Some of the biggest names in Facebook’s embattled Libra Association have joined a rival stablecoin project, which touts its mission as the promotion of financial inclusion using the blockchain.
Dubbed the “Celo Alliance for Prosperity,” the project was unveiled on March 11, with key Libra backers Coinbase Ventures, Andreessen Horowitz, Anchorage Mercy Corps and Bison Trails Co. joining the ranks of its 50 founding members.
The combined reach of the Alliance members at launch is ostensibly estimated at 400 million people.
Aside from veterans of the Libra Association, high-profile members of the Celo Alliance include Carbon, GiveDirectly, Grameen Foundation, Maple, and Polychain Capital.
What is the Celo network?
Behind the newly-launched alliance is the non-profit Celo Foundation, founded in 2017, which has been developing an open-source smart contract platform that supports a family of ERC-20 (Ethereum-based) stablecoins.
Enabling users to interface with the network using a smartphone, the project envisions offering faster and more affordable remittances, providing payments and micro-lending services, and reducing operational complexities in humanitarian aid delivery.
To achieve this, the Foundation has designed a decentralized network structured in three parts.
This comprises the Celo blockchain, a set of smart contracts dubbed “Celo Core Contracts,” and a decentralized application (DApp) layer —supporting products such as the Celo wallet or offerings from third-party developers.
The code of the Celo blockchain has, in the Foundation’s words, a “shared ancestry” with Ethereum. It inherits some of its key features, such as the Ethereum Virtual Machine (EVM) runtime environment, smart contract functionality, and a native unit of accounting, Celo Gold (the equivalent of Ether on its predecessor).
From a technical perspective, Celo is a Proof-of-Stake blockchain that implements a Byzantine Fault Tolerant consensus algorithm.
The first stablecoin in Celo’s set of ERC-20 assets is the Celo dollar (cUSD), pegged to the U.S. dollar and making use of a “decentralized version of the one-to-one issuance and redemption mechanisms of most fiat-backed stablecoins.” At a front-end level, this means that:
“Users create new Celo Dollar by sending 1 US Dollar worth of Celo Gold to the reserve, or burn a Celo Dollar by redeeming them for 1 US Dollar worth of Celo Gold.”
Libra in slow motion
As Cointelegraph has reported, Libra continues to face regulatory setbacks and uncertainty.
Just last month, a memo released on behalf of the European Commission claimed that the information provided so far by Facebook “remains insufficient for determining the precise nature of Libra and, by extension, its relation with existing EU law.”
In October 2019, PayPal, one of the association’s major backers, pulled out of participation altogether due to worries that its own reputation might suffer.
Reports also surfaced that other association members such as Visa, Mastercard and Stripe were also reevaluating their participation, citing concerns that Facebook may have exaggerated the extent to which regulators had accepted its plans.