Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Marek Olszewski & Rene Reinsberg: Celo – Towards Prosperity for Everyone

Episode Date: September 1, 2020

Celo has a clear mission - to build a financial system that creates the conditions for prosperity, for everyone. The Celo Foundation is a non-profit organization that supports the growth and development of the open-source, decentralized Celo Platform. Its aim is to build a flexible network of applications built on a blockchain to facilitate payments and remittances to people’s phone numbers. Guided by the Celo community tenets, the Foundation contributes to education, technical research, environmental health, community engagement, and ecosystem outreach. These activities support and encourage an inclusive financial system that solves real-world problems such as lack of access to sound currency, or friction for cash-transfer programs aimed to alleviate poverty.They are aiming to create a new platform to connect people globally and bring financial stability to those who need it most. Rene Reinsberg and Marek Olszewski, founders of Celo, talk about how they are using blockchain technology to achieve this.Topics covered in this episode:Rene and Marek’s backgrounds and how they got into blockchainThe history of Celo and its missionSome of the friction points with the project and how they have overcome themWhat Celo are doing differently than other networksHow Celo are dealing with privacy issuesWhy they chose to build on the EVMThe go-to-market strategy that Celo has chosenHow cUSD works and how they deal with the scalability issue on the systemAs the reserve holds Bitcoin, how does the transfer of cUSD work?cUSD vs MakerThe issuance protocol for transferring assetsHost debriefEpisode links: Celo websiteThe Celo blogcLabs announces acquisition of SummaRethinking Remittances with Blockchain Technology and CeloCelo DollarsPlumo Channel on DiscordValoraCelo on TwitterRene on TwitterMarek on TwitterThis episode is hosted by Brian Fabian Crain & Meher Roy. Show notes and listening options: epicenter.tv/355

Hi and welcome to App Center. My name is Brian Crane. And I'm Meheroy. So today we are going to speak with Mori Goldshefsky and René Reinsberg, the two founders of Sellos. So Sellers is really, really ambitious, really exciting kind of new layer one protocol that's focused a lot on usability, financial inclusion and, you know, different life for a few months and there's a lot of traction around it. It was great to kind of talk with them and dive into the platform. Just a disclaimer, before we go into the episode, so as listeners are aware,

Meher and I, besides doing episode and we also run a company called Course One. So with Course One, we are running a validator on Cello, so it's a proof of stake network, and we're running a validator there. And we've also been building kind of a user interface for staking called Anthem, and that has now, like we're in the process of adding kind of full support for SELO there as well. And we've received some funding from the SELO Foundation for this work. So we just wanted to make that disclaimer off the front. And now let's go to the interview.

We're here today with Marek and Rene, the two of the founders of SELO. So SELO is a project that we also from KORS-1, Meher and I have been involved in, running validators. And so it's a blockchain that recently launched and he has a lot of ambitions about, especially around financial inclusion. So I'm really excited to have both beyond. Thanks for joining us. It's great to be here. Thanks for having us. We always find it interesting to dive a little bit into sort of, you know, what's your background? How did you get into blockchain and how did that lead up to sell or maybe, Renee, can you start on what sort of your journey that led up to here. Not unlike others who've been on your show before, I started my career in traditional finance

at Morgan Stanley. I was working in fixed income capital markets, so spending a lot of time with derivatives. And also spent some time in sort of the more international realm and did some stints with the World Bank local office in Caracas, as well as working and living in a bunch of different places where I sort of got firsthand exposure to what it means to maybe not. I live in a place where you can take sort of a sound financial system for granted. And so sparked my curiosity, especially after Ethereum came out and seeing sort of the kind of concepts around programmability and applying that to money. And that was very fascinating.

I have a CS background. I studied at the University of Toronto for my undergrad and then went to MIT for my PhD, where I focused on an area of research called the Terministic multi-threading, which just very coincidentally is very relevant to paralyzing smart contract execution today on blockchains. And along the way, I spent some time at Google and Microsoft Research. But then at MIT, Reni and I actually met, and out of a seminar taught by Tim Berners-Lee, we started a linked data and machine learning company, which helped small businesses better compete against the big guys. And that company did well. It got acquired.

And after a few years, Rennie and I and a MIT professor that was advising us in this last company, we got together to start SELO. For you guys, what are the biggest learnings from your previous company that kind of like shaping how you're approaching SELO? This is probably not just a learning from that company, but sort of a general thing that goes through life. You know, when you're building something, when you're creating something, you know, think about what you're one, what you're actually kind of solving for. what's the solution you're trying to tackle and then how are you doing that and those are really two big kind of themes that influenced yeah our journey so far so one start by doing a lot of research spending a lot of time with you know the end users ultimately the people that you think will want to use what you're building and then two spent a lot of time early on especially thinking about

what kind of organization you want to be and I think the key lesson for us was to be even at the outset, Sep, Merrick and I, you know, sitting down and laying out what are the values for the organization we want to build. What is sort of the long-term mission? What's sort of the North Star that can keep us honest as we're going through the ups and downs that just come with entrepreneurship. And so definitely that has helped us, I think, stay pretty focused and build something hopefully that already early on very quickly after our main net launch has led to big organizations adopting. This is one of the things that like stands out to me a lot is, you know, when you look at

your website, blogs, all the material, it's always so upfront, clear. And what's the long-term vision, what are the values? And I think that's most blockchain projects don't do as well. I mean, it's probably there, but it's not as articulated as much and brought to the forefront as much. So I think that's something that's really impressive about you guys. I was reading through the website a little bit before and, you know, I read somewhere that Zello's philosophy is based on Charles Eisenstein's sacred economics. I'm curious, like,

who's that guy and what's sacred economics? So Charles is a philosopher, and he has indeed been very influential on work we've been doing. And, you know, I think we can maybe chat about some of the concepts that he introduced that we think was this technology can be brought to life at a big scale. I think one thing maybe for people who are new to cello and to sell a community, maybe let me just kind of lay out sort of the community tenants or the tenants that we've kind of set for the work that everyone is doing. And I think that helps kind of in a way make sure people have a sense for what cello stands for. Regardless of where they're building and what kind of application they're building or how they're looking to kind of use the platform. And those four tenants are designing for all.

