There are more than 7.7 billion people on Earth, of which more than 6 billion have mobile phones, and about 1 billion are crypto users. At the same time, more than 4 billion people cannot access official financial services. This is explained by the fact that banks simply do not want to serve the poor and impose high fees on cross-border payments, remittances, and other financial transactions. The Celo project aims to reshape the current monetary system and provide financial prosperity for everyone. Find out how Celo changes the game in our article.
What Is Celo?
Celo is a highly scalable, EVM-compatible blockchain that intends to provide financial prosperity for everyone. The project is an open platform with financial tools available to all mobile device users. The system operates on a decentralized basis and is characterized by adaptability. It is aimed at forming a reliable structure for building a stable financial system.
The developers have repeatedly noted that their key task is to overcome the problems associated with the lack of access to reliable coins and reduce poverty. The distinctive features of Celo are simplicity and accessibility so that it can be used even by those far from the sphere of blockchain and DeFi. Celo aims to break the framework imposed by the current financial structure and enable users to send and receive money via mobile phone. In addition, Celo provides developers with a highly scalable, EVM-compatible runtime. Among other things, the key feature of Celo is the ability to pay gas fees using whitelisted ERC-20 tokens.
Celo Key Features
1. Mobile-First Approach
As already mentioned, Celo is designed to provide access to the financial structure to all users with mobile phones and the Internet. Celo team provides a fast, cost-effective, and secure Valora wallet focused on mobile phone users. Valora wallet uses the lightweight Plumo client protocol, which allows seamless sync and interaction with the Celo blockchain. Valora allows users to buy, send, spend, and earn. Users can claim their 12% weekly reward for using Valora. But the most crucial point is that Valora users no longer need to use long, unmemorable wallet addresses since users’ phone numbers are used instead. Moreover, Valora users can easily send cryptocurrency to their relatives and friends that do not even have crypto wallets. All this is thanks to the lightweight identity protocol, which uses a smart escrow contract that releases funds only after the recipient verifies his phone number in the Celo system.
As for the developers, this approach is extremely advantageous for them. After all, with the help of Celo, developers can build easy-to-use apps that do not differ in any way from traditional ones and can be available in app stores.
2. Celo Consensus Mechanism
Celo strives to make financial services accessible even to users from developing countries. Although this group of the population has mobile phones, for the most part, they are far from the most advanced, that is, those that are underpowered in computing. For this reason, the Celo developers rely on the Proof of Stake consensus mechanism, which allows users to run light clients on low-power devices. Celo uses three innovations to provide a better light client sync experience:
- Users who run light clients should not download the block header for each block but only the epoch block headers. The epoch block headers contain information about the current validator sets, which change daily. Therefore, users only need to download once a day.
- Celo uses a scalable and secure IBFT consensus algorithm along with BLS signatures. Simply put, only a part of the selected validators is responsible for signing blocks. Their signatures are collected into one and stored on-chain. This approach significantly reduces the size of the blockchain.
- In addition, the Plumo protocol allows light clients to verify transactions quickly. Plumo is a zk-SNARK protocol that allows Celo to significantly reduce the time costs and the amount of data required for transaction verification.
These technologies allow Celo to be a lightweight, highly scalable blockchain with high throughput and 5-second block finality.
On the way to improving compatibility, Celo implemented a Donut Hardfork in May 2021. This solution allowed the Celo blockchain to become fully EVM-compatible. In simple words, Celo now supports Ethereum transaction types, giving users and developers access to all Ethereum-based apps and tools. In addition, developers can seamlessly port their dapps from Ethereum to Celo and benefit from the speed, low gas fees, and various innovative toolkits. Moreover, this step allows Celo to build new bridges to Solana, Cosmos, and NEAR.
The main token of the ecosystem is an ERC-20 compatible CELO token. CELO has a limited maximum supply of 1 billion, 46% of which are in circulation. 600 million tokens were circulated upon launch, while the remaining ones were gradually distributed via rewards and fees. The CELO token allows holders to earn rewards, staking, and voting power. In addition, part of the CELO supply is sent to the Celo Reserve to maintain the price stability of built-in stablecoins.
In addition to the native CELO token, there are also several stablecoins ― Celo dollar (cUSD), Celo euro (cEUR), and Celo real (cREAL). These stablecoins are over-collateralized algorithmic stablecoins and operate based on Mento's stability protocol. Pegging to fiat currencies is supported by Celo Reserve, which includes various whitelisted assets, including BTC and ETH. With low fees and fast transactions, ecosystem tokens are perfectly suitable for:
- cross-border payments;
- payments for goods and services;
- charity, and so on.
In addition, Celo allows users to use some ERC-20 tokens to pay gas fees. You can send cUSD to your friends and relatives and not pay the fee from the cUSD balance.
The Celo team contributes significantly to the development of the mobile-first movement and creates conditions for the prosperity of local economies. In addition to the Valora wallet described above, which allows you to use phone numbers as addresses, Celo also provides two DeFi products:
- Ubeswap is the mobile-first DeFi exchange. The exchange allows you to instantly swap assets, provide liquidity, earn rewards, and stake tokens.
- Moola is a mobile-first lending protocol. Users can deposit CELO, cUSD, cEUR, and cREAL tokens and earn rewards paid by borrowers.
The Celo ecosystem also includes the Celo Terminal. Users can easily manage their accounts, send and receive funds, participate in decision-making, and access decentralized applications on this all-in-one platform.
In addition, the project team has developed Celo Camp. This is a virtual 8-week training camp with mentoring from industry leaders. Within the framework of the project, users can get the necessary knowledge and skills to build innovative projects and receive funding.
Celo is a truly revolutionary project that aims to reshape the current monetary system and provide financial freedom even to those who do not have access to banks. The project has a bright future and support from many global partners. In addition, the project team has created Celo Alliance which aims to solve real-world problems and create conditions for prosperity for everyone: residents of developing countries, refugees, local merchants, and so on.