Celo: Built Different

DSRV
DSRV
Published in
11 min readAug 2, 2023

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cLabs CTO and Celo Co-founder shares a look at the early days, the protocol’s fundamental role in shaping the ReFi movement, and why to get excited about what Celo is working on today

We recently had the pleasure of welcoming Marek Olszewski, CTO at cLabs and Co-founder of Celo, back to Seoul. DSRV and Celo go way back to early days in 2019, back when we were just getting started in the validator scene and they were launching their network. Since then, we’ve witnessed our fair share of highs and lows together: bear markets and unforeseen downturns, alongside spikes in adoption and a rapidly diversifying ecosystem.

Celo has been through a few changes itself, including a fantastic rebranding to Celo 2.0 earlier this year, a number of new exciting partnerships, and a recent proposal to “return home to Ethereum” as an L2. But first, how did they get to where they are today? What makes Celo a human-first, planet-first protocol? In other words, what sets Celo apart on an ideological level as well as a technological one? How is it spearheading the ReFi movement, and how is it continuing to deliver on its promises as an industry leader?

If you’re curious about all this and more, follow us as we start by tracing Celo’s early beginnings– starting with some bitcoin at a festival in 2013.

Built for Every User

Early Days

It’s August in San Francisco at Outside Lands, and Marek happens to run into Coinbase CEO Brian Armstrong. Having studied deterministic multithreading and distributed systems during his PhD at MIT, Marek was already beginning to display a propensity for Web3. Of course, he was also following Bitcoin and familiar with the whitepaper. But after receiving some BTC in his fresh Coinbase account, the space took on a whole new dimension.

Four years later in 2017, Marek would get back together with Celo co-founders Rene Reinsberg (with whom he co-founded startup Locu– later acquired by GoDaddy) and Sep Kamvar to brainstorm what they wanted to do next. Wanting to be very intentional, they conceived a list of 100 different ideas with Celo ultimately at the very top.

Early Celo (Source: Celo Blog)

“If you think back to 2017, there were no stablecoins on Ethereum, very few dApps– it was still very much the early days,” Marek explains. With the original aim of building a wallet on top of Ethereum — enabling users to send value globally to any phone number — they quickly realized there had to be certain primitives and platform features in order to provide the best user experience. This set the stage for Celo.

Mobile-First Design

Celo was built with users carefully in mind, and that meant taking a mobile-first approach from the get-go– a significant challenge in itself. “I think we certainly underestimated the difficulty in creating a light client that can work on low power, resource-constrained devices,” Marek admits, “So that took almost three years to completely develop.” Working with zk-SNARKs back then was still relatively uncommon, and tapping into the expertise needed to develop with this technology was not easy. Refusal to compromise on certain characteristics — mobile-based, inexpensive, environmentally friendly, and user-friendly — is what continues to define Celo today.

Now, several years later, we have SocialConnect– a protocol that allows users to easily send money to phone numbers (or other off-chain identifiers like twitter handles, or emails) instead of long public key-derived addresses. The first version of SocialConnect was fully decentralized, and validators were randomly selected and paired with users to whom they would send text messages for verification. The user experience wasn’t ideal however (iPhone users had to copy and paste three separate codes), and the team quickly recognized the importance of prioritizing this over full decentralization.

Social graph example (Source: HSE University)

Another interesting thing to note about SocialConnect is how it operates as a sort of social graph. “If you think of the amalgamation of everyone’s contacts list on their phones,” Marek elaborates, “that together creates a social graph of sorts…one that’s probably bigger than Facebook’s.” Dapps can then leverage this social graph to effectively bootstrap any network effects they wish to harness.

And let’s not forget that a wallet was the veritable starting point of Celo itself. Later baptized Valora, this wallet went into development prior to building Celo as an L1. As a result, the wallet and L1 were developed simultaneously, allowing for a more tightly coupled system of parts and therefore an enhanced user experience. “Apple very successfully does this today with software and hardware, and the same can be true in the Web3 stack as well,” Marek explains.

The Importance of On/ Off Ramps

And yet, while sending value in the form of cryptocurrency to any phone number in the world is a remarkable feat, the ability to immediately use that value to buy a coffee or pay the bills is still in the works. This would allow users to instantly convert value into their local fiat, an achievement that would require every wallet to have a native on and off ramp for every country across the globe. And this means dealing with local jurisdictions, local licenses, local banking relationships and so forth.