Big one for us, you know, you brought up financial inclusion. but I think it's less about just purely focusing on financial inclusion, but it's designing a system that is truly accessible to everyone. And I think by focusing on communities that are more excluded today, you actually have a shot at having ultimately something that is accessible to everyone and can work for everyone. So that's the first one. The second one is innovating on money, which is kind of in sort of the vein of programmable money.

And I think this is where you see some of the ideas that Charles is. introduced in among other things, this book, Sacred Economics and Charles has been an advisor to seller, which has been awesome. But I think when you look at the history of money, you see it hasn't really changed since the 1600s. And now we have this opportunity to really kind of actually change what money is and what it can, the benefits that can bring to communities. And so with that looking at really revisiting a lot of the features of money. And of course, we're starting in a much more pragmatic place, you know, stable coins, you know, digital kind of assets. that represent, you know, Fiat currencies, but, you know, in the future, we see currencies take

different shape. And, you know, concepts like natural asset-back currencies are things that are really interesting to us. Related to that striving for beauty, that's a tenant that is important, you know, when you create stuff like, is it going to make the world, it sounds maybe a little bit cheesy, but a more beautiful place, is it actually bringing things that will bring joy and value to communities? And if you're someone who's debating whether they want to be part of this community, I think seeing that and then thinking about the things that they want to build, give some orientation. And the last one, and this is maybe one that does feel even more important in today's kind of times, is about humility, embodying humility.

That has helped us. I think we, if you talk to us, you know this already. I mean, we don't pretend we know all the answers or have all the answers. And certainly like the undertaking, you know, the big mission for Sello to have a better financial system that allows prosperity for everyone. It's not something that a small group of people can just, like, build and roll out and, like, you know, grow. But it is a team effort as an effort of, like, a growing community, a lot of people being involved all over the world to shape that and drive that. And so the best way to kind of go about it is by asking questions by showing vulnerability and humility. Those are the broader the tenets for Sellow.

In addition to those tenets, does Sellow have a separate vision statement for the future, some specific target you are looking to achieve? Or is it more that you'll want to achieve something that brings about financial inclusion and more beauty in the world? So Sasello's mission at its core is to build a financial system that creates the conditions for prosperity for everyone. And the way that we're doing that is by building a permissionless platform that makes financial tools accessible to anybody with a mobile phone. And so maybe for those also taking a step back, for those who are new to Sello, you know, what is Cello kind of concretely, it's a proof of stake platform that is fully EBM compatible. I would say that there are three kind of key innovations that help us kind of achieve this mission, each of which were really specifically chosen to make CELO more usable to someone using it via

a mobile phone. Cello has a like client, Plumo, which lets mobile devices sync with the chain kind of near instantly. The current version that we've launched requires about 17,000 times less data to sync than a kind of traditional SPV-based-like client. And the soon-to-launch snark-based version of this will be 1.7 million times more efficient. And this allows anybody on a mobile phone to sync in a fully peer-to-peer manner with the chain in a fully censorship-resistant manner. There's no need for something like in Fuera to be able to connect with the chain from your mobile device. Secondly, Sello has a stable coin that's native to the platform called Selo Dollars or CUSD. This is kind of algorithmic and crypto collateralized.

Currently, there is about just over 6 million CUSD in circulation. The network just launched, and that number has been kind of growing steadily since the launch. This is collateralized with around $220 million worth of crypto assets, which include SELO, the native asset on the platform, Bitcoin, and ETH. And then critically, even though CUSD is implemented kind of as a token on the platform, you can actually pay for transaction fees with tokens on the CELA platform, so you can actually pay for transaction fees with CUSD. And then finally, SELO has an on-chain PKI,

which maps phone numbers or hashes of phone numbers to public keys and wallet addresses. so that people can find each other really easily by phone number. And so this allows people to send payments to anyone in their contact list, even if the recipient hasn't even kind of created an account on the cell network. And so these three things kind of taken in unison really allow us to build really great mobile kind of experiences that are ultimately accessible to anybody in the world. isn't there friction associated with getting CUSD in the hands of underserviced people that Salom might otherwise want to serve?

Of course, when you introduce any new technology, you know, there's always the question, how do you actually get it out there? I think for us, early on, we did spend a lot of time looking at what are the use cases that would most benefit from digital currency, particularly digital currency that is accessible on just a smartphone, really. One use case, or I mean, there are many use cases, but one that particularly stood out and that I think is more timely than ever is cash transfers, right? And this is obviously the big programs that, you know, even the US government right now

is running a big cash transfer in light of COVID. But obviously, you know, that if you look at the broad definition that includes also, you know, peer-to-peer remittances and other payments. And so one way for us to think about that, I think about it was like, okay, how do we we make sure that everyone who is currently operating in that world and that industry knows about several dollars and the benefit that can bring. And in light of that, we actually, while back, started, you know, talking to organizations that do large-scale deployments, for example, around cash transfer, but also some of the other use cases, the platform is powering

initially. And so one example here, make it more concrete, maybe is Grameen. So the Grameen Foundation of the biggest microlenders is actually. actually using cello dollars and the seller wallet, Valora wallet, that the C-Labs team has been building to deliver COVID relief aid to hundreds of low-income families in the Philippines for them to then spend it on groceries and pharmaceuticals. And that's part of a bigger project funded actually by JP Morgan. And so if you look at that for most of the beneficiaries, this is going to be their first digital wallet. So, you know, that's kind of already something that you have to think about, so when you think about the entire stack, right, you want to make that experience as easy

as possible. It has to be as easy as someone sending a text or, you know, making a WhatsApp call. Otherwise, you're just not going to be able to be successful. But then secondly, you also want to make sure that it's actually, once it's on their phone, it's actually valuable. It can be used, for example, at the local stores, right? And so as part of the Alliance for Prosperity, which now has 100 members and organizations like Ramin, but also organizations that directly work with merchants or merchants themselves are also partnered on this. And so it's actually possible for the recipients to go into a local grocery store and directly pay with the wallet for groceries. And so if you take this apart, there's obviously a lot of complexities there in terms of like, you know,

things like custody and liquidity, right? And so you have to kind of think about this kind of holistically and think about how do you bootstrap pretty much a global ecosystem. But the good news is that having a digital currency that's stable, accessible on a phone is such a game changer, both in terms of speed, efficiency, and cost, that it's worse kind of the investment, the up-for investment, even if it means setting up some additional kind of infrastructure. And that's a one-time investment. And once the ecosystem is in place, obviously, you don't have to do it again the next time. So that's really what we've been focused on.

