Nansen's Celo Quarterly Report - Q2 2022

Disclaimer: Nansen has produced the following report as part of its existing contract for services provided to Celo at the time of publication. While Celo has the right to review and provide feedback to Nansen, Nansen maintains full editorial control over the publication of this report. All views expressed are the independent opinions of Nansen's research analyst(s) who are the author(s) named in this report. This report is intended for informational purposes only and does not serve as investment, financial, professional, or other advice. For more information, please refer to the disclaimer at the end of this report, as well as our Terms of Service.

Overview

Celo is a fully EVM compatible layer-1 blockchain that was launched in 2020 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, with its ability to facilitate payments between any phone number in the world. This is achieved via an ultra-light client that connects a device to a full node, enabling anyone to connect to the Celo Network with minimal data requirements.

Celo also revolves around the core idea of Regenerative Finance (ReFi), which is a proposed financial model to develop and build while maintaining a positive environmental impact and allowing communities to flourish. Leading the way with Climate Collective, a partnership of various web3 projects and organizations with a common goal to reverse climate change via accelerated ecological efforts, Celo aims to bolster ReFi efforts and provide the infrastructure to continue building towards a more sustainable future.

Check out Nansen Alpha’s previous report on Celo here.

Key Development: Q2 2022

RefiSummer

• Throughout Q2, the Celo community embarked on a campaign, #RefiSummer to provide a glimpse into what a sustainable economic system could look like. This was done via onboarding several decentralized applications (dApps) on the Celo blockchain.
• Uniswap v3 was one of the dApps that would be deployed on Celo, beginning with the Moss carbon credit (MCO2) token pool, pooling liquidity for the voluntary carbon market, and spearheading the efforts for tokenized carbon credits. 
• The MCO2 token represents a REDD+ forestry carbon credit that has been tokenized onto the blockchain and is primarily sourced from projects that engage in environmental regeneration efforts. 
• The Celo Foundation would help seed initial liquidity so that users from other EVM-compatible chains can bridge over to use MCO2 and other future ReFi assets.
• Creating pools of such tokens with deep enough liquidity would allow the carbon market to scale and facilitate transparency between institutions and individuals.
• Another dApp onboarded was EthicHub, an innovative protocol to support agricultural projects by unbanked farmers. Many of these farmers form the backbone of the agricultural ecosystem and yet are unable to access credit due to a lack of collateral. This is where the community can support these farmers via lending capital or staking collateral, facilitated through EthicHub’s smart contract crowd-collateral platform. 
• Besides onboarding new projects, the Celo Foundation also launched the Celo University Guild, a comprehensive trove of information for both students and educators alike, rallying the community regardless of technical experience to learnand grow together.
• The synchronous focus of both development and community building reinforces the successes highlighted in the recently released Celo Foundation Annual Report 2021, setting Celo up for an exciting 2022 ahead.

Celo Camp

• Celo Camp is an initiative run by the Celo Foundation and Upright. Through mentorship and funding opportunities, Celo Camp aims to help new founders connect and develop their projects, many of which focus on a variety of societal and environmental problems, celebrating the innovation and coming together of talented individuals in the space.
• Batch 5 of Celo Camp just concluded with notable winners Plastiks and esolidar.
• Plastiks aims to build a business model and ecosystem that tackles plastic pollution and tracks the amount of plastic recovered in the process. Their platform connects companies and individuals to plastic recovery projects, empowering these projects to get the required funding and boost their influence. As an individual, one would also be able to showcase their commitment to plastic recovery on their profile based on the recovery guarantees that one has participated in. A highlight during their demonstration was their collection of sustainable NFTs, featuring a partnership with Hotel Lancaster Paris where NFT buyers could redeem a free night's stay in the hotel. With Celo, Plastiks is en route to building a more sustainable world and achieving much greater transparency on plastic recovery.
• Esolidar is utilizing blockchain technology to boost philanthropy and Environmental, Social, and Governance (ESG) efforts. During the camp, the esolidar team demonstrated an NFT Sweepstake prototype that featured multiple campaigns for users to participate and win exclusive NFTs. Launching a pilot of their Sweepstakes tool with music festival Rock in Rio, donors stand a chance at a unique experience with renowned digital artists and musicians. esolidar is committed to building alongside Celo to utilize web3 to drive transparency and fundraising engagements.