To complicate things further, various on/off ramp providers may have their own APIs– which brings us to FiatConnect. FiatConnect provides the standard needed to connect these on/off ramps to Web3 wallets and dapps. Using a single standardized API spec, FiatConnect allows all parties to more easily access what they need (a wider user base, local fiat, better DeFi UX, etc). “You can think of this as the WalletConnect of on/off ramping,” Marek elucidates. “WalletConnect has done a wonderful job making it easier for dapps to connect with wallets, and now we need the next thing– wallets connecting with on and off ramps.”

Connect the World (Source: Celo Blog)

To drive further adoption, Celo kickstarted the Connect the World program– a $20M initiative that incentivizes companies to be the first to integrate FiatConnect in their respective markets. Currently implemented across 12 markets, 10 of which are in Africa and the other two India and the Philippines (collectively covering almost 2B people), FiatConnect is targeting the broad coverage needed to allow anyone to instantly cash out.

Built for the Planet

Setting the Stage for ReFi

My Neighbor Totoro (Source: Giphy)

Historically, blockchain technology has more often than not been associated with excessive energy consumption and a lack of concern for ESG policies and sustainability. Then came Celo. Many will already recognize Celo as the “home of ReFi (Regenerative Finance),” which it ultimately helped activate. For starters, Celo insisted on launching as a carbon-neutral chain, making it effectively the first chain to actually offset its carbon (by programmatically buying carbon offset credits).

And the protocol has come a long way from there. As outlined in the Whitepaper several years ago, the team wished to promote the use of “natural-capital-backed means-of-payment currencies (for example, currencies backed by forestland), where the growth in demand for those currencies will increase the amount of natural capital backing them.” In other words, back money with what you want to see more of. Javan Rhinos, Mangrove trees, clean water– you name it. Elaborated on during last year’s Celo Connect conference by Sep, this idea from Charles Eisenstein’s Sacred Economics is a powerful one. Moreover, ReFi also critically encompasses regenerating local economies and redistributing wealth and opportunity. This can look like UBI, or better public goods funding.

Types of economic systems (Source: Toucan Blog)

(Not Just) Carbon Offset Credits

To this day, Celo has become home to a plethora of projects with ReFi at their core– many of which take the approach of tokenizing carbon offset credits. “But historically, carbon offset credits haven’t had the best reputation because sometimes they don’t represent what’s being stated about them,” Marek discloses. This is because they can often be double-spent, or double-retired and there is also a certain degree of obfuscation around price. Which is where blockchain comes in. “The problem literally maps so perfectly to crypto that it’s so obvious these things should be traded on-chain,” Marek tells us.

Restoring oil and gas wells in Colorado (Source: CarbonPath Blog)

He brings up as an example CarbonPath, a project that generates credits by plugging abandoned and old oil wells (one of the largest emitters of greenhouse gasses) in the US. By using sensors to accurately flag methane leak levels, they can then record changes that attest to the success of their efforts. Marek also admits the lack of a certain standardization around measuring data, which Celo is actively addressing by joining Chainlink’s SCALE program. The industry-leading oracle provider, Chainlink specializes in reliably bringing off-chain data on-chain– a key element in measuring the impact of credits or other similar initiatives.

And carbon offset credits are just one corner of the ReFi space. “I think the biggest bottleneck is coming up with new and exciting protocols that can do things we previously didn’t think were possible,” Marek says. One recent example he brings up is Plastiks, which recently partnered with FC Barcelona to launch an NFT project. By buying their NFT or tokens, you can contribute to their mission of transparently reversing plastic pollution via plastic recovery and improved recycling rates. Natural-capital-backed assets, removal of pollutants (carbon, plastics, etc) from the environment, reforestation efforts– there are so many shapes that ReFi can take.

Very Very Green Money

Celo’s carbon footprint throughout the years (Source: ultragreen.money)

From Bitcoin as “sound money” (given its supply cap of 21M BTC), to Ethereum becoming “ultrasound money” once EIP-1559 (implementing a burn mechanism that made ETH deflationary) and The Merge took place, now we have Ultragreen money. Very aptly named, UltraGreen makes Celo both deflationary and uses 20% of each transaction fee to buy additional carbon offset credits to retire on-chain. This is big.

It means that every transaction occurring on Celo not only increases the value of CELO, but also backs climate action. Once the hard fork passes, UltraGreen will be deployed from its current location on the Cannoli Testnet to mainnet. (And in case you were curious, yes, that is what the bat and tree emojis in numerous Twitter handles signify.)

