What is Celo (CELO)?
Celo is the multi-purpose native token for the platform of the same name. Celo is a mobile-first decentralized finance (DeFi) ecosystem that allows users to perform crypto transactions using their phone numbers.
Celo is Ethereum Virtual Machine (EVM)-compatible. It aims to improve crypto usability on mobile devices by using blockchain technology to map mobile phone numbers as public keys for cryptocurrency wallets. Celo is also known for issuing stablecoins like cUSD and cEUR.
Who is the Team Behind Celo?
The Celo Foundation is a non-profit organization that consists of an international team of researchers. Members have represented a vast array of commercial and academic institutions, including Cambridge University, the Gates Foundation, Google, MIT, Stanford, Twitter, the U.S. Department of Justice, and Visa.
The project came to be as it was discovered that the rate at which users adopt smartphones is significantly faster than crypto adoption. Given the globally widespread use of mobile devices, it was decided to simplify the process of crypto acquisition, trading, and other decentralized finance services for the small screen.
Celo is a considerably volatile asset. It generally follows the overall market trends regarding its value changes. The most up-to-date CELO price value can be seen in the chart above.
Work on the Celo crypto project began in 2017, marked by the publication of the whitepaper. Initially, Celo was known as cGLD. However, one of the earliest proposals submitted for the governance vote on the blockchain was to change the name to Celo.
The decision to change the name was made to avoid confusion since the Celo price is not pegged to the value of gold. Some sources may still list the asset as cGLD. Prior to the official launch, the network released two testnets.
Alfajores, the testing environment for dApp developers, went up in July 2019, while the incentivized Baklava testnet for node operators was released in December of the same year.
The Celo Mainnet went live in May 2020. Around the time of launch, the CELO price was estimated at around $0.8. 60% of the overall token supply was made available during the release, while the remaining 40% is scheduled to be gradually released.
What are the Features of Celo?
Celo coins have a limited maximum supply that is capped at 1 billion. The asset is deflationary, meaning that the Celo price is expected to rise in the future, once the reserves become more scarce. 120 million Celo tokens from the overall supply are reserved to maintain the stability of the network’s stablecoins.
Celo tokens are not the only ecosystem's assets. It also offers cUSD and cEUR – stablecoins that have their value pegged to 1 USD and 1 EUR respectively. Other stablecoins pegged to popular fiat currencies are also in the works.
To maintain their pegged value, the stablecoins use an overcollateralized reserve, also known as a programmatic reserve. Alongside CELO, the reserve also uses other crypto assets, including Bitcoin (BTC) and Ethereum (ETH). The Celo price is not dependent on that of the pegged assets as it maintains the exchange rate of the fiat currency.
If the stablecoin value goes over the peg, assets are taken out of the reserve. On the other hand, if the value falls below the peg, tokens are sent to the reserve. This ensures that the stablecoins do not crash and partially regulate the available token supply. cUSD and other stablecoins can be sold for the equivalent CELO price value or traded for other assets.
Celo uses the Proof-of-Stake (PoS) consensus algorithm. This means that users can stake their assets to provide liquidity to the network, as well as ensure its security and stability. In return, stakeholders are eligible for rewards as an incentive to continue their contributions to the Celo ecosystem.
There are three types of network contributors on Celo:
- Light clients
- Validator nodes
- Full nodes
Light clients are applications that network users can access on their phones. They’re essentially all dApps developed on Celo. Validator nodes are devices that directly take part in the PoS consensus mechanism. They’re responsible for block production and transaction validation.
The protocol establishes strict directions on which devices can act as validator nodes and how many nodes can run at the same time. Users that wish to run a validator node must stake at least 10,000 CELO. There can be 100 validator nodes running simultaneously. These nodes are selected by the full nodes during a vote.
Full nodes connect Validator nodes to the light clients, specifically Celo mobile wallets. They take requests from light clients regarding new transactions. The data is then sent to the validator nodes which record it on the blockchain.
Both validator and full nodes receive rewards for network participation. Validator nodes earn block rewards for logging new transactions, while full nodes receive the transaction fees that the light clients pay.
Celo has three primary uses:
- Utility
- Reserve
- Governance
As a utility asset, CELO is primarily used for smart contract programming and transactions. Celo allows developers to work on mobile-first decentralized apps that enable ease of transactions and employs light clients. The apps developed on Celo can be both Android and iOS compatible, making them accessible to a wide range of users.
Celo’s apps enable users to encrypt public keys with access to their cryptocurrencies by mapping their mobile number to their crypto wallet. One of such apps is Valora, a peer-to-peer decentralized financial platform. It allows users to perform transactions similarly to sending text messages.
Valora requires users to verify their phone numbers, which then act as the public keys to access their Celo coins. The platform also supports transactions that use cUSD and cEUR. Valora offers low transaction fees, as the Celo price for the fees equals $0.01.
The assets used for the reserve are the aforementioned 120 million CELO dedicated to stablecoins. They ensure that the available supply of Celo is regulated and helps maintain the stablecoins’ peg.
Celo’s on-chain governance functions as a decentralized autonomous organization (DAO). Stakeholders are eligible to submit proposals regarding protocol changes, and all Celo token holders can vote in a Referendum. The value of one stakeholder’s vote depends on the value of their staked assets.
The platform’s DAO runs a Community fund that is maintained using 25% of the minted block rewards. The proportion dedicated to the Community fund can be changed via a governance vote. The Celo DAO has full control over where the funds go.
