Celo is actually not a new project, having been founded back in 2017 with the mission of building financial systems that create conditions for prosperity for all. This seems to be in line with Libra’s mission to build a financial infrastructure that serves billions of people around the world, which is why it has been called by many the “decentralized Libra”.
However, unlike Libra, which ended without a hitch, more than 2 million transactions have already taken place on the Celo network, making it one of the most actively used decentralized payment platforms, and Celo has been backed by many well-known institutions. So what exactly is the origin of Celo and how is it developing so far?
For this, we invited Alex Witt, CFO of Celo Labs, to share with us what Celo is all about. Here is the original interview:
01 Project Introduction
Media: Welcome to Alex’s guest appearance. First of all, can you briefly introduce the Celo project?
Alex: Celo is an open source platform that allows anyone to access or use financial products, as long as you have a cell phone, you can use and trade all kinds of financial products, including but not limited to payments, lending and a series of financial products.
Because Celo is completely open source and decentralized, there are many projects developed on our infrastructure. There are currently over 400 projects for various financial products, including wallets, payments, and debit platforms. We are actually kind of like a decentralized Libra, anyone can use our platform, and similar to Nokia’s cell phones can also use any financial product on our platform.
Media: As one of the core members of the team, can you tell us more about how you came across cryptocurrency and joined the Celo team?
Alex : I started mining bitcoin in 2013 when the story of bitcoin was very different from now, which is now e-gold, when it was more about person-to-person payments, and financial inclusion, which is about making financial products available to more people, and I think bitcoin didn’t fulfill that dream, but Celo has the hope to advance that aspect of the goal.
In 16 or 17, the concept of stablecoin started to emerge. Before that, people were more likely to use XRP to complete cross-border payments, but after stablecoin came out, I realized that stablecoin is definitely the future, and Celo is the most suitable platform to expand a series of stablecoins.
The most important thing about making payments is stability, which means that you don’t want your personal purchasing power to keep changing. USD or RMB, which are more stable payments, are more suitable, rather than just an investment type product like Bitcoin.
Simply put, Celo is an infrastructure that enables everyone to enjoy financial products, as long as that product is available in the traditional financial industry, it can be put on top of this protocol of Celo, and it will become faster, more convenient, and as cheap as sending an email.
Why Celo protocol is the most suitable for stablecoin. You can pay the fee with stablecoin, and you only need to know the other party’s cell phone number to transfer money to him, without knowing the concepts of public key and private key, which is more helpful to the popularity of Celo.
Media : It is understood that since Celo was founded in 2017, more than 2 million transactions have occurred on the Celo network, making it one of the most active decentralized payment platforms with Tokens such as Celo Gold and Celo Dollars, cEUR, etc. What is the economic model and value capture of these Tokens?
Alex : Celo Gold is now called Celo, and about this model, it is actually a very perfect cycle. Every time an additional stablecoin is issued, 50% is used to buy Celo’s platform coins and 50% is used to buy non-Celo virtual currencies, including bitcoin and ethereum.
And this buying and selling is just completely done with a protocol and is 100% open and transparent. Simply put, a higher demand for stablecoins will lead to a higher demand for Celo’s platform coins as well.
02 Recent Progress
Media: In addition, on April 20, Deutsche Telekom, a leading global telecommunications company with over 242 million mobile subscribers, invested in a large amount of Celo’s native assets (CELO) and expressed its bullishness on the future trend of decentralized finance. This move also makes Deutsche Telekom the first telecom company in the world to join the Celo Prosperity Alliance. What impact do you think its addition will have on Celo and what does it mean for the growth of Celo?
Alex: We are very grateful for the investment from Deutsche Telekom, this is the first telecom company to buy virtual currency and it’s Celo, this is very significant because these telecom companies have a huge user base and they will become a sales channel for Celo.
I think the most interesting thing is that there can be various stablecoins in the future, the first one is the USD stablecoin, the second one is the Euro stablecoin that we issued last week, and there will be various stablecoins after that, and 50% of every additional stablecoin issued will be used to buy Celo, so the higher the demand for stablecoins, the higher the demand for Celo.
Celo platform is most suitable for stablecoin, you can pay Gas Fee directly with Celo stablecoin, the fee is less than one cent, very cheap. Also just like WeChat Pay, cross-border stablecoin payments can be done all over the world.
The benefits of this stablecoin are not limited to cross-border, but also apply to DeFi. Through the agreement you can use the stablecoin to enjoy more financial products and services, such as pledging your stablecoin and then borrowing.
Right now you can talk and text through your cell phone, but after that you can use the Celo protocol to transfer money and be able to transfer money across borders. So I believe more telecom companies will work with Celo in the future because they want this to expand this aspect of their business as well.
