Celo Strengthens Its Economic Model with Buyback and Token Burn Reforms

The Celo community has taken a significant step toward consolidating its ecosystem. In January 2026, the second tokenomics meeting was held, during which the Celo Foundation presented a series of structural reforms aimed at improving the economic design of CELO and ensuring a stronger connection between the token’s value and the actual activity of the network. Today, with CELO trading at $0.09 and showing a -5.43% change in the last 24 hours, these initiatives become even more relevant for the investing community.

Main Pillar: Revenue-Linked Buyback and Burn

The core of the proposal lies in an innovative programmatic policy that allocates at least 50% of the protocol’s profits to the buyback of CELO, creating a direct mechanism that links the token’s value to the growth and activity of the network. This approach aims to avoid traditional token dilution and align the community’s interests with Celo’s actual technical and financial performance.

The expense structure follows a well-defined priority order: first covering essential operational costs, including on-chain data availability, revenue distributions from Optimism, critical infrastructure, engineering, operations, and security expenses. Only after satisfying these fundamental needs are remaining revenues used for CELO buybacks.

A distinctive feature of the plan is the treatment of repurchased CELO: most will be permanently burned to reduce the total supply, while a limited portion with strict compliance measures may be deposited into a growth-limited treasury, intended to fund structured and transparent incentives within the ecosystem, thus avoiding immediate recirculation that could pressure the price.

Pilot Incentive Mechanisms: ProsperOn and Expanded Proof-of-Ship

To catalyze activity growth on the network and generate on-chain revenue, the community has proposed pilot reward mechanisms with considerable potential. ProsperOn represents an interesting innovation: it transforms gas fees into non-transferable usage points backed by the profits from Celo’s stablecoin reserves, allowing these points to be distributed among users, developers, or public goods without creating selling pressure.

The expanded Proof-of-Ship program for 2026 has shown promising results: in 2025, it involved 576 projects that maintained a user retention rate of 29% over two or more consecutive quarters. This tool has become a valuable mechanism for driving developer engagement and sustainable building within the Celo ecosystem.

Future Outlook for the Network

These reforms represent a mindset shift in Celo, moving from generalized distribution models to result-oriented mechanisms directly linked to actual activity. By connecting CELO’s tokenomics with the network’s operational performance, the Celo Foundation aims to create more durable incentives and generate sustainable value for all ecosystem participants.