Celo is an open platform that aims to expand access to financial services to anyone in the world with a smartphone. Through a decentralized platform operated by a community of users, Celo provides the opportunity to positively impact the 5.6B smartphone owners around the world.
In order to increase adoption of the protocol, the Celo Foundation created the Celo Alliance for Prosperity to bring organizations together and spread the shared vision of making digital assets more accessible and useful in the real world. “By joining the Alliance, members are furthering the Celo mission by either: backing development efforts of the project, building infrastructure (like Bison Trails), implementing desired use cases on the platform, integrating Celo assets in their projects, or collaborating on education campaigns in their communities to further advance the use of blockchain technology.”—Chuck Kimble, Head of the Alliance for Prosperity
cLabs, a team working on Celo, is building new blockchain software, core libraries that run on that blockchain, and end user applications, including a wallet app that communicates with that logic. The three layers of the Celo tech system are (1) the Celo Blockchain, (2) Celo Core Contracts, and (3) Application. Layers one and two make up what is called the Celo Protocol.
Celo Blockchain is an open, secure, and decentralized cryptographic protocol that allows associated applications to make transactions and run smart contracts. Celo Core Contracts are the “set of smart contracts that make up the logic of the protocol features including stablecoins, identity attestations, Proof of Stake, and governance.” Applications are built to enable end user interaction with the protocol.
"Bison Trails is proud to join the Alliance for Prosperity. Celo has the potential to be a global driver of financial inclusion. At Bison Trails, we believe building robust blockchain infrastructure, that keeps networks decentralized and enables them to scale securely, is critical to their success. We share the Alliance's vision of a world in which intuitive technology lowers the barriers to participating in a more inclusive and decentralized financial system." –Joe Lallouz, CEO of Bison Trails
Three technical innovations on the Celo platform include:
Celo is a fork of Ethereum. It started with the Geth client and Ethereum Virtual Machine (EVM) as a base and made modifications to allow for preferred use cases focused on a mobile experience, such as cash transfers and direct payments. Although Celo’s native currency is CELO, the protocol also includes native support for multiple ERC20-like stable currencies pegged to ‘fiat’ currencies like the US dollar. These stablecoins facilitate the use of Celo as a means of payment. The Celo Dollar (cUSD) is the first stablecoin.
Because Celo aims to provide access to financial services to anyone with a smartphone, their key innovation is the ability to send digital currency directly to a person’s phone number, rather than a blockchain address. Celo maintains a secure decentralized mapping of phone numbers that allows wallet users to send and receive payments with their existing phone contacts. If someone hasn’t yet registered on the Celo network (i.e. they haven’t yet proven that they own their phone number), the crypto-assets are held by the protocol until they verify themselves, which will allow end user organic growth.
“By building support for stablecoins into the protocol, Celo is addressing a key use case at mainnet launch. From day one, wallet users will be able to transact easily on Celo. It’s exciting to see how the cLabs team aligned their early technical and protocol decisions with the mission of driving financial inclusion.” —Aaron Henshaw, CTO and Cofounder of Bison Trails
The main participants in Celo’s network economy are validators, validator groups, CELO holders, and full node operators.
Celo’s active set is initially capped at 100 validators, with plans to scale to millions of validators over time. A validator is a Celo account that has a minimum of 10,000 locked CELO, which is at risk for slashing, and is registered on the network as a “validator.” This account must spin up a Validator node in order to perform work on the blockchain. Validators must be elected to the active set to be eligible for the reward.
Validator groups were created to help bridge the information gap between validators and token holders. The cLabs team’s intention is that a validator group will do the necessary due diligence before allowing a validator into their group, so a token holder needs only trust the group. In addition, the group is responsible for campaigning for votes from token holders allowing the validators to focus on ensuring the security of the Validator node itself.
The election process uses the D'hondt method to choose representatives, iteratively selecting a validator from the group with the most votes as a proportion of total votes until all slots are filled.
In practice, this process results in a “price per seat” for the active set dependent upon the amount of Locked CELO that is voting and what proportion of that amount is controlled by the top validator groups. Groups must satisfy this price per seat to guarantee election into the active set. The system tends to over-represent top groups compared to the ones with a smaller percentage of the vote.
Validator elections are held once every election epoch. Votes persist between epochs, and the same vote is applied to each election until revoked, in which case it has no effect on the validator set until the following election. A user can divide its vote between a maximum of three groups.
Groups can receive votes up to the equivalent of the number needed to elect all of its validators, plus one more. Enforcement of this cap is done when a user is voting; they can only cast a vote for a group if it is currently under the cap. The cap for a group fluctuates depending on the number of validators in the group and the total amount of voting Locked Gold in the system.