To be honest, they are also threatened by e-wallets and so on, and the open source platform can expand their products in this area and also play to their channel advantages. In the future, telecom companies can use Celo, an open source platform, to provide various financial products to their users, including but not limited to payments.
Media: It is understood that Celo is based on the Ethernet code base and can deploy Ethernet smart contracts without changes.
Alex : Celo is forked from Ether, using the advantages of Ether and then improving on that. Ether is also in our basket of Tokens that support the stability of stablecoins, and there is a role for asset sharing in this regard. The most important thing is that we are compatible with EVM, so developers on Ether can easily develop various projects on the Celo platform.
Now Ether is the largest community in all blockchain protocols, so you can understand that we are lending our strength. Developers can directly use the already developed applications and can enjoy the competitive advantages of Celo, including cheap transaction fees.
In the cross-chain era, assets can easily be transferred from one chain to another. For example, pledging ethereum on Celo is much cheaper, less than a cent, and borrowing stable coins after pledging, such as Euros and US dollars.
03 Advantages of Celo
Media: Crypto payments have always been an important area in the blockchain world, and algorithm-based stablecoin payments are the focus of it, as you just mentioned that Celo system supports operating stablecoins. It is understood that Celo has built a mobile-first smart contract platform with a built-in stablecoin system, and Valora, which officially launched on February 17, 2021, is also known as the most central vehicle for achieving stablecoin cUSD payments.
How is the stability mechanism of Celo implemented, and how about a brief introduction to Valora?
Alex: Valora is the wallet on Celo, one of our core products, but not the only one. In addition to the Valora App, there are other wallets, and we are currently working on a wallet for the Chinese market.
Valora actually works very well, you can use your phone to connect to various decentralized applications on Celo. Simply bind your phone number and you can start enjoying the benefits of the entire Celo protocol, including the transfers I just mentioned.
I’ll explain the stability mechanism of Celo again. there are two kinds of coins in Celo, the first one is a stable coin, and the second one is various stable coins, such as USD and EUR. There will be more in the future. What kind of a mechanism do these two coins have for each other?
For example, for every additional dollar issued, this agreement is equivalent to printing one dollar. This person of which 50 cents to buy Celo and other virtual currencies, including bitcoin and ethereum. Why produce this virtual currency? The reason is that we want to be completely automated and completely decentralized, so that we just don’t have to rely on third parties.
Media: Also on the technical side, Celo, as a fork of the Ether codebase, has full EVM compatibility, so please give us a concrete explanation of Celo’s EVM compatibility? Alex
Alex: EVM compatibility means that the applications you develop on Ether can be launched on Celo at the same time. Because developers don’t want to start writing code again on every platform, there are also security issues, each blockchain protocol may have different security vulnerabilities, so developers also have the cost of upgrading in this area, so we make sure Celo has EVM compatibility to make it easy for more developers to develop projects.
Ethernet has the largest developer community, and we can easily attract all kinds of engineer talents to our platform to develop different application scenarios. This is also beneficial to user experience because you can directly use meta mask, a third-party Ethernet tool that has been developed, to directly engage with Celo’s protocol without starting from scratch.
We are taking advantage of the benefits of Ether and improving its shortcomings. The lack of scalability of Ether, the high fees, the need to pay fees with Ether, and now the need to switch to layer 2, etc., have discouraged many people. But people are already familiar with how to use their phones, so the Celo protocol is in line with what consumers are used to.
04 Celo VS Libra
Media: It is understood that Celo has received support from Anchorage, Bison Trails, Coinbase Ventures, Macy’s, Andreessen Horowitz and many other well-known organizations.
Alex: Libra or now Diem is actually a coalition chain, while Celo is an open source decentralized blockchain protocol. You need to pay $10 million to join the Libra consortium, which is basically a very wealthy organization to participate in the settlement mechanism.
Libra is a coalition chain, and it is up to the institution to decide the future of this protocol and network, and also to decide whether the user can complete the transaction, which is actually very inconsistent with the original spirit of blockchain.
The benefit of decentralization and open source is that it is more efficient, and all kinds of developers around the world can come on our infrastructure to develop projects without any license, and they can directly develop any product, which is relatively more inclusive and permanent.
05 Future Planning
Media: According to the official website, Celo is a global payment infrastructure for mobile devices. What kind of application scenarios do you want to build on Celo, and can you also describe them?
Alex: We want to develop such a blockchain protocol specifically for mobile users. Because there are 1.5 billion people who use cell phones but don’t have computers or bank accounts. In order for anyone to use our blockchain protocol, it has to be developed for mobile users.
