Celo is a mobile-first payment platform that allows anyone to transfer and receive cryptocurrencies using their phone number.
With the rapid growth of information technology, as evidenced by the widespread use of mobile phones, the Celo platform was built with the goal of making financial tools simple to use, limitless and accessible to everyone.
In today's article, we'll learn the basics of the Celo project, including:
- What exactly is Celo?
- What are the salient features of the project?
- Tokenomics in detail, including how you can store, buy and sell $CELO tokens.
- The company's development roadmap and management, as well as the project's strategic partners.
- Some projects are similar to Celo, so you can assess the project's development potential.
Now let's jump into it!
What is Celo?
Celo is a mobile blockchain that allows anyone with a phone to easily access financial services, transfer and receive money using the recipient's phone number and public keys.
Celo lets users contribute to the development of the platform over time. The project aims to be a decentralized platform that is developed, updated, and managed by a large community of individuals, businesses, and partners, rather than controlled by a single person or organization.
CELO has a fixed supply and its fluctuating value is related to the overall value of stablecoins circulating within the Celo ecosystem. The CELO coin also plays an important role in stabilizing the platform. It helps keep prices as close to the target value as possible by adjusting the circulating supply of stablecoins.
Celo launched the $100 million Incentive Program in August 2021 as the first step in developing their ecosystem.
Celo's current ecosystem is still in an early stage of development, with the first projects in the puzzle pieces such as AMM with Mobius and Ubeswap; or Lending with Moola Market, Mother Protocol, and so on.
These projects have achieved a promising amount of Total Value Locked (TVL) within days of their debut. For example, Mobius (MOBI) reached a TVL of $10 million within hours of launch, Moola Market (MOO) grew from $3 million to $72 million by mid-September 2021.
In short, the Celo ecosystem consists of the following main components:
- The Celo protocol is a proof-of-stake blockchain protocol that uses email addresses and phone numbers as public keys instead of traditional cryptographic hash functions.
- Celo Dollar (cUSD) is a stablecoin pegged to the US dollar (USD) and backed by a reserve of crypto assets.
- Celo Developer Wallet allows you to transfer, receive and exchange tokens for cUSD and CELO token using decentralized phone number verification.
Highlights of the Project
Celo's mission is to enable 6 billion smartphone users worldwide to benefit from blockchain technology and stablecoins.
To achieve this goal, they have formed a solid alliance that will help them develop, interact and secure new financial services applications.
In recent months, they have launched a second integration with tBTC. tBTC, which has already enabled Bitcoin holders to earn via DeFi applications on the Ethereum blockchain, is now also able to provide secure access to the Celo platform.
Bitcoin will soon be accessible to 6 billion smartphone users around the world thanks to the Celo and tBTC bridge. We believe that more and more features will be added in the future to help Celo get closer to its goals.
Below are some highlights of the project:
- Stable currency: It supports a range of stablecoins tied to fiat currencies like the US dollar, making it easier to use Celo as a payment method.
Accounts linked to phone numbers: It maintains a secure hierarchical map of phone numbers that allows wallet users to easily send and receive money with their existing contacts.
- Transaction fees: It allows users to pay transaction fees in any stable currency, thereby eliminating the need to manage multiple currency balances.
- Instant syncing even on slow connections: Even for wallet users with poor bandwidth, high latency or massive data rates, it provides extremely fast and secure synchronization between mobile devices.
- Benefits for running nodes: The Celo protocol incentivizes mobile devices to run full nodes on a regular basis.
- Difference from other proof-of-stake platforms: Even if users do not stake any other crypto assets, they can still earn coins or tokens by contributing their computing resources (processing power).
- On-chain governance: it offers quick upgrades and protocol updates through on-chain governance, which is open to all cryptocurrency holders.
- Fully EVM compatible: It has a programmable smart contract platform that is fully compatible with Ethereum. This enables Celo to provide users with comprehensive features while supporting a diverse ecosystem of third-party apps and extensions in a timely manner.
- Self-management: Users retain full control and access to their funds and private keys without having to rely on a third party to process transactions.
How Does Celo Work?