In parallel to developing the technology, we've been spending a lot of our time on the ground with local organizations, doing a lot of user research and pilots, and quite frankly helping some of the alliance members do pilots. And I think that's led to a lot of the way we've built cello, but also has actually led to some concrete features like what Merrick mentioned earlier, the ability to pay with seller dollars as the first stablecoin on the platform for fees. Since I became interested in crypto and Bitcoin, which was in 2013, so in mid-2013, this financial inclusion and, you know, like remittances and, you know, like banking the unbanked who's always kind of there as this, you know, this is one of the great benefits of this technology.

To be honest, I haven't like followed up that much with, you know, where did some of those projects go. But like I would say sort of my overall impression is that not like a lot has come out of that. How do you guys look at that like all of these previous effort or work? like were there results there? And what are the biggest things that you guys think data wrong and that you guys are doing differently? Yeah, it's a good question. I mean, don't get me wrong.

I don't think cello is built specifically for those use cases. But I think in order to build something that if I want to, you know, imagine we could get together in person and, you know, you would pay for my beer, you know, I would want a seller the way I pay you back, right? And I don't want to necessarily kind of say that by building for cash transfers, you to do too many things differently from building just a kind of general payments infrastructure, right? I think if you have a very kind of strong global payments infrastructure, then you can do things like cash transfer programs more easily. And I think a few things that were just not

technically feasible led to this now being possible. And I think we're some of the first to take full advantage of that by combining some of the puzzle pieces. But we very much remember those things as well. And, you know, I think three years ago, I think the world just looked different. in some ways, but actually not much has changed in terms of the adoption, but the technology has advanced so much, right? And so I think where maybe things ended up taking a slightly different turn, I think for us, we saw, and Mary can speak to this, you know, given this background as well. You know, there's definitely a lot of excitement three years around, you know,

scalability and how do we like, you know, the CryptoKitties problem and how do we like make blockchain's more scalable? And that drew some of the best people in the space into thinking about scalability, but much less effort was going into usability and thinking about just some of these small kind of, you know, I'll call them tweaks now, but they're, you know, still take a lot of work, but that actually ends up making the experience so that you and I could more easily send money between two wallets. And, you know, I think once you have that basic infrastructure and you can bring kind of liquidity to markets kind of around the world, then you suddenly can see a lot of other infrastructure kick in, right?

So bid wage was another alliance member who recently joined is going to use several dollars. And that can lead to sort of acceleration of sort of the gig economy and funding the gig economy. We did this really interesting project. We supported a company called Appen and another alliance member in Kenya around micro work. People were doing small tasks on their mobile phone and getting paid in several dollars and then using several dollars with that kind of the money they just received at a local store to pay for stuff. right. Now imagine trying to do this on, say, Ethereum was like dye. The infrastructure just hasn't been ready for that to be kind of a seamless experience. If you want to do it, especially

if you want to do it in a trustless manner, we didn't think it would happen so fast. So especially a lot of the light client work, we've, starting cello, we thought this could take five to 10 years to see some of that actually be feasible. And in many ways, like the great work that has happened and the cryptography community has accelerated that. And don't get us wrong, I think scalability is extremely important in kind of this new cohort of proof of stake chains that are launching this year. Encelo is among them. It's a really novel proof of stake protocol that uses a stake to elect hundreds of validators who then perform PBFT consensus. And in that regard, it's both extremely environmentally efficient but also highly scalable.

But it's not only highly scalable. scalable, it also works really well with mobile devices. It also allows you to send payments to someone even before they've created a public and private key pair and allows you to actually pay for transaction fees in multiple currencies, including the one that you actually want to send. And it's this combination of all of these things together that really makes LO really, really powerful. Maybe thinking back to that moment three years ago that René was kind of alluding to, I think one thing that Sello has done differently since then is getting to this solution, not by kind of thinking about, you know, what are the things that people will find important in three years?

To be completely honest, we didn't know three years ago that these were the important features that you had to kind of build. We actually discovered them along the way by building Valora, Sellow's kind of flagship mobile wallet. But we were building it alongside the platform right from the get-go. And so very quickly we learned, oh, we're going to need to pay for transaction fees with tokens. Otherwise, it's going to be really confusing to users. And, oh, we're going to need phone numbers as identifiers. People need a social network to kind of bootstrap off of.

And the kind of combination of everyone's contact lists across everyone's mobile phone is arguably the biggest kind of social network, kind of decentralized social network in the world. And so we wanted to tap into that to make it really easy for people to transact with people that are in their networks. All of these things, we had to kind of learn along the way. They're like clients another great example. We tried sinking the Ethereum chain on our mobile phones.

And even with extremely kind of fast internet here in the U.S., it still took way too long. And so we put our heads together and came up with kind of this really, novel snark-based like client protocol. That really is just, it's amazing. When you first open the wallet, you are asked to type in some basic kind of information to get started. And during that first screen, that's really all the time that it takes to sync with the chain.

It always brings me so much joy just seeing how quickly it sinks. And, you know, this was not something that, that again was obvious to us. And now that we've done it, in hindsight, it looks, you know, obviously very, very important. But now we're also finding that there's all these other benefits, too. It turns out that having an extremely efficient like client is also very useful for bridging and verifying kind of state across two chains. And so there's a lot of nice, kind of serendipitous things that came out of that as well. And it's all thanks to kind of that very tightly coupled integration that we did with kind of the mobile wallet and the platform.

