The Celo protocol, which was launched as a stablecoin + public chain project, has attracted the attention of investors just like its predecessor, Terra.
Like Terra, Celo is a stablecoin protocol that builds an underlying public chain and incubates and introduces many DeFi projects to provide financial scenarios for its native stablecoin.
Currently, there are over 1 million wallet addresses active on the Celo network.
Celo: a public chain focusing on decentralized mobile payments
Celo is a blockchain digital currency payment project dedicated to improving accessibility and the ease of use of crypto financial services.
Established in 2017, Celo launched its project on the mainnet in April 2020. Users without bank accounts and no access to financial services can use it to transfer money and use DeFi products conveniently through their mobile devices.
Celo has the following features:
- cUSD (Celo Dollar), a stable currency, as a medium of exchange and mobile wallets as a means of payment
- A proof-of-stake (PoS) blockchain to optimize blocks used for mobile synchronization
- Gas fees in multiple currencies to accommodate users with various assets
The major difference between Celo and other blockchains is that payments from Celo’s stablecoin, cUSD, can be sent to people’s phone numbers instead of complex blockchain addresses. Phone numbers become users’ cryptocurrency payout addresses, making them easier to operate and use.
Celo ecosystem components:
- Celo protocol: a proof-of-stake blockchain protocol that uses phone numbers and email addresses as public keys.
- cUSD: a stable coin pegged to the US dollar and backed by a crypto asset reserve.
- Celo Developer Wallet: sends, receives, and exchanges cUSD and CELO test tokens using decentralized phone number verification.
Celo’s Ecosystem
Celo’s Ecosystem landscape now covers several areas.
As more users have connected ERC20 tokens to the Celo network, the total value locked up on Celo has risen significantly, with TVL on the Celo ecosystem growing from $167,200,000 at the end of 2020 to nearly $1 billion in November, an 460% YoY increase, according to Footprint Analytics.
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Celo vs. Terra: A mobile-first differentiated strategy for stablecoin + public chain ecosystem
Stablecoin Mechanism
In terms of stablecoin design, the Celo stable mechanism relies on a combination of algorithmic and overcollateralized on-chain and cross-chain reserves., For instance, in an algorithmic stablecoin, the Celo protocol acts as a market maker for its stablecoin. cUSD is continuously traded on exchanges such as Uniswap to maintain its anchor rate.
In addition, Celo Treasury is initiated with many reserve assets and is designed to remain overcollateralized at all times. If Celo’s assets fall below 200% of its liabilities, the system will recapitalize by charging transaction fees for Celo transfers.
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Public Chain Ecosystem
Like Terra, Celo not only develops a stablecoin protocol but also builds the underlying public chain. It incubates and introduces a large number of DeFi projects to provide financial scenarios for its native stablecoin, realizing its project kickoff and network expansion.
In this regard, the approach and positioning of Celo and Terra are very similar:
- Both projects focus on decentralization in the stablecoin vertical, rather than being a pan-public chain like Ethereum.
- Both protocols have shifted from just being a decentralized stablecoin protocol to an entire financial ecosystem.
- Both use DeFi to build business scenarios for stable coins and fundraising projects to foster its ecosystem.
Compared to Terra, Celo’s technical features include:
- Stable currency value: CELO includes native support for various stable currencies (such as ERC20), which are pegged to legal tender such as the US dollar.
- Accounts linked to phone numbers: allows wallet users to send and receive payments with existing contacts.
- Support for transaction fees in any currency: users can pay transaction fees in stable currencies, without managing balances in different currencies.
- Programmable and full EVM compatibility: familiar to developers, widely adopted, and supported by powerful tools.
Note: Like MakerDao and Liquity, which also form stablecoins through lending agreement minting and share similar features, there are also similarities and differences between Celo and Terra.
CELO Token Performance: started to rally in July, maintaining an uptrend
After experiencing a market downturn between May and June, CELO, the platform token of the Celo protocol, regained its momentum in July and has since maintained its upward trend, with the coin price hitting an all-time high on September 24.
CELO’s price has a solid correlation with eco-live and planned launches as observed in the following:
February 2021:
- Celo sold its platform tokens and raised another $20 million.
- Celo launched Valora, the first peer-to-peer mobile payment app based on the Celo platform.
- The Graph, a blockchain indexing project to organize data, announced its integration with Celo
April 2021:
- Deutsche Telekom joins the Alliance for Prosperity and purchases Celo as a verification node.
- Optics, a cross-chain communication mechanism, is launched to support Celo’s cross-chain and interaction with other strains of assets.
August to October 2021:
- DeFi for the People project was launched in August 2021, providing over $100 million in funding for advocacy, qualification, and incentives.
- Optics V1, a cross-chain communication protocol, was launched in September 2021.
- Sushi deployment to Celo, a $12.6M liquidity mining program launched by both parties, was introduced in October 2021.
In its CELO price forecast, DigitalCoin predicts an average CELO price of $11.73 by 2022, up from $9.76 in 2021. The average price is expected to be $20.83 in 2025 and $29.64 by 2028.
Footprint Analytics will continue to monitor whether the Celo token can retain its interest and achieve the price forecast in the future.
Disclaimer: The contents of this article represent the views of Footprint and are for informational purposes only and do not constitute any investment advice.
Data Source: Footprint Analytics