 token transfers). (In other words, a user in the US gets one free transaction per week, while a user in Kenya gets 7.)
For each CELO coin frozen in a user’s wallet, he receives an additional 1 cFuel per week. (So, for instance, if a user freezes 1000 CELO coins in his wallet, that will create enough cFuel to pay for 10 token transfers per week.)
Within the MiniPay app, certain actions will earn a user free cFuel, which will be sent from Opera Corp’s wallet to the user’s. (Opera Ltd. is already holding millions of CELO coins; they can freeze some of it, generate cFuel in their own account, and then distribute it to MiniPay users in order to subsidize a user’s transactions.) MiniPay can create a user friendly experience that shows users how many free transactions they have left for the week in their account, and how they can earn more free transactions if needed. In other words, MiniPay users do not have to actually familiarize themselves with the concept of cFuel; they can just be guided by the app, which will track how many free transactions they have left and direct them towards what they need to do in order to get more
If a user wants to make a transaction and does not have enough cFuel to cover it, he will have to spend CELO or stablecoin to cover the cost, at a rate of $0.05 per 100 cFuel.
What this all accomplishes, among other things, it that low income MiniPay users in Africa and other parts of the world will get free stablecoin transactions in a user friendly environment, while many other Celo users will either freeze CELO coins in their account to get free transactions, or they will just go ahead and pay a transaction fee of 5 cents per stablecoin transfer. MiniPay gets what it wants, because they can advertise a zero fee experience, and also get their users to do X, Y, and Z to get free transactions (if they need more than their allotted 7 free transactions per week). Meanwhile, Celo will benefit from the increased use case for CELO coins, and from the 5 cent transaction fees for users who don’t have frozen CELO in their wallet and don’t care about saving a few cents here or there.
There is no reason for Celo to charge 1/20 of a cent transaction fees across the board, even in regions where the median income is $40k a year; I don’t see why a user in the US, South Korea, or England would mind paying 5 cents for a stablecoin transfer or 15 cents for a token swap; 95% of people in high income countries won’t care at all, or they’ll just go ahead and freeze CELO in their wallet to avoid the fees. We need a fee structure that serves the needs of ultra low income people in ultra low income regions, but also generates significant revenue from people who are not in that category. I feel like the Tron style system can be used to make this happen in a way that won’t rock any boats.
Also, we can begin implementing Tron style tokenomics in general. To me this is preferable to what we have now.
(I should point out that in order for projects like GoodDollar and Blockscratch to have a viable business model under my proposed system, they will either have to buy and freeze large quantities of CELO in order to generate enough cFuel for their transactions, or they will have to obtain large quantities of cFuel from someone else such as Opera Ltd. or the Celo Foundation. This should not be a problem, though, as I’m sure Opera Ltd. and the Celo Foundation would be very motivated to support those types of projects and offer them bulk cFuel for extremely low rates, a in, 1/20 of a cent per 100.)
We need to take action now and (a) start incentivizing users to do what we want them to do, (b) create use cases for the CELO coin, and (c) demonstrate that we can actually generate revenue and/or create a deflationary environment like Ethereum and Tron. I don’t see how our current course of action will achieve this, as we have an inflationary coin and a network that generates $2,000 in revenue per day, while Tron is deflationary and does $5,000,000 a day.
Even if MiniPay becomes a dominant form of payment in Africa and beyond, I can see that benefiting Opera Corp. a lot and Celo very little; if you don’t believe me, just look at the success of PolyMarket, and how little it has done for the Polygon network in general: PolyMarket is one of the most successful companies in the world utilizing a decentralized network and a stablecoin, whereas the Polygon network itself is one of a handful of entities somewhat lost in a crowded field of various L1s and L2s.
Celo needs to take action in order to actually get somewhere itself economically, and not just be a facilitator for MiniPay transactions.
As far as I can see, in the crypto space in general, we have the first mover advantage in five significant areas: SocialConnect, stablecoin gas fees, live links, web 2.0 style wallets, and a lineup of local decentralized stablecoins. As substantial as those five items are, they are not necessarily going to cause our network to take off and thrive if we do not address other issues. In my opinion, one of our best courses of action right now is to copy Tron, but improve their system and also adapt it for our purposes. Tron, Ethereum, Solana, Arbtitrum, etc. do not have anything remotely resembling our five first mover advantages. Let’s do what we need to do now in order to put Celo on the map.
To me it is just plain ludicrous that people are actually using Metamask, Trust Wallet, TronLink, Phantom, Solflare etc., when Valora and MiniPay offer an experience that removes so many of the hurdles and confusion accompanying crypto wallets built for Ethereum, Tron, Solana, etc.; not to mention the fact that USDT and USDC transactions on Ethereum and even Tron often incur a fee of over $5. (Most of you are probably familiar with the high and unstable token transfer fees on Ethereum, but keep in mind that Tron, which is even more popular than Ethereum for USDT, also sometimes charges similar fees. If you don’t have enough energy to cover a USDT transfer on Tron and you are sending to an address that contains no USDT, the transaction fee is 27.6 TRX! They also offer an option to reduce the fee via a bizarre process that involves going to an energy marketplace and renting energy, so you can pay about 7 TRX instead of 27.6.)
We already do many things better than those other networks, but now is the time for us to study what they do better, and to some extent copy them. If we go with what we have accumulated and we also adopt what those other networks have achieved, we will put something on the table that can actually deliver so many of the benefits of decentralization to the general public.