I just said this question is kind of in my back of my head and I was thinking it before as well. With the ability to send funds to a mobile number, is this compatible with like privacy or let's say could I figure out, okay, how many coins are associated with a particular mobile number if I know that? This was a huge, huge technical challenge as well for us to overcome. If you simply hash phone numbers and keep that hash on chain, then it becomes pretty easy for someone to brute force all of the phone numbers that they might be interested in and look up kind of those mappings on chain to then find people's wallet addresses. And so the way that we get around this is actually through a decentralized oblivious directory service, which uses some really interesting new threshold cryptography to serve salts. that are used in combination with these phone numbers when hashing them in a way that is both decentralized but also rate limited. And so whenever you want to look up, say, a wallet address of someone's phone number, you have to first make a request to kind of this directory service.

It's run by kind of tens of operators that are each using kind of the BLS-12-37-Elytive elliptic curve to effectively create an oblivious pseudorandum function that generates a salt so long as a kind of honest threshold of these folks acts honestly in response to that request. And crucially, none of these folks can actually themselves look up the salts of each of these phone numbers. they have to get a threshold of them to kind of work together to do that. And so long as a threshold remains honest and rate limits, not just kind of the end users making these requests, but also these other node operators, then no single party in the system can actually brute force

and infer all of the pashes and their mappings to wallet addresses. This is really exciting. we actually have some really outstanding institutions and companies that are running the service and will be kind of making an announcement soon. So, okay, you can't brute force it that way, but let's say I know someone's specific phone number. Would that I then still be able to do that? In order to be able to kind of send money to people that are in your contact list, you can typically look up one phone number per transaction that you're making on the network,

more or less. And so you typically would want to save that for the person that you want to transact with, but you could in theory look up a very small number of people's phone numbers. And the good news is that this threshold cryptography, kind of oblivious directory, can actually be used to do a double opt-in as well, so that in the future will have a mode where you can only reveal your mapping to people who you explicitly have in your contact list. So you can have this kind of double opt-in. So that's something that we're working on today. But the reality is some people will prefer the other approach anyway. If you're kind of a small business and you're looking to get paid easily, then you're going to want to have your mapping kind of easily available to people

who have your phone number. And so we've started off with kind of this initial offering and then we're working on adding kind of this double opt-in method that will be coming soon. I can understand the value proposition behind the ultra-efficient light line and the linkage with the phone numbers, but you have also chosen to put smart contracts into your blockchain, and not only that, you have specifically gone for these EVM smart contracts. And so what's the reasoning behind going for smart contracts in the first place? And then like why specifically these EVM based smart contracts? This may be kind of just having sort of the end user hat on and looking at some of the solutions

that we want to see on the platform. But I think there's a lot of and maybe coming back to, you know, Charles Eisenstein a little bit and features of money, but also some of the use cases kind of that were, you know, applications that we observed in the real world. And so one example that is interesting. On one of the user research trips, we, the team kind of in a village saw like a kind of a lockbox that had a bunch of like physical locks on it, right? And so it was kind of the, you know, like the community kind of savings kind of pot. And it was used to, you know, save money over time. And then at some point, like take the money and, for example, you know, invest in a new bell, for example. And so, but in order to get the money, a bunch of people had to come together and insert their key and then open the lockparks, right? So kind of a real world multi-sick. And so, but. And so, but in order to get the money, a bunch of money, a bunch of And when you see some of that and you're like, oh, wow, you know, you could actually implement some of these, you know, basic financial applications using, in some cases, pretty simple smart

contract logic and bring more efficient tools to these communities. And there could be things like saving circles. It could be basic kind of micro insurance lending applications. And so for us, it was always clear that we needed a way to easy allow folks to, from the beginning build and launch some of these applications. And we're seeing that now. Some of the teams, I don't know if you guys have followed Salo Camp, which is super interesting.

I think the first batch had 250 teams from over 60 countries, upright, the Alliance member who just announced version 2 has been doing a phenomenal job with that. But there's a team among the finalists in this last, in this first batch, which was working on a peer-to-peer universal basic income. So a bunch of folks would pay into a pot or several pots, and then these pots would be paid out to people in a community at, for example, the rate of like a seller dollar a day. And that's super interesting, right?

I mean, there's things that you just can't do easily today with traditional financial infrastructure, but with some relatively straightforward smart contract logic, you can actually achieve that and roll that out and, you know, it's fairly limited risk. Yeah, and maybe just to add to that, I think we were very kind of inspired and excited by what was going on in the Ethereum community at the time. So much so that we even implemented the majority of our protocol using system smart contracts. So the stability mechanism, the on-chain governance mechanism, the identity system, everything is implemented as the solidity.

upgradable smart contracts that are ultimately owned by the governance contract. And we were excited by that methods of development and by kind of that method of dog fooding. And so we knew right from the get-go that we wanted a VM to be able to support that. I think at the time, I think there was a lot of excitement around WASM and it was kind of still in its infancy. And we are excited about WASM and we do see a future where we can upgrade to, add support to WASM, just like Ethereum has talked about, adding kind of EWSM support to kind of the 1.X series of Ethereum. And we do see that kind of in our future. But for now, we're fully

EVM compatible, which also means that anybody in the Ethereum ecosystem who is interested in a platform that has a decentralized stable coin built in, which you can kind of use to pay for gas, kind of a built-in identity layer, great mobile kind of support. If there's anyone building DAPs on Ethereum that... And where a transaction doesn't cost $20. And where a transaction doesn't cost $20. You know, we are a solution that is really quite easy to migrate to or to just deploy a second kind of version of your DAP onto.

And we think that that's really powerful. in order to get to those solutions that Rennie was kind of alluding to, we need a rich ecosystem of DAP developers who have the expertise to create correct safe smart contracts and there's a big community of those folks on the Ethereum ecosystem and we have a solution that is fully compatible

with what they're used to. And maybe one thing just to add to the, you know, the transaction costs come in. I mean, it is true, right? I mean, if you think about, I mean,

for anyone who is, he was kind of played a little bit and, you know, has done some yield farming these, these past few kind of weeks, you know, it's, it's very easy for the,

for the fees to add up to, like, tens, if not hundreds of dollars with just a few, uh, transactions. And if you think about, like, someone wanting to,

um, you know, just put like, you know, 10, 20, $50 into the system and still participate and benefit from it, right? It's just not economically feasible.