Built to Lead the Industry

Meet Celo 2.0

As was previously mentioned, Celo entered the game with the highly technical and innovative architecture necessary to wholly support its mission. And so as Celo underwent a fantastic rebranding to Celo 2.0 early this year, it evidently entailed a thorough technical roadmap that includes goals ranging from deeper alignment with the Ethereum roadmap and horizontal scalability to redefining CELO tokenomics.

On the tokenomics side is UltraGreen Money, announced on Earth Day. On the Ethereum alignment front, one major focus is making it possible for users to pay for gas on Celo using ETH. “Celo is unique in that you can pay for gas with tokens,” Marek explains, “so we’re adding support to pay for gas with bridged wETH [and adding] support to MetaMask using a MetaMask flask to let folks actually pay for gas there as well as use wETH.”

DSRV’s multi-chain development suite WELLDONE Studio has also jumped on board. “I was super excited to see literally right before this interview that WELLDONE has added support for paying for gas with tokens on Celo,” Marek exclaims. “As soon as wETH supports this, WELLDONE will also be able to pay for gas with ETH.”

Another thing to look forward to is a trustless bridge to Ethereum. In order to achieve this, Celo’s advanced zkSNARK-based light client Plumo must be cheaply verifiable on Ethereum. “It’s not an easy task because of the crypto involved and the different curves that Ethereum uses relative to Celo,” Marek explains. But once launched, not only will it allow Celo to powerfully bridge assets between the two chains but will also enable further integrations with Ethereum. This will also become much easier now that Celo is pretty much set to migrate from its status as an EVM-compatible L1 to an Ethereum L2 (a “temperature check” for this proposal has just wrapped up with overwhelmingly positive results).

Temperature Check for Celo L2 proposal (Source: Stake ID)

Then there’s scalability. “In test environments, there is a smaller, more conservative block size limit on production today,” Marek elucidates, “but in theory we could raise it up to 1000 tx per second as demand grows.” Now the team expects to raise that bar higher by separating execution and consensus similar to Ethereum, and in doing so optimize for client implementation as well as expand the active validator set. It’s a lot of work– but so far so good!

When it comes to horizontal scalability, cLabs strongly encourages and supports L2 rollups, with an increasing number of scaling solutions now being launched. Marek uses Blockless as an example: a zkWASM-based network that allows developers to seamlessly write and deploy using WASM in a fast and cost-efficient way. Deploying rollups has also been made easier thanks to precompiles for BLS12–381, BLS12–377, and ed25519 operations– with more likely to be added soon.

Built Different

Celo takes home the Social Impact Award at the 2022 Crypties (Source: Decrypt)

Earlier this year, Celo won two Community awards at the CMX Community Industry Awards as well as the Social Impact Award at the Crypties in 2022. This isn’t surprising, given the unique energy and drive that power the Celo ecosystem and its community. “One of the unique things that the Celo community and ecosystem has is just a lot of heart,” Marek agrees, “a lot of soul and a lot of focus on solving difficult, big, and ambitious problems that Web3 is now making it possible for us to address.”

With its distinct mission-driven approach that does not compromise on outreach or impact across the emerging markets that arguably need it most, Celo naturally attracts like-minded builders, partners, and users. And, to be honest, a more sustainable and equitable world is an initiative we can (and should) all get behind.

At the core of Celo’s mission is prosperity– building a new financial system that creates the conditions of prosperity for all. For some, prosperity might look like a greener planet, regenerating local economies, or simply better financial security. For Marek, it’s the latter that has consistently informed his approach. “We live in a world where many people are excluded from today’s financial infrastructure,” he specifies, “people without government-recognized IDs [who are] not even eligible to open bank accounts.” And Celo is bringing self-custody, empowerment, and new opportunities to them.

“I think everyone has their own definition,” Marek concludes, “but for me, it’s really one about financial inclusion.”

Special thanks to Marek for battling jet lag to share his great insights and Celo’s story with us! We hope this article helps readers grasp what Celo is trying to achieve, how this industry can powerfully reinforce climate action, and what to expect going forward.

Written by
Domitille Colin, Brand Communications Manager (Twitter @domitille_marie)

Designed by
Heeyoung Moon, Brand Designer, DSRV Brand Marketing Team

Who are we

A leading Korea-based digital infrastructure company, DSRV validates for 40+ global networks and provides solutions for next-level building. This includes All That Node (enterprise-grade NaaS supporting 24+ protocols) and WELLDONE Studio (multi-chain development suite featuring a wallet, compiler and more).

Our ethos is to adapt to what the market and community need; our mission to advance the next internet and enable every player to build what they envision. We exist to push this space forward.

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