CELOccelerate: Celo Tokenomics Proposal - Pausing Carbon Fund Payments

Summary

This proposal implements one of the four changes outlined in the CELOccelerate tokenomics temperature check (CGP-0233), which recently passed governance. Specifically, it executes item 4: pausing carbon offset fund contributions.

It pauses the fee-based carbon fund distributions on the FeeHandler (currently 10% of transaction fees) by setting the carbon fraction to zero via governance.

Specification

Current State (Mainnet)

Contract	Parameter	Current Value
FeeHandler (0xcD43...778)	carbonFraction	100000000000000000000000 (10% in Fixidity fixed point library)
FeeHandler (0xcD43...778)	carbonFeeBeneficiary	0xCe10d577295d34782815919843a3a4ef70Dc33ce

Proposed State

Contract	Parameter	New Value
FeeHandler	carbonFraction	0
FeeHandler	carbonFeeBeneficiary	0xCe10d577295d34782815919843a3a4ef70Dc33ce (unchanged)

Onchain Changes

Transaction 1: Pause FeeHandler Carbon Fund

• Destination: FeeHandler at 0xcD437749E43A154C07F3553504c68fBfD56B8778
• Function: setCarbonFraction(uint256)
• Args: ["0"]
• Value: 0

Sets the carbon fraction to 0. The freed fraction is redirected to the burn (since burnFraction = 1 - carbonFraction - otherBeneficiariesFraction). There is one other beneficiary on mainnet (0x7A1E98FC9a008107DbD1f430a05Ace8cf6f3FE19), so totalFractionOfOtherBeneficiariesAndCarbon remains non-zero and no division-by-zero can occur in _distribute().

Transaction 2: Remove cLabs Other Beneficiary

• Destination: FeeHandler at 0xcD437749E43A154C07F3553504c68fBfD56B8778
• Function: removeOtherBeneficiary(address)
• Args: ["0x7A1E98FC9a008107DbD1f430a05Ace8cf6f3FE19"]
• Value: 0

Removes cLabs as an other beneficiary so its allocation can be re-added at 100% in the next transaction. This indirection is required because changeOtherBeneficiaryAllocation cannot raise an existing allocation past the available headroom — see celo-monorepo#11735.

Transaction 3: Re-add cLabs at 100%

• Destination: FeeHandler at 0xcD437749E43A154C07F3553504c68fBfD56B8778
• Function: addOtherBeneficiary(address,uint256,string)
• Args: ["0x7A1E98FC9a008107DbD1f430a05Ace8cf6f3FE19", "1000000000000000000000000", "cLabs"]
• Value: 0

Re-adds cLabs as the sole other beneficiary at 100% (1e24 in Fixidity fixed point). After this transaction the burn fraction is 0 and all distributed fees flow to cLabs.

Json Script

See mainnet.json.

Verification

Verify the proposal transactions:

celocli governance:show --proposalID <TBD> --jsonTransactions cgp-0236-proposal.json --node https://forno.celo.org

Verify FeeHandler carbon fraction (should be non-zero before, zero after):

cast call 0xcD437749E43A154C07F3553504c68fBfD56B8778 \
  "getCarbonFraction()(uint256)" \
  --rpc-url https://forno.celo.org

Risks

• Reversibility: This change is fully reversible. A future governance proposal can restore the carbon fraction to its previous value.
• Economic impact: The fees that would have been directed to the carbon fund will instead be burned (since burnFraction = 1 - carbonFraction - otherBeneficiariesFraction). This has a mildly deflationary effect.
• No smart contract risk: Setting the fraction to zero is a supported code path. The FeeHandler has an existing other beneficiary (0x7A1E98FC9a008107DbD1f430a05Ace8cf6f3FE19), preventing any division-by-zero in _distribute().

Useful Links

• FeeHandler contract (source)