And we do feel, I think, one of the, you know, I think reasons to be excited about what this technology enables overall, but also the way kind of token economics work, right? And I think Jesse actually was more recently really nicely articulated that when he kind of announced this fund and talked about the ownership economy and giving, you know, kind of people agency and, you know, in a way, reward them for participation. And I think yield farming is kind of a narrow example of that, but more broadly, I think it is, it is nice to see sort of, yeah, I think the ability for us and other kind of protocols in the space to do that and, and let early participants benefit from ownership, right? And so I think for that to kind of make economic sense, though,

at small amounts, you need kind of a, you know, you need sort of a more economical, you know, transaction fee model. And a better way to price those transactions. So there's a lot of talk in the Ethereum community right now about finally implementing the IP 1559. And I think absolutely Ethereum should implement this. And I think Ethereum should actually just lift the implementation that we have in SELO since it's already fully compatible with kind of the Go Ethereum code base.

we knew from the get-go that we needed to have a better way of pricing transactions. And so as with many things on the platform, we were inspired by what others were doing, and we went ahead and implemented it. Now, if I think of like the SELOUSD, there are like lots of different projects that are that are building decentralized table coins with different designs, right? And usually the go-to markets are quite different. So for SELO, it is financial influence. So banking the under bank, underbank.

For example, for something like Dai, it is the typical use cases when you want to leverage and get more access to some kind of position. So it is, it is that a stable coin targeting some speculators that are rich in crypto and etc. Then you have Terra. So you have TerraUSD that's that's targeting e-commerce usage in South Korea. so pay using a stable coin and there are probably other go-to-market strategies for stable coins. So is it correct to say that as sell-o, like you have picked a go-to-market strategy, which is around financial inclusion and kind of you will stick to it, even if some of these other go-to-market strategies actually end up proving more lucrative

in the short to medium term? Yeah, and maybe kind of, yeah, to unpack that a lot, bit. So there's, there's actually cello, the protocol, the platform, it's open source, you know, permissionless, anyone could participate, built whatever they want. If you look at the kind of alliance, 100 alliance members and the teams, for example, building is part of cello camp, and then probably teams that we don't know about, there is quite a range of applications and what people are wanting to use this for. Now, I think the fact that we are optimizing for sort of a great mobile experience does gear this more towards sort of the means of payments use

case. But I also like, you know, I think, yeah, I think why is why is dye used in the way it's used today? I think it's, you know, probably also some kind of just historical kind of limitations. And if you could transact, die more easily peer to peer on a phone, then maybe that's what would happen a lot more. And in some markets, you know, we've seen people go through. through great lengths and use dye that way in the absence of sort of working traditional financial system, for example. And so I think longer term, you know, ultimately there's definitely a place for stable coins and for fiat back stable coins. Even if you read the initial white paper, I think that was for us always kind of the first step in a series of steps towards kind of a rich

ecology of digital currencies. And so we do see a lot of potential for, even some of the use cases that are, you know, that are being used, that staple coins are not being used for today. Let's put it that way. But, but ultimately, you know, I think what's already becoming clear is that there is potentially going to be a shift in the way kind of, you know, currencies, their monetary policies and what currencies will look like in the future. We actually, the community, you guys, you know, stood up at the seller network on Earth Day. And, you know, I think already at this point, there's about 10,000 or so cellar dollars that's gone towards project rent for sort of carbon offset, right? And so I think the idea of cello being carbon

neutral and sort of the digital currencies on cello being kind of more sustainable, even the ones back to Fiat initially, but longer term maybe truly introducing currencies that are backed by natural assets, right? And thereby promoting, for example, the planting of trees. that's really powerful. I think that's not something that happens overnight or in a year or on a sort of two years, three year horizon. But I think what is important to us and from a community perspective is to put sort of the pieces in place to enable that. And I think that's what we're seeing. And so it almost, you know, I think the early use cases matter because they're about bringing kind of liquidity and sort of understanding and adoption and, you know, developer familiarity

to all the communities around the world. But I think what's almost more important is, is this kind of long-term viable, right? And are we not just, I think in some cases, you know, we have to start somewhere where it's not a massive leap for someone who doesn't care about crypto, right, who just wants to send money to a friend,

make that easy, to then be able to kind of do the more ambitious stuff, which is actually, you know, reshape how kind of currencies can work. And that's a longer journey. I think that's kind of what got us excited to start in the first. first place and we're on that journey now and I think even like very big organizations, governments

are starting to kind of get excited about this. And so we're hopeful that it will happen. But yeah, I would say maybe kind of more concretely to answer your question, I think it's great that there are different entry points and there, I think, different ways to kind of bring more stable coins and solve kind of real world problems, whether that's in commerce and trading or in peer-to-peer payments. But ultimately, I think longer term, a lot of this will kind of become part of hopefully the same ecosystem. So maybe just briefly on this, since we kind of touched a bunch of time. So for CUSD, can you guys walk a little bit through how CUSC works and like how, you know, the reserve is used to like, you know, guarantee maybe the price peg, you know, how you deal with the scalability of the system, right, which I think is a challenge for like for maker, right?

where it's kind of hard to increase the supply. Yeah, do you guys mind expanding it a bit? Yeah, absolutely. So at a high level, the cello dollars and actually all future stable coins that will be launched on the platform are backed by kind of the same over collateralized crypto asset reserve. And the thing that is unique to SELO is that you can trade one SELO. dollar for one US dollar worth of cello using a kind of on-chain decks called CP Dodo, which is a

kind of uniswap style kind of automated market maker exchange that lives on the on the chain. And by being able to always exchange one cello dollar for one US dollar worth of cello, if the price of C-USD deviates from one dollar on a centralized exchange anywhere in the world, that presents the arbitrage opportunity for you that allows you to instantly make money. And so this is something that doesn't exist with something like Dye. If the price of Dye deviates from a dollar, you can't instantly make money off of that. To maybe if it's less than a dollar, you have to buy it and kind of wait for kind of the demand to go back up and then sell it for a profit. But you can't instantly take an arbitrage opportunity

that by doing so brings the kind of supply and demand back to kind of the $1 peg. And so this is something that's pretty unique and pretty novel with this design. It means that in all likelihood the stability of this asset once it hits centralized exchanges will, hopefully match that of centralized fiat-backed stable coins, because the way that those fiat-backed stable coins keep their peg is using the exact same mechanism. People can always buy or redeem a fiat-backed stable coin for a dollar from the issuing entity, and so if the price ever deviates for a dollar, they can always take an arbitrage opportunity, and that's what keeps those prices kind of pegged on the centralized exchanges.

