Celo architect Rene Reinsberg on how the upstart platform can widen access to DeFi

What exactly is Celo? Rene Reinsberg, one of the crypto network’s key architects, says the answer “highly depends” on who he is talking to.  

In technical terms, Celo is a proof-of-stake smart contract platform that has been designed specifically with mobile experiences in mind.  

But Reinsberg would tell a potential user that Celo is a network aiming to make “financial products and services more accessible really to anyone,” he says over a video call. “So with Celo all you need is a phone to participate and use the technology.” 

Reinsberg is a partner at cLabs, the entity piloting Celo’s development as part of the so-called Alliance for Prosperity, an ever-growing cadre of companies — now featuring Deutsche Telekom and PayU — building financial tools on the platform.

The alliance aims to “create a more prosperous world with mission-aligned organizations,” according to its website. Reinsberg believes Celo’s “mobile-first” approach is fundamental to achieving that goal.

Despite the often-futuristic framing of blockchain technology, the mobile user experience for cryptocurrency systems often leaves something to be desired. MetaMask, perhaps the most popular Ethereum wallet, has a rating of just 2.9 stars on Apple’s app store. 

Valora, the best-known Celo wallet, sports a score of 4.7. Reinsberg says that is thanks to Celo’s “ultra-light client technology,” which he claims is almost a million times lighter than the Ethereum-based equivalent.

To successfully roll out the kind of tools Reinsberg and his merry alliance envisage — think micro-loans, P2P payments, and money transfers — slick mobile experiences will be essential. All the more so because much of what is being built on the Celo platform targets customers living in emerging markets. 

Back in March 2019, for example, a Celo team was deployed to Tanzania to speak with refugees in Tanzania, learn from their experiences and tweak the platform accordingly.

“If you look at reaching as many people as possible, there’s really no way you can do that if your technology only works with laptops and desktop computers,” says Reinsberg.

A stable of stablecoins

The DeFi platform, which has focused heavily on emerging markets tools, is also a stablecoin issuer. Having reliable stablecoins is crucial if Celo’s goals are to come to fruition.

The main stablecoin on the Celo platform is the Celo Dollar, which has a market capitalization of just $53.6 million, according to CoinMarketCap. Developers rolled out a Euro-pegged equivalent in January.

Celo’s stablecoins rely on “a shared on-chain reserve” to algorithmically manage the backing for all the stablecoins native to the platform, keeping their price as close to their pegged currency as possible. The composition of that backing can be checked in real-time on a dedicated webpage – and the reason for that, according to Reinsberg, is because the reserves are composed entirely of cryptocurrencies. 

“And whenever there’s more demand for stablecoins on Celo, the protocol will mint and purchase assets into the reserve to kind of grow the reserve with the circulation of these stablecoins,” he says, adding that the price of Celo Dollars and Euros have to date remained closely in sync with their fiat equivalents.

Reinsberg says the platform could feasibly launch stablecoins pegged to any fiat currency in due course. For instance, there is currently a team of developers working to amass support within the Celo community for a stablecoin pegged to the West African CFA franc, the currency of Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo. 

“My best prediction here is that over the next few months we’ll see many more currencies both pegged to existing fiat currencies but then also some new innovations that are pegged to any arbitrary basket of goods,” says Reinsberg.

For the time being, Reinsberg sees stablecoins as serving a valuable purpose in decentralized finance. In the future, however, things could get weirder. He speaks of living in a Cambrian moment — a reference to the advent of modern life forms in the fossil record — for currencies.  

“I mean I don’t know if ten years from now we’ll be using fiat-backed stablecoins,” says Reinsberg. “You could imagine a currency that is backed by natural assets from a community, like pristine forests or clean water, and the incremental use of the currency resulting in the preservation of forests or generating more clean water.”

Big-name backers

Meanwhile, partnerships with Deutsche Telekom and PayU, both secured in the past six months, promise to inspire near-term adoption of the Celo platform. The PayU deal in particular gives a glimpse of how it may all start to fit together.

Announced in July, PayU’s plan is to allow its 450,000 merchant customers in Latin America, Africa and Southeast Asia to begin accepting payment in Celo Dollars. The infrastructure firm First DAG, which connects merchants with their bank of choice to ease the technical burden of accepting stablecoin payments, has also been brought into the fold.

“This is a really big deal,” says Reinsberg. “Other than Stripe’s early foray into bitcoin that they ended up discontinuing, this is the first time that a major payment processor is embracing stablecoins.”

He explains how the addition of bigger firms like PayU, coupled with existing applications native to Celo, will begin to create a “native loop” for transacting on the platform.

To kickstart the partnership, PayU bought a significant sum of CELO, the utility and governance token native to the Celo blockchain. Doing so gives the company a way to influence the development of the platform, in addition to a financial exposure to the tokens.

“Increasingly there are companies now that are playing a role not just using the infrastructure but contributing to the core infrastructure,” says Reinsberg.

Platform influencers

Like Deutsche Telekom and PayU, Celo’s early venture capital backers hold CELO tokens. There isn’t any equity to hold, according to Reinsberg.

Andreessen Horowitz (a16z) has contributed a sizable chunk of the money raised by Celo to date. The Silicon Valley heavyweight also recently invested in a $20 million fundraise by Valora, the digital wallet underpinned by Celo and incubated by cLabs, which spun off to form an independent company in July.

Valora gives mobile users an easy way to send, spend, and save crypto. It is, circling back to the earlier comparison, “like the MetaMask for the Celo ecosystem,” according to Reinsberg.  

One of the big challenges facing Reinsberg is balancing the interests of all the various parties that are already contributing, and that may come to contribute to, the Celo project.

It’s a challenge that is inherent to all decentralized networks, but perhaps one that is more accentuated by the stated mission of the Celo Foundation — the non-profit organization that guides the network’s growth — to strive for “an inclusive financial system that creates the conditions for prosperity for everyone.” How will the project balance that goal with the profit incentives of prestigious venture capitalist backers like a16z?

According to Reinsberg, the answer lies in decentralization.“Celo is an open platform, so anyone can build anything on Celo,” he says. “A lot of the things that I’m most excited about that are building on Celo I heard about on Twitter.”

The Celo Foundation does of course have a hand in deciding how best to shape the platform’s development by dishing out grants. The organization’s latest call for proposals highlighted a wide range of priorities that applicants should seek to address, such as “lowering barriers to access” with better on and off-ramps.

On the question of influence, which can be a thorny one for DeFi projects, Reinsberg points out that any application built on Celo has the opportunity to amass influence.   

“You could end up seeing one of those applications becoming really big — bigger than Valora, bigger than any other application on the platform, and because of that ending up themselves contributing in a much more meaningful way through grants and through our work at cLabs to the future development of the platform,” he says.