Celo is a mobile-centric solution that consists of three main components:
- For a better user experience, it leverages a lightweight identity
- Currency stability mechanism to maintain the value of the currency.
- There are incentives and a governance mechanism to ensure the long-term viability of the platform.
Transfer Crypto Assets With Phone Numbers
To exchange cryptocurrencies, senders and receivers must download digital wallets, create public key or private key pairs, and share long hexadecimal addresses (derived from the public key).
Instead of using long, complicated cryptographic addresses, Celo has simplified this by allowing users to send value to each other with just a phone number.
If someone is not registered on the Celo network (and cannot confirm ownership of their phone number), the protocol holds the crypto assets until they are verified.
Implement Address-based Encryption
Address-based encryption (a form of identity-based encryption) is also used by Celo to enable mobile payments.
Address-based encryption binds a phone number to a Celo address (similar to an Ethereum address) so that the phone number can be used instead of the address when making payments, thereby simplifying the customer experience.
To ensure privacy, the blockchain only stores a hash of the phone number instead of the actual phone number.
When a phone number is linked to a Celo token address, verification takes place. In general, it works as follows:
- Users can request that their phone number be linked to a public Celo address.
- When the network receives the request, three text messages are sent to the phone number in the form of secure messages. In this way, users can prove ownership of their phone numbers by returning signed secure messages.
- Verification is considered complete when the network has received all signed messages and the phone number is marked as "verified" on the blockchain.
If a person's phone number changes, they can re-verify their identity with the new phone number associated with their old address. Therefore, a public Celo address can be associated with multiple phone numbers.
In addition, users can revoke or change the address associated with their phone number at any time in the future.
Easy to Access Users' Reputation
By associating a phone number with a Celo address, it is possible to gather information about the user's credibility (e.g., their credit score). Celo measures this metric using a decentralized algorithm called EigenTrust.
The score assigned to a phone number is determined by the number of other phones that trust it, as measured by their reputation score.
Help to Stabilize Value
Volatility is one of the biggest obstacles to the widespread use of cryptocurrencies as a means of payment.
Stablecoins help overcome this obstacle by eliminating the price risk of financial contracts denominated in these currencies.
Furthermore, by having a pool of assets with a stable value (instead of a single currency), utility assets can be created that boost the local economy and allow individuals to hedge against the price risk of locally produced goods and services.
Therefore, Celo allows for a set of stable currencies, each linked to a measurable value such as the dollar, the euro, a Greek commodity basket, or the price of oil.
The supply of stablecoins on Celo is automatically adjusted to user demand. The flow of stablecoins is backed by a pool of crypto assets that serve as a reserve and adjust the value in case of volatility risks.
How The Stability Mechanism Works
The protocol contains a predetermined supply of Celo Gold (cGLD). A small percentage of the cGLD will be available from the beginning, and the remainder mined by the network over time.
The majority of the cGLD initial supply will be used to fund the reserve, with the expectation that 50% of the cGLD will go into the reserve and 50% of the cGLD will be used to purchase other crypto assets. The company shares that Bitcoin and Ethereum will also be included in the reserve.
When the price of cUSD rises above the set level, it means that the demand for the currency exceeds the supply.
In such cases, the protocol automatically increases the supply of cUSD by mining fresh cUSD and selling it to cGLD via something called CP-DOTO, a decentralized market similar to Uniswap.
Similarly, when the price of cUSD falls below the predetermined level, it indicates that the demand for cUSD is greater than the supply.
Again, the CP -DOTO, a Uniswap-like decentralized exchange, is used to swap cGLD from reserve for cUSD. The protocol then destroys all cUSD that was acquired during this process.
To encourage long-term cGLD holdings and maintain a healthy reserve, a variable fee is applied to all Celo Gold transactions. This fee is based on the reserve ratio, which is determined by the value of the reserve to a stable (e.g. cUSD) value.
In addition, if the reserve ratio falls below the target level, a large percentage of the network's block reward is transferred to the reserve.
Provide Incentives to Maintain Stability
Celo's governance structure is designed to ensure the long-term stability of the protocol. This is achieved through the use of a proof-of-bonded-stake consensus approach that rewards long-term Celo Gold holdings based on the amount bonded and the time remaining in the bond.