And so that's the kind of first, I would say, major kind of idea behind the mechanism. And just to understand how this mechanism works, because I mean, if the reserve holds Bitcoin, right, then, I mean, practically speaking, how are you able to transfer a Bitcoin for a CUSC? Yep, no, great question. Through on-chain governance, the community can kind of nominate a entity to diversify a portion of this reserve into other crypto assets. And so the community kind of elected an entity that's been doing that over the past few months. I think around 20 million now dollars worth of that $200 million reserve is now. held in in other crypto assets. Longer term, we want this rebalancing to be done fully on chain, fully automatically. And so we've already started working on cross-chain bridges to bring these other assets onto Cello so that the reserve can automatically rebalance without the need for this kind of nominated entity. And maybe final question on this. If you contrast this to let's say

make or what do you see as the biggest maybe advantages and whether are there some disadvantages of the cello stability system versus theirs? Yeah, I think the big advantage is that the biggest advantage is that there is a mechanism by which you can make money if the price ever deviates from the peg, which motivates arbitrages to take that opportunity and to kind of restore supply and demand to make sure that the peg is maintained. And we've already seen this happening. Hummingbot has already added support to their arbitrage software, and people are already running Hummingbot to kind of maintain the CUSD peg.

And while CUSD isn't yet on centralized exchanges, you can look at the implied price on the on-chain exchange, and it's been absolutely rock-solid stable. I think the most it's deviated in the last week is 0.1 cents up and down. So it's keeping that peg really well. And then the second, I would say a big advantage is that the supply of CUSD is tied almost exclusively to the demand for it. And not for the demand of borrowing a stable asset and collateralizing that loan with something like eth or another crypto asset. And so I think time and time again, we hear that dye is very hard to come by, that there's not much liquidity, and that likely is because of this kind of imbalance between desire to make die versus the actual demand for a fully decentralized stable crypto asset.

And so that's also a big interesting advantage as well. And so it'll be interesting to see how that plays out. So if I have some asset, let's say it's ether or it's Bitcoin, and there's a bridge that exists to Selo, how do I get CUSD for my asset? What is the issuance protocol? Yeah, I just maybe to jump, it's kind of related to this question. We can kind of do the technical works through as well. but I think at a high level, I think the idea is to kind of decouple the generation of stable

value assets from the use of stable assets, right? And so if you're, if you're someone who is looking to, you know, start paying salaries in seller dollars or make a payment or use it for sort of the treasury of your kind of company and kind of just holding a stable value asset on the balance sheet, right? You, I don't think we want to kind of have sort of ultimately the the users of those digital assets kind of have to worry too much about the creation of the digital asset. But there should be a way to kind of based on the demand, right, to basically have to supply, kind of follow the demand in a way. That's kind of what Merrick is highlighting.

And I think that is a big differentiator because, you know, here what happens is the, by getting sort of a feat, an Oracle feed off sort of the price of sell of dollars. or actually, yeah, by getting kind of a sense for what the demand is for cello dollars, right, the protocol will programmatically adjust the supply. And that can lead to kind of expansions and contractions that basically then kind of just reflect what is going on instead of the cello economy. And the nice thing is when you kind of expand that from sort of a single kind of stable asset kind of world into a multi-acetate world, right? where suddenly you have other stable coins once packed to the euro, the Swiss franc, the Kenyan

shilling, the Mexican peso, or maybe once packed to kind of basket of goods or commodities or other assets, and then being able to look at this kind of economy realistically and kind of look at the flows even between assets, right? So you could see an expansion in several dollars. that goes hand in hand with a contraction in cello euros. And then rather than worrying about the mechanics of sort of, you know, doing a rebalancing and a kind of an adjustment of against the reserve, you could see those kind of happening directly at the stable value asset kind of level.

And that's really powerful. And that's, you know, in a way, brings additional benefits to making, from a liquidity and from sort of just a, you know, market perspective in providing these assets to the people that want to use them. So that's, I think, yeah, the idea is to really, in a way, separate the adoption and sort of people using cello dollars from sort of the protocol kind of adjusting the supply kind of over time. That makes sense. And the difficulty really is bringing these other assets onto the cello network, building trustless cross-chain bridges.

This is a very difficult endeavor. Obviously, we've seen what's happened with TBTC recently. This is an incredibly difficult yet important piece of infrastructure that I think the whole ecosystem has to get right in the coming years. We're definitely very excited that Selo has a very efficient-like client because it does make things a little easier, especially if you want to do them in a fully trustless way. But it's still a big endeavor.

And so to that end, where C Labs is extremely excited to be acquiring the team behind Summa to come join C Labs to work on these bridges. One of the nice things about having a mechanism that has demand for kind of these assets already built in is that it's easy to kind of invest in building these bridges, even before it's obvious that they'll be. be a lot of utility for them. I think the fact that the stability mechanism will be buying up these assets means that the utility will be there. And maybe just off the record, we didn't mention this before. But by the time that this goes live, that announcement will be public. So I figured we could mention it here. But please keep it to yourselves until then. Congratulations. That's very exciting. Well, let's move a little bit. So, I mean, Estello's been live for, you know, a few, a few months now. Like, what's happening so far? What's happening with the network? Like, what are some projects that you guys are excited about? And, you know, what are people building? Yeah, absolutely. So, yeah, we launched on cello, kind of the Genesis block was on Earth Day, which is April 22nd. And following that, there were a series of governance proposals that basically brought more.