Also for this reason, Deutsche Telekom and other telecom companies are going to work with us because we are perfect for mobile users and mobile Internet access and mobile use of blockchain protocols must be getting more and more popular.
Media: In previous interviews, we learned that Celo has developed a truly global launch plan, with the goal of establishing a presence in more than 20 countries around the world by the end of 2020. What is the current progress regarding this piece of business? Are there any new developments that Celo can share in the future?
Alex: Celo has users in more than 100 countries and developer development projects in more than 50 countries. 500+ application scenarios have been implemented, so we have already exceeded our original goal.
Celo now has 640,000 registered addresses, a figure that was only about 330,000 on January 1, so in the past four or five months, we’ve doubled our registered addresses by more than 20 times, and our average daily transaction volume has also doubled by 10 times.
Celo will become more and more decentralized, all decisions are made through the on-chain mechanism, and the name of the platform coin has been changed from Celo go to Celo through the on-chain consensus mechanism.
I think the focus is still on DeFi, and we already have various DeFi projects in development.
06 Questions from the community
- What positive impact will the future Ether EIP-1599 have on Celo?
Alex: Actually, Celo is a PoS mechanism, although we are forked from Ether, we are already a PoS, so we don’t have a particularly big problem with this kind of scalability.
Also in terms of fees, you can pay directly with the Token you transfer, less than a cent, sometimes less than 1% of a cent. Simply put, we do not have such restrictions on the payment of fees and scalability.
2、How is security guaranteed? It is understood that as long as you know my phone number, Celo can send Token to me directly, why choose the identity system based on phone number, does it mean that people who know my phone number can also see my whole transaction?
Alex: If you don’t know if the person has a Volora wallet or any other wallet on the Celo platform, then it will go to a blockchain smart contract first and then notify the user to sign up for a new account to receive the Token.
Regarding why the phone number-based identity system was chosen, it’s actually a way to leverage the power. Because people are used to using their phone numbers to communicate, so we are relying on old user habits to make transactions more convenient.
But we don’t have the SIM card security vulnerability aspect, and we also provide more measures to find the mechanism of vulnerability. For example, if you lose your cell phone number, we have developed a community of friends to dig out the mechanism of private keys.
- Has Celo considered cross-chaining in the future?
Alex : We have developed technology about cross-chain, simply put, you can do all kinds of cross-chain asset exchange through this new cross-chain technology, so whether it’s Polka or Ether, you can directly interact with that Celo blockchain protocol. We’re going to have TBTC and TETH online next month, and you just can hold these assets directly on Celo from other chains.
- most PoS projects choose an inflationary model for Token supply. why does Celo choose a fixed total supply? Will fixed supply lead to the solidification of rich and poor in the network?
Alex : Actually we want to help many users avoid this inflationary environment. Because many of our users are in South America or Africa. They have a greater tendency to want to have a full value vehicle that can fight inflation. Bitcoin is so popular also because it has a fixed supply.
The solidification of the rich and the poor is indeed a point of concern, but we are trying to reduce the risk of that as much as possible through this Token economy, so we are releasing it now at a very low level.
As long as you are a community contributor to Celo, you can actually apply for a Celo on the chain. so 25% of Celo’s block rewards are donated directly to a community fund, which is then transferred to community contributors, thus avoiding the rich getting richer.
5、What are the future plans of Celo Labs in terms of getting the support of MetaMask, Tokenpocket, Math and other APP wallets; what are the future plans for the Chinese community and business?
Alex: We have a lot of wallets developed on Celo now, and there will be another soft fork in the next few weeks to make EVM more compatible, so you can have direct contact with Celo on MetaMask, and we will also access Math APP below.
Specifically for China, we now have many Chinese developers developing different wallets for the Chinese market. But to be honest, the Chinese market we are just starting now, our main focus before is on Latin America, Africa, Europe, USA, etc. So next we will invest more time and resources in China to mainstream the DeFi app on Celo.
6、Why did you set up 100 validator seats, what are the validator groups in Celo, and what is their role?
Alex : We will actually expand to 125 in two or three months. 100 is a relatively small number for several reasons: if there are too many nodes, it’s difficult to spread the information, and it’s harder to achieve synchronization, and we want to let the community participants to understand these different this nodes, and then can decide whether to vote based on their contribution to this validation node for them.
But if there are too many, it’s actually very difficult for you to choose, and users won’t know where to start to understand, so by just having fewer seats to get a deeper understanding of what these verifiers are all about.
The main purpose is to ensure the security of the network, to ensure that the cell phone number and the public key are bound, if there is no verifier to prove the binding, it will be insecure.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/whats-so-special-about-celo-as-the-242-million-subscriber-telecom-giant-invests-in-an-upgraded-version-of-libra/
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