At mainnet launch, 600 million CELO was allocated with 400 million more planned to be released for epoch rewards over time. Epoch rewards are paid in the final block of the epoch. An epoch in Celo is approximately 1 full day.
Validator groups are compensated by taking a share of the rewards allocated to validators. Validator groups set a group share rate when they register and can change that at any time. The protocol automatically deducts this share, sending that portion of the epoch rewards to the validator group of which they were a member at the time of the last election.
Since the sum of a validator’s reward and its validator group’s reward are the same regardless of the ‘group share’ that the group chooses, no side-channel collusion is possible to avoid deductions for downtime or previous slashing.
“Celo’s initial design choice, using the established and tested EVM and geth software for their underlying node systems, effectively leverages years of mainnet operations and experience of the Ethereum blockchain. Hundreds of millions of transactions have moved successfully through this software. There are very few newer blockchains that can say this about what they’re building. I think the approach is smart as a starting point for the network as it is a practical iteration of software that already works.” —Aaron Henshaw, CTO and Cofounder of Bison Trails
Celo validators and validator groups are both at risk of slashing; they get slashed by the same amount. Locked CELO holders, who are voting for a group that gets slashed, do not suffer this penalty. However, all three parties have their reward reduced by half for the next month.
Types of slashing:
Severity of slashing:
Governance is managed on-chain on Celo. Stakeholders can submit proposals to improve the network; CELO holders then vote whether or not to implement the proposals.
These proposals center around:
The goal is to align incentives for the protocol and CELO holders to ensure stability and consistency. It is important that only stable currencies for which there is demand are added to the reserve, otherwise the reserve will have to contract its supply by selling assets. Expanding the reserve is a way to fend off the volatility introduced when the reserve ratio dips.
An initiative of the Celo Foundation, the Celo Alliance for Prosperity is a group of fifty founding members who are committed to “helping ensure that Celo delivers on its mission to enable prosperity for everyone.” The Alliance will work collaboratively towards a shared vision of making digital assets more useful and accessible in the real world through blockchain technology and intuitive user experiences that work “across devices, carriers & countries.”
Bison Trails joined the Celo Alliance for Prosperity as a founding member, because we believe there’s a need for groups of incentive-aligned participants to help govern, secure, support, and generally further protocols through collaboration. We share a vision with the Alliance’s members of blockchain technology unlocking access to greater participation in global financial systems. As one of the few infrastructure providers in the Celo Alliance for Prosperity, and a founding member, we are responsible for keeping identity, assets, and the network secure.
"As both a member of the Celo Alliance for Prosperity and an active participant in Celo's incentivized testnet, Bison Trails has demonstrated early and continuous commitment to the Celo community. I'm grateful to their team of protocol experts and engineers as they contribute to the protocol's development and securing the Celo network." —Rene Reinsberg, co-founder of Celo
If you’re a CELO token holder, you can run your own group and validators or delegate to the Bison Trails validator group. Locked CELO holders can earn rewards by voting for a group with at least one (1) active validator. Rewards which are denominated in CELO are targeted by Celo at 6% annually.
As a founding member of the Celo Alliance for Prosperity, and an active participant in Celo’s incentivized testnet, Bison Trails is intimately familiar with the Celo Protocol. We were confirmed as a Master Validator after passing Celo’s audit of our secure blockchain infrastructure platform. Our role in the Celo Alliance for Prosperity is to help keep identity, assets, and the network secure.
We have unique insights and perspective on the Celo protocol. Our protocol specialists and engineers closely collaborate with the cLabs team and have the latest information on protocol developments.
Due to the process of voting on Celo, a key benefit to running a validator node with Bison Trails is our ability to help node operators understand and react to changing prices for becoming part of the active set. With an accurate price per seat and registry of customer public keys, Bison Trails can monitor elections and send actionable signals including:
In addition, we also work closely with our customers on Celo governance, helping them understand the key issues at play, providing our insights, and assisting them with executing on their voting strategy.
Contact us to get started running a Celo node, to connect with our protocol experts who can answer your questions about the Celo protocol and token dynamics, or to delegate to Bison Trails’ Celo validator.
Bison Trails is an Infrastructure-as-a-Service company, based in New York City, specifically focused on blockchain participation. We’ve built a platform for anyone who wants to participate in new chains effortlessly (e.g. by running Cosmos Validators, Tezos Bakers, and Libra Validators, etc.)—without having to invest time and resources into developing any of the engineering, protocol, dev ops, or security competencies in-house. Our goal is for the entire blockchain ecosystem to flourish by providing robust infrastructure for the pioneers of tomorrow.
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