Toucan Protocol

• With Celo’s infrastructure centered around sustainable innovation, Toucan has announced its plans to launch on Celo, after its initial launch on Polygon. 
• At its core, Toucan tokenizes real-world carbon credits on-chain and creates Carbon Pools for emerging use cases of DeFi. It also facilitates price discovery which was previously hindered in off-chain carbon markets.
• In the upcoming quarter, Toucan will draft a proposal to the Celo governance community to include several tokenized carbon credits into the Celo Reserve, namely Base Carbon Tonne (BCT) and Nature Carbon Tonne (NCT). 
• Upon successful passing of the proposal, a new grant program would be launched to incubate and grow several Refi projects in the Celo ecosystem. Some of the projects that have committed to leverage Toucan’s and Celo’s infrastructure include:

• Senken - Platform for trading carbon tokens
• Return Protocol - Pursuing carbon emission reduction via the use of NFTs and web3 interactions
• Solid World - Decentralized Autonomous Organization (DAO) that supports good carbon projects

Collaboration with Mysten Labs

• Back in September 2021, Celo announced a partnership with Mysten Labs to improve the throughput of the Celo blockchain via an advanced mempool protocol, the Narwhal, and Tusk consensus.  
• Additionally, Mysten Labs would also provide support for the Move virtual machine to facilitate the migrations of frequently utilized Celo core contracts, such as cUSD and cEUR.
• Lastly, to enhance self-custody efforts for users, Mysten Labs would also add the KELP key recovery protocol to Celo, allowing users to recover their private keys despite losing their mobile devices.

Nansen On-chain Data

Daily Transactions

The number of transactions on Celo was quite volatile throughout this quarter, ranging from 120k to slightly above 450k transactions. The number of transactions and gas on the Celo network both spiked on May 12, corresponding to the UST de-pegging event. This indicates that Celo was not sheltered from the external events in the broader crypto market.

Daily Transactions vs Ethereum

Putting the transactions of Celo against those on the Ethereum network, the trends for both chains are similar. Interestingly, the number of transactions on Celo after the UST de-peg event seemed to trend higher than before, almost doubling from 200k to 450k transactions, pointing towards the increased activity happening on the Celo chain, amidst the onboarding of new projects.

Daily Gas Paid vs Ethereum

As seen on the chart above, in Q2 2022, users pay significantly less gas compared to Ethereum. On average, the amount of gas paid on Celo was less than $400 per day. The gas paid on Celo hit the peak on May 11, 2022, at above $1.9k, which coincided with the aftermath of the UST de-peg event.

Celo Bridge Stats

The chart above shows the bridging activity from Ethereum to Celo. The daily volume showed volatility throughout the quarter and peaked in early April at slightly above $700k. There were some days where the volume was low, particularly from the end of May until mid-June. It could be due to the downward trend in crypto after the UST de-peg event that impacted users’ enthusiasm in the Celo ecosystem.

Smart Money Segments on Celo

Comparing the overlapping of Smart Money addresses on Celo and Ethereum, it seemed that in this quarter about 9% of Airdrop Pro addresses were on Celo as well, followed by First Mover Staking and First Mover LP. Comparing these categories to Q1, it seemed like Celo has started to gain the attention of more Smart Money addresses, which comes as no surprise due to the many projects focusing on sustainability being on board the network.

Check out this page for how these categories are defined and how you can use these labels on Nansen!

Conclusion

With concerns about the environmental impact, Celo’s strategy to focus on ReFi and sustainable progress had contributed to its growth over the last quarter, especially with efforts to onboard strong projects with similar goals. Celo’s commitment to growing these projects organically had also added to the thriving community and support from multiple partners and protocols. In the upcoming quarters, Celo has an exciting lineup of improvements and innovations, pioneering the way towards a fast and accessible blockchain that is overall planet positive. 

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