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Celo: A Smart Contract and Stablecoin Blockchain for Smart Phone Users

By 2sats | 2sats | 19 Dec 2021

*obligatory not financial advice*


What is Celo?

Celo is a smart contract blockchain that enables smart phone users to become their own bank. There are many people in poorer countries that do have smart phones but no access to a trustworthy bank, Celo wants to solve this problem by letting the users register their phone numbers or email addresses on the blockchain as public address. This makes it easy for the users to send funds to other people simply by using their contact info.

Today there are roughly 6 billion smart phones in circulation and the adoption of the internet sky rocketed with their invention, so connecting them with Web 3.0 might be exactly what cryptocurrencies need to get mass adopted. Celo is supported by many big organizations and individuals including Deutsche Telekom, the Opera Browser and Twitter founder Jack Dorsey, also Bitpanda, the biggest European crypto exchange had a Celo giveaway for their top traders this month.




The blockchain hosts a few DeFi applications and is compatible with the Ethereum Virtual Machine, which makes it easy for Ethereum dApps to migrate to Celo. But the main utility of Celo and its coin is the creation of decentralized stablecoins, which allows people to use the blockchain to hold and use their savings without the volatility of cryptocurrencies. The blockchain hosts multiple stablecoins like cUSD and cEUR and many more can be built on it. The stablecoins are secured both algorithmically and with a collateral.

The algorithm works like Terra’s LUNA and UST work, 1 cUSD can always be traded with $1 worth of CELO. This means that if the value of the cUSD rises to $1.05, then CELO holders could earn an instead profit of 5% by minting more and selling them, which would increase the supply and lower the value down to $1. Should it fall to $0.95, then the cUSD holders could get a 5% profit by burning it for CELO, which would lower the supply and increase its value again. Celo uses the Band Protocol oracle to know the price of CELO. Additionally the stableassets are also backed by a treasury that holds CELO, BTC, ETH and DAI.

This stablecoin infrastructure makes it possible for the users to become their own bank, which means that people without access to banks can just use their phone instead. The blockchain can also be used for CBDCs and dApps. Celo has a blooming ecosystem of dApps, which includes a Launchpad, a DEX, a lending protocol and multiple dApps that migrated from Ethereum like SushiSwap.



The Celo Coin

CELO is the native cryptocurrency of the Celo network. Celo uses proof of stake to achieve its consensus and holders can delegate their CELO to a validator to earn rewards. The other utilities of CELO are stabilizing the price of stablecoins on the blockchain, paying for transaction fees and governance over the network.

CELO has a max supply of 1,000,000,000 coins of which 600,000,000 were available since the launch of the chain in 2020. The remaining 40% of the supply will be received as staking rewards until 2026. 20% of the genesis supply were used for pre-launch sales, about 60% went to founders, developers, the Celo Foundation and other contributors that help with the development or adoption of Celo and the remaining 20% went to the reserve that collateralizes the stablecoins. All in all, the Celo blockchain was initially very centralized because most of the supply is being used to fund further improvements and adoption but it will slowly become more decentralized when the contributors sell their coins, however this will likely also put a downward pressure on the price.

The value of CELO obviously depends on how much the blockchain is used, how many stablcoins are minted with it and how many applications run on it. Because Celo provides a useful service and makes it easy for people to use their phone to be their own bank and also enables the usage of DeFi apps. The potential is very high, however the token distribution favoured the main contributors a lot.





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