Overview
Since our initial post, the Celo ecosystem has undergone changes in TVL and liquidity, along with shifts in key metrics of its major assets. In this post, we will re-evaluate the asset parameters proposed in our previous analysis based on the latest market data.
Market Cap and Liquidity
CELO
Over the past year, Celo’s total supply has shown a steady upward trend, increasing from 690M in March 2024 to 706M as of March 2025. This represents an increase of approximately 16M over the period. As of the time of writing, Celo’s total supply stands at 706.04M.
Celo’s market capitalization, on the other hand, has been on a downward trend. In March 2024, its total market cap was approximately $600M, but it has declined over the past year due to a significant drop in Celo’s price, which fell from a peak of $1.75 in mid-2024 to its current level of $0.35. As of the time of writing, Celo’s market cap stands at approximately $210M.
Currently, CELO liquidity is primarily concentrated on Uniswap, with the largest liquidity pool being the CELO/WETH pair, which has a TVL of $10.1M. Other notable pools include the CELO/USDT pair, with a TVL of $102K, and the CELO/cEUR pair, with a TVL of $35K.
Below, we present the aggregated liquidity of CELO. Since our review in May 2024, Celo’s liquidity experienced a decline in September and October 2024 before returning to its previous levels. As of the time of writing, approximately 13M CELO and 2.3K ETH are held in liquidity pools.
USDT
Over the past year, the expansion of USDT’s total supply on Celo was primarily concentrated between March and July 2024. Since July 2024, the supply has stabilized at approximately 470M, with no significant fluctuations.
USDT liquidity on Celo is primarily concentrated on Uniswap, with the largest pools being the USDT/cUSD pair, which holds $1.3M in TVL, followed by the USDT/USDC pair with $797K, and the USDT/WETH pair with $351K.
Below, we present the aggregated liquidity of USDT on Celo. The data indicates a significant increase in USDT liquidity since our last review, peaking in late October 2024 at approximately $4.5M in total TVL across all liquidity pools. However, liquidity has since declined and is now stabilizing at around $2.5M in total TVL across all pools.
USDC
USDC’s total supply on Celo has exhibited significant volatility. Until the end of 2024, its supply was in an upward trend, peaking at 72M in November 2024. However, since late 2024, the supply has been in a continuous decline, stabilizing around 24M. As of the time of writing, the on-chain supply stands at 24.15M.
USDC liquidity on Celo is primarily concentrated on Uniswap, with the most notable liquidity pools being the WETH/USDC pair with $1.8M in TVL, the USDT/USDC pair with $797K in TVL, and the USDT/cUSD pair with $712K in TVL.
Below, we present the aggregated liquidity of USDC on Celo. Since our last analysis in May 2024, the liquidity pools for cUSD, USDT, and ETH against USDC have seen a significant increase in their respective asset balances. However, by October 2024, liquidity across several USDC pools has gradually declined at a slow pace and is currently stagnating.
cEUR & cUSD
cUSD, cEUR, and other Celo stable assets like cREAL are backed by the Celo Reserve, an on-chain, over-collateralized portfolio primarily composed of CELO (50–60%), with the remainder in DAI, USDC, BTC, and ETH. This marks a shift from the initial 63% CELO allocation, enhancing diversification.
While this structure strengthens stability, the interaction between Mento Protocol’s expansion/contraction mechanism, CELO’s volatility, reserve asset liquidity, and collateral composition introduces complexities that require deeper risk assessment before considering cUSD and cEUR as collateral. CELO’s price fluctuations directly impact the reserve’s value and the efficiency of Mento’s stabilization process, particularly during market stress. Given these considerations, we recommend classifying them as deposit-only for now. If market demand arises, we will reassess their risk exposure before proposing appropriate collateral parameters.
Recommendations
In light of the key metric changes analyzed above, we are preparing to update the parameters for CELO, USDT, USDC, cUSD, and cEUR on Celo’s Aave V3 deployment. These adjustments will primarily focus on supply and borrow caps for each asset, reflecting current market liquidity data. The supply cap will be set according to Chaos Labs’ standard methodology, which defines the cap as twice the liquidity available under the liquidation bonus, while the borrow cap will be determined based on the asset’s Uoptimal parameter.
We do not recommend adjusting CELO’s risk parameters at this time, as its volatility has not improved since our last assessment and has slightly worsened, as shown below. Nonetheless, given that its DEX liquidity has remained stable, further lowering the already conservative parameters is unnecessary.
However, we recommend enabling CELO as a borrowable asset, as it presents the future use case of leveraged staking through stCELO. Given its volatility, we suggest setting the Uoptimal parameter at 45% and setting its borrow cap at 10% of its supply cap to manage risk appropriately. We recommend maintaining the debt ceiling at its current level of $500K.
Specifications
| Asset |
CELO |
USDC |
USDT |
cUSD |
cEUR |
| Isolation Mode |
Yes |
No |
No |
No |
No |
| Enable Borrow |
Yes |
Yes |
Yes |
Yes |
Yes |
| Enable Collateral |
Yes |
Yes |
Yes |
No |
No |
| Loan To Value |
55% |
75% |
75% |
- |
- |
| Liquidation Threshold |
61% |
78% |
78% |
- |
- |
| Liquidation Bonus |
10% |
5% |
5% |
- |
- |
| Reserve Factor |
20% |
10% |
10% |
15% |
15% |
| Liquidation Protocol Fee |
10% |
10% |
10% |
- |
- |
| Supply Cap |
1,000,000 |
3,500,000 |
2,000,000 |
1,300,000 |
80,000 |
| Borrow Cap |
100,000 |
3,150,000 |
1,800,000 |
1,170,000 |
72,000 |
| Debt Ceiling |
500,000$ |
- |
- |
- |
- |
| UOptimal |
45% |
90% |
90% |
90% |
90% |
| Base |
0 |
0 |
0 |
0 |
0 |
| Slope1 |
10% |
7.5% |
7.5% |
7.5% |
7.5% |
| Slope2 |
150% |
40% |
40% |
75% |
75% |
| Stable Borrowing |
No |
No |
No |
No |
No |
| Flashloanable |
Yes |
Yes |
Yes |
Yes |
Yes |
| Siloed Borrowing |
No |
No |
No |
No |
No |
| Borrowable in Isolation |
No |
Yes |
Yes |
Yes |
Yes |
| E-Mode Category |
N/A |
N/A |
N/A |
N/A |
N/A |
Disclaimer
Chaos Labs has not been compensated by any third party for publishing this ARFC.
Copyright
Copyright and related rights waived via CC0