Governance is implemented entirely on-chain. Anyone can submit protocol modifications for a small fee plus an implementation fee. cGLD holders can vote based on their committed holdings.
All proposals to add new stablecoins or crypto assets to the reserve go through the same process. The only difference is that supporters must stake cGLD instead of paying a submission fee.
In order to avoid existing cGLD holders exercising their veto power over the proposal, new stable assets that are not backed by the reserve are exempt from going through the regulatory process.
Celo's global team of over 100 professionals includes experts from the public and private sectors, technology, non-profit and non-government organizations.
The entire Celo team is publicly available on their website.
Early backers include notable venture capital firms, C-level executives, professors, and professionals in a variety of industries, including:
The platform's economic model is based on the following two tokens:
- $CELO is a main coin with a fixed supply of 1,000,000,000 tokens. The token is used to pay commissions and gives users the opportunity to vote on community ideas. It is also required for the issuance of stablecoins.
- Celo USD (cUSD) is a dollar stablecoin backed by Celo's internal dollar reserves.
Users can freely convert CELO to cUSD and vice versa. To mint cUSD, the platform freezes the corresponding amount of CELO tokens so that the CELO price is directly tied to the cUSD demand.
To complete a transaction, you must pay a "gas" fee, which can be paid in any of the Celo tokens now available. This eliminates the need to always hold a reserve of CELO.
The first stablecoin on the platform is cUSD, but it's not the only one. Euro-coin is expected to be available in March, and users will be able to vote on other assets to be added in the future.
- Token Name: Celo
- Ticker: $CELO
- Blockchain: Celo Blockchain
- Token Type: Utility, Governance
- Total Supply: 1,000,000,000 CELO
- Circulating Supply: 306,819,314 CELO (increasing over time)
- Staking & Validator Rewards: 30%
- Community Grants: 19.5%
- Protocol Contributors: 18.5%
- Pre-launch Sales Purchasers: 12.5%
- Initial Reserve: 12%
- Operational Grants: 7.5%
- 1st Private Sale: $0.18 per CELO
- 2nd Private Sale: $1.00 per CELO, with a 25% discount for buyers who agree to commit for 3 years beyond the initial 1-year lock-up period and/or waive reserve refunds if the mainnet is not released on time.
Token Release Schedule
The graph below shows the projected monthly distribution of CELO coins from mainnet launch to 2050:
Until 2050, all tokens will be unlocked at T+1 years, T+10 years, and 2050. You can have a look at the table below:
Below is some important information about token unlocks:
- Unlocking 52% of CELO's revenue in the first year.
- The number of unlocked coins will increase weekly as Private Sale 1 is scheduled to run 24 times in 24 months. Each distribution can be deferred for up to one year, but all funds must be delivered by the end of the fifth year. This auction has raised approximately $6 million.
- Unlock 16% of tokens for protocol contributors.
- Unlock 4% for staking and validator incentives (not including on-chain community funds).
- Unlock 10% of on-chain community funds for community grants.
- Release 5% of tokens held by cLabs and the Foundation.
- Initial reserve is 50% of the total number of tokens.
Celo's native token is used for the following activities:
- Governance: Staking allows users to vote on network governance issues.
- Cybersecurity: Staking to secure the network, participate in consensus, and receive incentives and rewards.
- Transaction fees: Paying gas fees for on-chain transactions.
How to Buy CELO Tokens
$CELO is currently traded on multiple exchanges with a daily trading volume of over $721.22 million.
You can easily buy this token using some popular exchanges like Binance, Kucoin, FTX and Coinbase Pro.
You can use exchange wallets to store your Celo tokens. However, we highly recommend that you use a private digital wallet such as Metamask and Trust Wallet to ensure the security of your assets.
You can follow these instructions to add the Celo network to your wallet. Once the mainnet is added, your wallet is ready to use.
The Future of the Coin
Celo is a blockchain, mobile-first payment platform that allows users to use their phone number as a public key. In this way, exchanging cryptocurrencies has never been easier.
After reading this article, you should have gained enough knowledge about this project and you can now make your own investment decisions.
We wish you much success and that you profit from this booming era of cryptocurrencies.