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- Celo has proposed handing 160 million tokens to Opera browser’s parent company to incentivize the distribution of Celo-based dApps.
- Some governance forum members have questioned the move, saying it will cause significant token dilution.
Celo, the Ethereum Layer-2 designed for low-cost payments in developing nations, has introduced a proposal to allocate 160 million tokens to Opera, a leading global browser whose parent company trades on Nasdaq.
The proposal was published by Celo Core Co., the company behind the network’s development, on the official governance forum for community feedback. It outlines a plan under which the network hands Opera 160 million tokens from its unreleased treasury wallet, subject to community approval. The allocation would support a three-year partnership with Opera and would replace an existing model in which the browser company has been receiving fiat payments.
This model was approved by the community in December 2023 and has resulted in the network paying Opera $568,182 per quarter since then. Each payment has had to be voted on before allocation. At the time the model was approved, the two entities agreed to a $5.7 million payout, with the arrangement set to end in the first quarter of this year.
This new proposal is shifting from quarterly fiat-based payments to a one-time CELO token allocation. At the current price of $0.08376, the tokens would be valued at $13.4 million. The allocation would also hand Opera a 27% share of all circulating tokens and 16% of the hard supply cap, set at 1 billion tokens.
Celo’s Proposal Raises Community Concerns
The 160 million tokens will be a reward to Opera for pushing the adoption of Celo products. The company says that since the two started working together in June 2021, they have onboarded millions of new crypto users. The main product is MiniPay, a self-custodial wallet that has reportedly processed 420 million transactions and has 14 million users. Daily active users on the network have hit 700,000, and Opera has been a key driver of this growth, Celo says.
The network says the allocation is more aligned with the partnership between the two parties than the previous quarterly payments. Jørgen Arnesen, the EVP of Mobile at Opera, said that through the partnership, the company is making “a long-term commitment to the Celo ecosystem and to bringing that utility to our global user base.”
However, the ‘long-term’ commitment is not part of the agreement, which does not stipulate any lockups or prohibit selling, a point some members of the governance forum have brought up. For context, CELO now trades 99% below its all-time high of $9.53, which it hit in 2021. In the last six months alone, it has lost 72% of its value.
The 160 million tokens are a lump-sum allocation, not tied to any performance metrics, which some members have also criticized. One stated:
Any such transfer of this size should be safeguarded by performance-based triggers that only release funding when certain milestones are hit. After three years the CELO can be returned if the KPIs aren’t met.
One important safeguard that the network has put in place is a cap on the voting power that Opera can wield. Despite owning 27% of the circulating supply, the proposal would limit its voting power to 10% “to maintain governance balance.” Even then, this cap can be bypassed during protocol emergencies.
