What is Celo?
Celo is a blockchain platform that prioritizes mobile access, decentralized finance (DeFi), and regenerative finance (ReFi). Initially launched as an EVM-compatible Layer 1 blockchain, Celo has been widely used to provide mobile-first decentralized applications and financial services, particularly targeting underbanked populations. In 2024, Celo began transitioning to an Ethereum Layer 2 (L2) solution to leverage Ethereum’s robust security while continuing to provide low-cost, fast transactions. This transition represents a strategic shift to better integrate with Ethereum’s ecosystem while maintaining Celo’s unique mobile-first and sustainable focus.
Key Features
- Mobile-first: Celo is designed to make blockchain technology more accessible via mobile devices, allowing over 6 billion smartphone users worldwide to interact with decentralized financial services.
- Low transaction fees: By transitioning to an Ethereum Layer 2, Celo aims to maintain its hallmark of sub-cent transaction fees, ensuring affordability for users in developing markets.
- Carbon-negative: Celo’s “Ultragreen Money” initiative enhances sustainability by burning 20% of transaction fees and contributing them to a Carbon Offset Fund.
Transition to Ethereum Layer 2
Celo is undergoing a significant upgrade to transition from a standalone Layer 1 blockchain to an Ethereum Layer 2, utilizing zk-rollups technology. This upgrade will improve security, scalability, and interoperability with the Ethereum network, while retaining Celo’s core features like paying gas fees using ERC-20 tokens. The shift is a crucial step toward greater alignment with Ethereum, leveraging its large developer ecosystem and robust infrastructure.
Key Milestones
- Dango Testnet: Launched in July 2024, this was Celo’s first Layer 2 testnet, helping developers familiarize themselves with the L2 environment.
- Alfajores Testnet: Launched in September 2024, providing a stable test environment before the full mainnet release.
- Mainnet Launch: Expected by December 2024, after extensive testing on the Baklava testnet.
Ecosystem and Use Cases
Celo is home to a wide variety of applications that aim to make financial tools accessible to anyone with a mobile phone. Its ecosystem includes projects focused on sustainable finance (ReFi), Universal Basic Income (UBI), and financial inclusion. Notable projects include:
- MiniPay: A lightweight stablecoin wallet built in collaboration with Opera, focused on fast and affordable transactions for emerging markets.
- Plastiks: An environmental project focusing on plastic waste recovery and recycling through tokenized solutions.
- GoodDollar: A Universal Basic Income distribution protocol utilizing Celo’s network to facilitate regular payments to users.
Technical Specifications
- Native Currency: Celo’s native cryptocurrency, CELO, is used for governance and staking, while also serving as an ERC-20 compliant token on the Celo blockchain.
- Smart Contracts: Celo supports Ethereum’s Solidity language, enabling developers to create decentralized applications and financial products.
- Transaction Fees: One of Celo’s unique features is the ability to pay transaction fees using a variety of ERC-20 tokens, making it more user-friendly for mobile users.
