What is Celo? The first blockchain for mobile users

As the internet transitions to web3 and decentralized finance (DeFi) attracts more and more users, promising new protocols are gradually dominating the market. One such platform, Celo, is expected to become the ‘WhatsApp of DeFi.’ In this article, we will explore what Celo is and how it works.

What is Celo?

Celo is a Layer 1 protocol compatible with the Ethereum Virtual Machine (EVM) and is carbon-negative, allowing users worldwide to perform simple financial transactions using cryptocurrencies. This platform has its own blockchain with a native token and three algorithmic stablecoins (cUSD, cEUR, and cREAL). Celo has also partnered with two prominent stablecoin projects, USDT and USDC, to integrate native versions of each stablecoin into its blockchain, expanding its reach to a larger cryptocurrency market.

Celo was created in 2017 by GoDaddy’s CEOs Rene Reinsberg and Marek Olszewski, along with MIT professor Sep Kamc. The company quickly attracted large investors, raising $46.5 million from 2018 to 2020 through the sale of CELO tokens. Venture capital firms such as Social Capital, Andreessen Horowitz, and General Catalyst are the main investors. Celo’s blockchain then launched on Earth Day in 2020, becoming the first carbon-negative Proof of Stake (PoS) Layer 1.

As the platform developed, the founders were able to build the necessary infrastructure to achieve their goals. Today, Celo provides a global payment infrastructure that cryptocurrency users can easily access from mobile devices by offering stablecoins and credit solutions. The company’s blockchain can also store decentralized applications (DApps), turning this platform into a potential hub for web3 activities.

Oracles on the Celo chain, such as Chainlink and Band Protocol, support the creation of DeFi DApps. In addition, its integrated Rarible API allows developers to build NFT projects on Celo.

How does Celo work?

Although the general concept of blockchain and decentralization of Celo is similar to other digital currency services, its focus on mobile access is what sets it apart. Celo’s blockchain is designed to connect all mobile phones worldwide in a single hierarchical framework.

Celo is built with a comprehensive approach, including three layers of interaction: PoS blockchain, Celo’s core smart contracts, and DApps running on the protocol. Its blockchain uses a Byzantine fault-tolerant consensus mechanism to enable self-governance. Its smart contracts, managed by a decentralized governance system, are compatible with EVM and upgradeable.

Celo has become a “green” blockchain by automatically offsetting carbon emissions from its first block by sending daily CELO to a Carbon Offset Fund on the chain.

The native token of Celo, CELO, is an ERC-20 token that provides the foundation for the governance and collective organization of the system. Holding this token allows users to participate in governance decisions and earn rewards. The organization also holds these tokens along with other cryptocurrencies as part of the blockchain reserve.

Celo platform’s native stablecoin

Celo supports mobile transactions through the use of native stablecoins on the platform (cUSD, cEUR, and cREAL). These stablecoins are pegged to different fiat currencies through a reserve algorithmic mechanism called Mento, and are backed by digital assets such as BTC, ETH, and USDT in the Celo Reserve. These algorithmic stablecoins can be used for any transaction in centralized financial applications (CeFi) and decentralized finance in the Celo ecosystem through mobile phones, and can also be used to pay gas fees.

Celo and the strategy towards mobile

Celo is very popular with users because it has many diverse applications. Its mobile-first approach makes this blockchain an excellent choice for instant international transactions. Attractive rewards have attracted many users to the idea of holding Celo’s stablecoins. Committing to holding CELO tokens can provide passive income for investors, and the decentralized nature of this platform makes it an excellent choice for anyone committed to the future of DeFi.

Although the Celo cryptocurrency has been an attractive investment in the years following its establishment, it has become more popular since implementing a hard fork in 2021. This significant change to the protocol, called the Donut Hardfork, has brought EVM compatibility to Celo, enabling interaction with the Ethereum (ETH), Solana (SOL), Cosmos (ATOM), and NEAR (NEAR) blockchains. By integrating more deeply into the larger cryptocurrency ecosystem, Celo’s blockchain has become an easier place for mobile users to transact.

What is CELO Token?

As the native utility token of the Celo platform, CELO supports multiple functionalities and governance within the ecosystem. Its main use cases include transaction fee payments, participation in governance through voting, and serving as collateral for the issuance of stablecoins such as Celo Dollar (cUSD) and Celo Euro (cEUR). This versatility not only emphasizes the importance of CELO in maintaining and securing the network, but also empowers token holders with significant influence over the platform’s future development and policy decisions.

One of the main functions of CELO is to allow users to pay transaction fees on the network. Unlike many other blockchain platforms that require the use of a native stablecoin or platform’s native token to pay transaction fees, Celo allows users to pay fees with various types of tokens, including CELO and its stablecoins. This flexibility enhances the user experience, especially for those using the platform for daily transactions and decentralized applications (DApps).

CELO plays a crucial role in governing the Celo ecosystem. Holders have the right to propose, vote, and implement changes to the platform’s protocol and other important decisions. This governance mechanism ensures that the development and evolution of the Celo platform are directly shaped by its community, aligning with the principles of decentralization and democratizing the project’s financial systems. The governance process involves various proposals, from technical upgrades and network parameter adjustments to resource allocation decisions from the Celo Community Fund.

Conclusion

For those who are new and want to learn more about Celo, we hope this guide will make you happy. In summary, this is a blockchain protocol designed to help mobile traders quickly and cheaply conduct cryptocurrency transactions. The system’s native token, CELO, allows for a proof of stake (PoS) governance model, with associated stablecoins providing stability to the entire Celo framework. If you think Celo’s approach could make it a pillar in the future of decentralized finance, then CELO may be worth considering for investment.