Understanding CELO Allocation: Estimated Circulating Supply Over Time
In follow-up to the recent Medium Post How Much Could You Earn on Celo?, we’d like to provide a month-by-month breakdown of the anticipated circulating CELO (Celo’s Native Asset) post-Mainnet release.* As anticipated allocations are partially dependent upon on-chain governance and foundation grants to optimize for the long-term sustainability of the network, the indicative figures below are best estimates of anticipated CELO allocation.
For the purpose of this article, circulating supply is defined as the best approximation of the number of digital assets that are circulating in the market (see source). Generally, the circulating supply is used to calculate the market cap of a digital asset (see source).
Upon Mainnet release, there will be 600 million CELO allocated with an additional 400 million coming into existence via epoch rewards (please see here for more technical details). We see the anticipated total CELO Breakdown (1 billion) consisting of 6 primary buckets, with approximated amounts as follows: pre-launch sales purchasers (~12.5%), protocol contributors (~18.5%), staking & validator rewards, excluding on-chain community fund (~30%), community grants including on-chain community fund (~19.5%), operational grants (7.5%), and initial reserve (12%). An estimated month-by-month breakdown from mainnet release through 2050 are broken down in this model (see here). (Similar to the below table, these amounts lay out anticipated and best estimated projected allocations.)
Per the model, the estimated circulating supply within the first month is approximately 29.5 million and after 12 months it is approximately 184 million. The total amount of CELO allocated in March 2050 is estimated at 926 million instead of 1 billion due to ongoing Epoch rewards. The target curve of remaining epoch rewards declines linearly over 15 years to 50% of the initial 400 million CELO, then decays exponentially (details here). Of this, 300 million is currently allocated to staking & validator rewards and 100 million is allocated within the community grants bucket (including 2 million CELO for a carbon neutral fund). The remaining allocation to community grants consists of funds going towards the Polychain Ecosystem Fund, in-market education and adoption grants, strategic development initiatives, and other community grants with allocation schedules ranging from 3 to 10 years. 75 million CELO is currently allocated for operational grants over the first 10 years to support network growth.
The CELO purchaser category includes two separate and limited pre-Mainnet release sales as well as upcoming CoinList sales (restrictions apply) where up to 30 million CELO will be available, with up to 13.5m CELO in the first one taking place on May 11 (updated on April 29, 2020). The valuation for the initial sale is estimated at ~$0.18 with distributions scheduled to occur in 24 monthly increments, with the potential to delay any one distribution up to a year, but with a requirement that all amounts will be distributed by the end of year 5. The valuation for the second sale is $1.00, with 25% discounts for purchasers agreeing to an additional 3-year lock-up beyond the initial 1-year lock-up and/or forgoing the return of reserve funds in the event the mainnet release did not occur. For reference, all CELO units sold in 2019 were either sold at the USD $1.00 or $0.75 levels. No CELO has been sold to date (as of March 12, 2020) in 2020.
The circulating supply over time without and with the reserve (120 million) are summarized in columns I and J of the model, respectively. While the reserve will affect supply and demand for CELO to support the stability protocol, the total reserve is not counted toward calculating the expected market cap per the definition above.
*This post was last updated on 5/4/2020 to accurately reflect amongst other things new grants and mainnet launch date.
*This article was was updated on 6/25/2020 to reflect the on-chain resolution to change the name of Celo’s native asset from “cGLD” to CELO. Nothing else was changed.
*9/14/2020 Update: To fund operations, the Celo Foundation may periodically sell CELO according to this updated treasury policy here. Monthly treasury-related sales are not expected to exceed 5 million CELO.
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Answer to Follow-up Question from the Community (April 23rd, 2020)
How much CELO is voteable?
Except for the Epoch Rewards (400m) and CELO in the reserve (120m), all other CELO (480m) is technically enabled to be votable at the genesis block. However, it is possible that not all of the 480m will actually vote.
Answers to Follow-up Questions from the Community (April 28th, 2020)
What were the amount of tokens sold in each round?
The valuation for the initial sale is estimated at ~$0.18 with distributions scheduled to occur in 24 monthly increments, with the potential to delay any one distribution up to a year, but with a requirement that all amounts will be distributed by the end of year 5. The valuation for the second sale is $1.00, with 25% discounts for purchasers agreeing to an additional 3-year lock-up beyond the initial 1-year lock-up and/or forgoing the return of reserve funds in the event the mainnet release did not occur. For reference, all CELO units sold in 2019 were either sold at the USD $1.00 or $0.75 levels. No CELO has been sold to date (as of April 28, 2020) in 2020. Please find more information as well as a link to the spreadsheet with estimated CELO release schedules by category in Understanding CELO Allocation: Estimated Circulating Supply Over Time.
What is the amount raised in each round?
Approximately USD 6 million was raised in the first round of prior token sales and USD 30 million was raised in the second round of prior token sales.
What is the lockup schedule for each round?
Please see the model for a month-by-month breakdown of released CELO, including for purchasers.
The lock-up for the first round of prior token sales is 24 months after mainnet launch whereby 1/24 is released every month for 24 months.
The majority of lock-ups (80%+) for the second round of prior token sales are on a 4 year vesting schedule with a one-year cliff from the close of the transaction.
What is the amount raised to date?
The amount raised to date is approximately USD 36 million, which is a combination of the first two rounds of prior token sales.
Answers to Follow-up Questions from the Community (March 17th, 2021)
Why do CoinMarketCap, Messari, and CoinGecko show a different circulating supply for CELO?
While CoinMarketCap, Messari, and CoinGecko appear to reference the model in this article as their reference data, their calculation methodologies are different. Based on the posted circulating supply numbers as of March 17th, 2021, below are interpretations of the calculation methods:
- CoinMarketCap pulls circulating supply data directly from column J once per month;
- Messari pulls data from column J, but assumes a daily linear increase between months. Thus, on most days of the month, the circulating supply will be slightly different from CoinMarketCap;
- CoinGecko subtracts the Initial Reserve Amount (60 million) and “Team, Advisors, Founders, and Contributors” from column J, so the circulating supply on CoinGecko is substantially lower.
Disclaimer: None of the information contained in this article should be interpreted as a recommendation to purchase CELO or as any offering of CELO. The above exposition is intended to be a transparent disclosure to the Celo Community regarding the allocation of CELO to date and expected distribution over time. You are cautioned that any forward-looking statements are only predictions and not guarantees of future performance, and you should not place reliance on any forward-looking statements.