This post is taking part in the Lens x Kiwi Writing Contest
In his recent post, “Layer 2s as cultural extensions of Ethereum,” Vitalik laid out an intriguing idea: that Layer 2 networks aren’t just technological add-ons to Ethereum but cultural extensions as well. With Celo’s upcoming transition to a Layer 2 on Ethereum, this idea resonates deeply with me. I’m excited for how Celo’s unique culture and technology will contribute to the Ethereum ecosystem.
I’m incredibly happy that Ethereum chose to adopt its current Layer 2-based scaling roadmap instead of the original sharding design. Not only does it address the scalability trilemma more effectively, but as Vitalik points out, it is more pluralistic — better suited to fostering diverse approaches and cultures. I suspect this pluralism was key to the Celo community’s governance decision to transition to a Layer 2 and why the Ethereum community has welcomed us so warmly. It is also why I’m optimistic about more Layer 1s becoming Layer 2s and for Ethereum to become the settlement layer for Web3.
But how do Celo and Ethereum differ culturally? As Vitalik noted, Ethereum embodies a combination of Cypherpunk, Regen, and Degen philosophies. Celo, on the other hand, brings a different blend: It shares Ethereum’s Regen culture but puts a bigger emphasis on enabling decentralized finance on mobile phones, with a particular focus on real world use cases like payments, savings, credit and commerce. This emphasis on practical use cases is likely why Celo recently surpassed Tron in daily active users transacting with stablecoins. But how did we get here?
The Celo Journey
Celo’s journey began on Ethereum. In 2018, inspired by Ethereum’s vision, we set out to build technology that could drive financial inclusion, aiming for a simple, intuitive financial application — something as user-friendly as Venmo. Our mission was ambitious yet straightforward: to build a regenerative system that creates the conditions for prosperity for all.
Initially, we tried to build a wallet on top of Ethereum but soon realized that the user experience we needed wasn’t quite there. So, the growing Celo community took a different path: we built our own chain from the ground up, integrating the software (wallet) and hardware (blockchain) layers, much like Apple’s seamless approach to products. This allowed us to build a scalable EVM-compatible proof-of-stake chain with features like gas being payable in stablecoins, an identity layer that safely maps phone numbers to wallet addresses, and even a Cypherpunk-esque zk-SNARK light client.
A quorum of independent validators launched the Celo network on Earth Day 2020, a symbolic reflection of our commitment to regenerative principles. Shortly after, the network’s first governance proposal activated proof-of-stake consensus along with a system for programmatically offsetting the network’s carbon footprint — integrating sustainability into the technology’s core.
Since then, we’ve been focused on turning our mission into reality. Our first wallet, Valora, showcased what financial inclusion could look like: an easy-to-use wallet using phone numbers instead of addresses as identifiers, where transactions could efficiently be paid for with stablecoins (pre-Account Abstraction). While elegant and easy-to-use, we quickly realized that on- and off-ramps in emerging markets were missing — a critical gap for any product targeting real world users.
Rather than waiting, we took action. Over the past three years, we invested in companies, incubated startups with Celo Camp, and formed partnerships to build these financial bridges. These efforts have paid off, and now, with the help of bigger brands such as Opera that have joined us, more and more emerging market-focused on- and off-ramps continue to be built.
With these now in place, we’ve finally been able to unlock end-to-end experiences that rival those built on traditional financial rails. As an example, with Opera’s Minipay wallet, you can now send money from Norway to Malawi with local on- and off-ramps built in, at a cost that’s 30% cheaper than MoneyGram. If you find this compelling, you are not alone. In just one year, Minipay has onboarded 3M users onto their beautifully designed phone number-based wallet. This isn’t just a milestone; it’s proof of crypto serving real people.
Though payments were our entry point, the Celo ecosystem has since expanded into broader financial services, such as savings and uncollateralized lending. The introduction of USDT and USDC this year has dramatically increased liquidity, making it easier for users to cash in and save in dollars, a popular choice for people looking to hedge against inflation in their local currencies. As with other chains, additional yield opportunities exist through DeFi protocols on top of Celo. Efforts to simplify these opportunities, such as through Valora’s Earn plug-in system, now let users effortlessly earn rewards on their stablecoin savings directly from their wallets.
We realized, however, that true financial inclusion requires more than just dollar-based stablecoins. People want to save in USD, but because they frequently earn in local currencies, uncollateralized borrowing in dollars against future income becomes risky due to foreign exchange exposure. This insight led to Mento Protocol’s ambitious goal: launching a stablecoin for every currency in the world. Mento has already made progress, with stablecoins for the US Dollar, Euro, Brazilian Real, Kenyan Shilling, West African Franc, and Philippine Peso — all live today.
These local stablecoins are already making an impact. In Kenya, for instance, Haraka is successfully running lending campaigns with the Mento Kenyan Shilling stablecoin, providing access to credit in a familiar currency. Haraka uses the time-tested concept of credit circles to protect against defaults, allowing it to offer uncollateralized loans — a key differentiator to the collateralized lending offerings targeting Degens on other chains.
The diverse set of stablecoins on Celo is enabling more than just lending. With 11 different stablecoins covering 7 currencies on Celo, we’re seeing a vibrant on-chain foreign exchange market take shape. As liquidity pools for these stablecoins continue to form on Uniswap, Celo is rapidly becoming the go-to destination for on-chain FX trading. Uniswap volumes have surged 20-fold since last year, hinting at the potential for a global, decentralized FX market that’s more accessible than any centralized counterpart.
As Celo returns to the Ethereum ecosystem as a Layer 2, we’re bringing not just our technology but our unique approach to growing financial inclusion and using crypto for the real world. We’ve surpassed Tron in one metric — daily active users transacting with stablecoins — but there’s much more we aim to achieve.
The Celo flywheel is starting to spin, but we can’t achieve this alone. We’re here to stand alongside Ethereum’s Cypherpunks, Regens, and yes, even the Degens. We’re here to create the conditions for prosperity for all and believe that by working together, we can make this vision a reality. We invite you to join us on this journey toward a more inclusive and regenerative financial future.