Nansen's Celo Quarterly Report - Q1 2022

This report provides an overview of Celo's ecosystem and performance of the chain via on-chain metrics.

Overview

Celo is a fully EVM compatible layer-1 blockchain that was launched in 2017 as a global payment infrastructure for cryptocurrencies with a focus on mobile users. The Celo project aims to build a financial system that is inclusive for all, thanks to its ability to facilitate payments between any phone number in the world.

Apart from facilitating payments, numerous decentralized applications have been built on Celo, such as Moola, an algorithmic money market platform, and Ubeswap, a decentralized exchange and automated market maker.. 

Celo utilizes a proof of stake (PoS) consensus mechanism. Unlike Bitcoin’s proof of work (PoW) model, PoS selects validators according to the amount of the blockchain’s native token they have staked. Since validators are chosen on this basis, no substantial computing power is needed and there is no competition between miners that creates upwards pressure on transaction fees. Transactions also take less time to verify because individual nodes do not have to dedicate so much processing power.

Celo consists of two native tokens: Celo (Celo) and Celo Dollars (cUSD). Celo is the protocol’s main native token and allows token holders to participate in maintaining the network consensus, participate in governance activities as well as pay for on-chain transactions. Whereas cUSD is a stablecoin that pegs its value to the US dollar.

Celo Ecosystem

Source: Coin98 Analytics

Celo Foundation Grants

To meet Celo’s mission to build a financial system that creates prosperity for everyone, Celo Foundation Grant Program also offers financial grants for developers to build and launch projects on Celo.

Source:https://medium.com/celoorg/announcing-the-celo-foundations-latest-grant-recipients-7061baf7dc0d 

Celo Product Fit

Despite the DeFi explosion that we saw in 2021, just about 10% of DeFi users live outside of developed countries. Smartphones are also used by a sizable chunk of the global population as their only means of accessing the internet. Celo fills this void by making financial services more accessible to this underserved group.

Transaction Count 

Ethereum vs Celo
Source: https://pro.nansen.ai/multichain/eth-vs-Celo 
Number of daily transactions
Source:  https://pro.nansen.ai/multichain/Celo 

Since the end of April 2021, we have seen a steady increase in activity on Celo with the number of transactions peaking above 1m on 22 Dec 2021. However on-chain transactions have been on a steady decline since the start of 2022. It is interesting to note however, that the number of transactions have recently spiked up since 15 March 2022, breaking its downtrend since the start of the year.

Celo TVL

Source: DefiLlama as of 27 March 2022

Likewise, we see a similar pattern between Celo’s TVL and Celo’s on-chain activity as shown above. The significant downtrend in TVL seems to be fairly isolated to Celo as compared to other more popular L1 blockchains like Solana and Terra.

Source: DefiLlama TVL for Terra as of 27 March 2022

Source: DefiLlama TVL for Solana as of 27 March 2022
Top 4 DApps  by TVL on Celo
Source: Footprint Analytics as of 28 March 2022

Addresses on Celo

Source: Celo Explorer as of 19 March 2022

Despite the decrease in Celo’s TVL and on-chain activity, we have seen a major increase in the total number of addresses on Celo, which is a positive indicator that the network has gained increased attention since the start of 2022. 

Source: https://pro.nansen.ai/multichain/Celo?network=Celo 

However, as shown in the Celo Nansen dashboard, the number of active addresses on Celo has also been consistently declining  for the past 30 days / 7 days / 1 day. 

User and Transaction count by entity

Source: https://pro.nansen.ai/multichain/Celo?network=Celo 

Based on the number of users and transactions by entity, the top 2 most popular protocols on Celo are Ubeswap and Mento Finance. Ubeswap is a protocol for decentralized exchange and automated liquidity provision on Celo, while Mento Finance is also an AMM that plays an essential role in maintaining the peg of Celo’s native token $cUSD. 

Since Feb 1, activity on both Ubeswap and Mento Finance has since ranged between a mere 500 to 1000 and 200 to 300 daily transactions respectively.

Source: DefiLlama Historical Activity for Ubeswap
Source: DefiLlama Historical Activity for Mento-fi

Smart money segments on Celo

Source: https://pro.nansen.ai/multichain/eth-vs-Celo?network=Celo 

Looking at the smart money Ethereum addresses that are also active on Celo, we see that within Celo, the first mover stakers take the greatest proportion followed by Smart LPs and Investment Funds. This may be attributed to new pools being constantly created on Celo due to Celo’s relative recentness. Smart money segments proportion on Celo is lower than EVM chains due to the different infrastructure.