and more functionality to the protocol, including the launch of the stability protocol and ultimately cellar dollars. So that's been, that's been kind of life and up and running for a few weeks. And so, you know, I think a lot of the early work really is, you know, kind of collaborating with other organizations that are building and integrating seller dollars or the platform more broadly. And some of that is happening on test net. You know, I think you, for those who followed the cello camp demo day, there are some exciting demos there that have already been built. And then, you know, some are kind of about to be announced. So, you know, it's not our, another hard place to announce them. But it's great. I think a lot of the early use cases really

are around just bringing some of the basic financial use cases. to places that don't have kind of, you know, the best financial infrastructure or where there's kind of a massive benefit in terms of the cost enabling, you know, particularly micro payments, whether that's around the earn use case, so people earning digital assets, digital currency, fellow dollars in return for doing small tasks and doing so, you know, paying, you know, less than a cent and transaction fees and then being able to redeem those balances at kind of merchants or local stores or online or sending kind of making peer to peer payments. Pesa Base, who was the winner of SeloCamp, for example, you know, has been building a solution

for African kind of migrants to send money back and is integrated with M-Pesa, which is a kind of mobile money service in Kenya. So that's really exciting. Of course, there's the C-LAPS wallet, Valora, that Merrick mentioned. So, you know, we're currently, we're giving the cellar community early access. So if you're interested in learning more, that's at valora app.com to basically play with that. And I think with everything with all of the applications, feedback is always welcome. So if you use some of the products, please reach out to us or the team that's building them and give them feedback. I think this is kind of where very early, obviously, just after launch.

And a lot of these applications have just run on TestNet for a few. few months and so feedback is definitely appreciated. But yeah, I think generally it's all about bootstrapping the ecosystem, starting, you know, with kind of mechanisms for allowing end users' organizations to more easily cash in cash out. And yeah, I think for us, the big, you know, the big kind of pieces that are still to come, obviously, are around enabling, you know, enabling kind of a world where, you know, no matter where you are, you have easy access, easiest possible access to seller dollars. I think this was near his point earlier, right?

I think even the on-chain cost may be kind of sub one cent, right? You still will face cost in the real world and actually cashing in, cashing out. And so that's, you know, when you think about kind of go-to-market, the true cost of a remittance on cello is still higher than sub-1-send, obviously. And so I think there are ways of kind of solving that is by bringing more people into the fold that integrates cell of dollars directly so you can natively stay in the asset as you then kind of use the funds you receive to pay for goods or services. But also kind of have the maximum number of partners integrated so that that kind of ultimately overtime brings down the cost more. If you look at sort of what's ahead, like what are the most important like milestones and, you know, improvements that are still to be done on the seller platform? One big improvement that I mentioned at the beginning is upgrading our like client protocol to the SNARC based version.

As I mentioned before, the current version is already about 17,000 times more efficient than NSPV-based. like client, similar to what exists on Bitcoin or Ethereum, and with this upgraded system, will be around 1.7 million times more efficient. And to get there, we'll be doing a really quite massive powers of tau ceremony with kind of 2 to 27 powers over the BW6 curve, which is a very big elliptic curve. And so this will require people to contribute a few days of computation, which means that we have to paralyze the whole ceremony using optimistic pipelining, so that it'll take only weeks instead of months. And you can think of this as a massive pre-computation step that will let the protocol create

proofs that in effect compress a large number of headers into just 500 bytes, which will then allow very low-end kind of devices to sync with a chain in a fully peer-to-peer permissionless manner near instantly. And so that's really exciting. It'll be quite an interesting ceremony. And if you're interested in contributing, please come visit the Plumo channel in the Selo Discord server, which is reachable at chat.com.org.

And once again, that's the Plumo channel on the Discord server. Yeah, for my maybe just one call-out, especially to kind of the builders out there. You know, I think the current alliance has a reach of about 500 million people kind of all around the world. And, you know, see, that's a big number. But, you know, we have more than 6 billion smartphone subscribers in the world. And so really, I think the promise you mentioned this earlier as well, right, the promise of cryptocurrencies and, you know, for just making the world a better place and kind of having more seamless financial system. Still, you know, I think it's the same promise we had three years ago. And it's likely not going to move all that much in the next three years.

But I think there's some, the momentum is definitely picking up. And from our conversations with people kind of all over, I think it's exciting to see kind of the things people are looking to build. And oftentimes what can get in the way is not necessarily like a technical roadblock, but it could be, you know, just having the conversation with someone else who's building something similar or easier access to funding. And I would just, you know, say to anyone out there who's building something in sort of the financial, space to reach out and you know we have we're very welcoming community there are many ways to kind of have a touch boy and get involved discord is obviously a great great place to start there programs like the one upright is running you know cello camp applications are opening up for for sort of the the second cohort we as c labs are you know doing a lot of collaborations kind of all over the world and and so

yeah i would just invite everyone one to join in. I think back to Merrick's point about how easy it is, even for people who are currently have an integration life on Ethereum, you know, think about this as expanding kind of to a very different audience, to kind of a mobile first audience, maybe kind of see very different kind of use cases for sort of your defy product.

But I think, yeah, we're definitely excited what sort of the next year can bring and, you know, less than us kind of necessarily driving, driving that. We want to be there to support a lot of the in-market kind of use cases. And so please do feel, or please to feel free to reach out if you're building something in market. Yeah. Thanks so much, guys, for coming on. I mean, for us, it's been great to sort of be a part of this. And it's been really impressive how, you know, there's this community that has come about

in cello and you know it's very active very vibrant so you can only second that that's definitely worth checking out i'm super excited about you know like i mean i was i was kind of trying out more except me and in right for the the app so i was playing out a little bit as much as it it was possible but design is very beautiful so i'm excited to see when i want to actually be able to use that for some um for some some things build on cello so thanks so much for coming on Thanks so much for having us. Absolutely. It was great to be here. Meher, what did you think of the interview?

It was interesting to go through SELO's, how SELO approached building the company and choosing the set of technologies that they focused on. I was somewhat unsatisfied at our discussions around the stability mechanism and how Sello dollars are kept stable. And I wish you would have done better there. Yeah, yeah. I mean, this thing is these mechanisms are so complex, right? And then you almost have to dedicate like a full episode if you really want to go into that. And so I mean, I remember that from previous podcast too where like that's kind of something that's hard to cover in a satisfactory way. You know, if you want to, if you want to do a comprehensive overview of the project.