Celo Bridge Stats

There are several bridges developed by the Celo community for bridging tokens to Celo. However the main bridge used on Celo is Optics.

Optics Bridge is a protocol for sending messages between EVM chains. It can be used to securely send tokens cross-chain using the burn/mint token model. It uses a new design for cheaper cross-chain communication without header verification, and the bridge is expected to cut 90% of gas costs compared to a traditional header relay.

Source:https://pro.nansen.ai/wallet-profiler?address=0x6a39909e805a3eadd2b61fff61147796ca6abb47 

Looking at the Optics Bridge contract, we see that bridging activity has more or less come to a sharp halt since the start of the year, with bridging activity ranging in the low single digits since the start of Jan 2022.

New Developments in Q1 2022

1. Celo Launches cREAL Stablecoin

cREAL is the third stablecoin on Celo used for mobile payments. It is a decentralized, over-collateralized algorithmic stablecoin that tracks the value of the Brazilian real. The new stablecoin is available on popular Brazil-based CEXes like FlowBTC, NovaDAX and Ripio and of course, Celo dApps like Ubeswap, Valora and Moola Market.

Update: Full list of Celo dApps supporting cREAL as of January 27 2022.

Brazil is now the first and only nation with a Celo stablecoin that can be used for trading, payment for groceries and access to DeFi apps and services without regional restrictions. cREAL enables users to trade digital assets and transfer them much faster, cheaper using their mobile devices. On average, transactions take about 5 seconds and cost less than 1 cent. 

Examples of $cREAL utility

  1. Bill payments
  2. Purchases at participating merchants
  3. Earning yield (Using LPs on Ubeswap or lending cREAL through Moola Market)
2. Celo Espresso Hardfork

On March 8 2022, Celo underwent its second hard fork called Espresso. The Espresso fork aims to bridge the gap between Celo and the Ethereum protocol code base by making Celo fully compatible with the latest Ethereum upgrades (Berlin / London forks and several EIPs). The changes also allowed popular dApps such as Superfluid to work on Celo after the fork implementation.

3. First decentralized reserve currency protocol built on Celo (OHM FORK)

ImmortalDAO helps users generate passive income through staking and aims to build a policy-controlled currency system. Holders of the IMMO token will be able to vote on proposals submitted by ImmortalDAO community members similar to how other governance mechanisms work.

Each IMMO token is backed by a basket of assets including Moolah Celo Dollars (mcUSD), Moolah Celo Euros (mcEUR) and Celo. This means that the price of IMMO is dependent on market forces, but will not fall below the value of the reserves made up by the basket of assets. ImmortalDAO aims to continuously add assets to this IMMO reserve basket such that IMMO eventually becomes a global unit-of-account and medium-of-exchange currency in the future.

Current IMMO Staking APY: 82,791.4% / TVL: $946,439 as of 27 March 2022.

Website: https://www.immortaldao.finance/#/dashboard 

Twitter: https://twitter.com/ImmortalDAO_Fi 

4. Celo partners with Unstoppable Domains
Source:Unstoppable Domains

Cello Wallet users can now shorten their wallet addresses to .crypto, .NFT and more. Similar to what users can do on Ethereum. 

5. Unmarshal partners with Celo via Celo Foundation Grants

Unmarshal is a multi-chain Data Network that supports indexing and querying for over 7 different chains. With the Celo chain indexing, Unmarshal will support and encourage developer communities to build and deploy dApps on Celo while maintaining the chain’s robust infrastructure. Developers will have access to a wide range of query data including token transactions, details, etc.

6. Connect the World Campaign

“Connect the world” campaign is a $20m campaign created to incentivize the development of Celo on and off ramps. In tandem with the campaign, Celo Foundation also introduces FiatConnect, an open source API for payment providers that will make integrations more scalable. The Foundation will also subsidize on-ramp fees of up to $100K for all providers, making it more affordable for users to access Celo assets. With this campaign, the Celo ecosystem will be able to grow more quickly by making it easier for the underserved communities to get on board the Celo ecosystem.

Conclusion

Looking at Celo and its recent developments, it's clear that the aim of this L1 blockchain is different from its incumbents like Terra and Avalanche. Celo aims to not only increase financial inclusiveness using its ultralight mobile client to allow easy access to DeFi  through smartphones, but also to improve environmental sustainability through its Celo Climate Collective initiative. 

Despite the network’s recent decline in popularity since the start of 2022, Celo’s large addressable market and its unique proposition still makes it an interesting L1 to watch out on. 

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