I think the interview works well to give an idea of the problem. problem statement? Sellow is after? And what are the technical solutions they have adopted to provide a good solution to that problem statement? Yeah. Yeah, I mean, one of the things I also find interesting, too, is like with Sello, you know, you have both Maurek and Renee being like experienced entrepreneurs, like kind of coming into that, you know, with the experience of having built a company. And it's interesting just like how totally different like that approach is from you know, the approach of like Cosmos, Apocod, or Ethereum, or, you know, they're like such a,

because they're thinking about like users, going to interview people, starting with building like a mobile app and then sort of reverse what does the blockchain need. Whereas those are so much more like a little bit detached and technology focused projects that, you know, have really, have so far been the predominant, you know, crypto networks, of course, cello, you know, sellers here, a new one. And of course, they're not the only one, right? There's more teams that have kind of taken a similar approach to building blockchain. So I'm really

curious, also, like, how is that going to play out and who's going to, you know, are there a particular, are we going to see that you have this, you know, new generation of, like, founders that came in, that, you know, came with, like, massive amounts of VC money, and that ended up building the superior thing,

or will you have more of this more old-school crypto people that maybe studied earlier on and took a different route? Will they kind of survive and prevail with their approaches? Right. But, you know, like, Sellow is this weird mix? Because I think what Sellar does really well is, you know, these user interviews and all of these features targeted towards their end customer as you mentioned.

But on the other hand, their engineering decisions are also oftentimes like really great. So, I mean, the kind of, I think SLO is really good at picking,

you know, they write cryptography, interesting cryptography for their chain. They have, they have one of the proposals which scales up their consensus algorithm to a million validators. Right now it's, I think,

100 or 200, but they want to scale it up to a million validators. That's a very interesting algorithm. Even the way they do linkages between mobile numbers and addresses has quite a lot of advanced cryptography in it. So it's almost this team that has a lot of end user focus combined with some heavy engineering capabilities. So, yeah. And plus, they have.

they have the VC money from from Enriessen Horowitz and all of these big VC firms. So they have a lot of the raw materials to make something successful. Personally, I am a little less convinced about their use case. So maybe I'd like to get your thoughts on that. I mean, what do you think about this starting point for a stable coin, which is to think about remittances and financial inclusion, other than be something like a maker or a tether, which is building a stable coin for exchanges or speculation. Do you think that's a good starting point actually for a stable coin today?

Yeah, I think it is the right starting point for them. I mean, first of all, I think it's the thing that's really aligned with their mission and what they want to do. So I think that's where they should focus. And of course, the other thing is too, that if you look at stable coins to data, are successful. I mean, you have Tether, of course. And of course, Tether is like, you know, first of all, it was created by an exchange. It's very deeply

ingrained in the whole exchange infrastructure. It has like a massive head start. And then you have another one, which is UCC, which is Coinbase, and they're pushing that. And they're, of course, a very powerful company. And you know, they're really having traction today on

Ethereum, right? As EOC20 tokens. And so that's a hard thing for Selo to compete in, right? They're on their own chain. So CUSD today bridges, as they've pointed out, or kind of not there yet. So they're at the disadvantage from that. They have a very strong competition there.

So I think it's good and the right thing that they're focusing on something different. And I think it's smart to go for this financial inclusion cases and this accessibility thing, because who else is doing that? And, you know, it's been recognized and it's been discussed that, you know, as I kind of mentioned in the show, for many, many years always, oh, crypto, that is the thing that crypto is going to do well.

But there were maybe some attempts at this, you know, I think there were maybe some Bitcoin companies that attempted to, like, you know, Bitcoin used in developing countries. They were, I think, like stellar at some point, or there were some other crypto networks that try to like tackle this um but you know so far nobody's done it successfully and and there's maybe various reasons for that there may be some things around execution maybe they were too early and the technology wasn't there yet maybe some of the technical issues and usability issues that that the seller team is addressing is also a reason so i like the seller strategy I think it's a good one

and I'm glad somebody's doing it somebody's really trying to make something that in the end people are going to find useful when they're just on their mobile phone in developing countries. My skepticism is essentially whether they'll be able to reduce the friction of crypto radically enough that it makes

something like CUSD a better alternative than all of the remittances and money transfer services that are there, there in the world. So yeah, if it can probably, yeah, it's a, it's a great market to start. Yeah. Yeah. I mean, of course, that's a hard to know. And that's definitely difficult. And especially if you, if maybe we're going to have things like Libra come in and Facebook and, uh, and, you know, some of those companies that already have a massive reach. Because that's, I mean, that is the fundamental challenge, right? That's right now, so it doesn't

have. They don't have distribution. I mean, they have this seller, you know, this alliance for prosperity. You know, I guess they have companies in there that do have big reach. So if they can actually convert those companies to functioning as distribution, you know, maybe that, that would be very promising. But like right now, like sell it doesn't have, yeah, it doesn't have the distribution. So then it's, you know, it's maybe hard work to find some use cases that like, you know, really good enough, working well enough, and that then can kind of like kick it off and get traction. So what surprised you the most in this interview? I don't think I had many surprises because I was kind of familiar with the project already.

I'm not sure. What about you? I was just surprised at how, yeah, single-minded they are about the remittances and money transfer and payments use case. I always thought, like when I look at Selo, I used to always think of like a project that's like, you know, this is a startup central bank of some kind and the

main thing is, you know, like how the monetary policy works. But talking to them, I kind of realize that you know, like their focus is so much on the end user and it's almost like the monetary policy is kind of, it's a

an interesting component, but it's not the centerpiece of their thinking. Maybe that was a little bit surprising to me, but in hindsight, you can see that from their website and their communications. This is a team that's single,

it's very focused on that particular use case. Yeah. Cool. Well, any final false? No, I'm generally like looking forward to what their like client can do. I guess as somebody that's, you know, like building bridges as part of KOROS one. SELO appears to be the project which has the most beautiful light client.

And it feels like the project that you want to build a bridge to because it's going to be easy on you to build a bridge to Sello. So I'm really, I am personally interested in seeing how this light client evolves and how other projects copy their light client. It's really like one of the most interesting innovations that the project has done. Yeah, absolutely. Cool. Then thanks so much, me here. It was fun. Thank you for joining us on this week's episode.

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