SAN FRANCISCO, CALIFORNIA – Packy McCormick, a16z’s advisor on web3, wrote an article sponsored by a DeFi platform called Celo, which contains a ton of information about the project’s origin, goals, investors and applications built on top of it. It acts as an argument for the ReFi ideology, and specifically cites a paper written by Jonathan Lageard, a member of the World Economic Forum, for the Brookings institute.
The core argument posits that we are in this global mess because global finance does not price nature correctly, if they could just get the right price for ‘ecosystem services’ and ‘natural capital’ such as biodiversity, clean air/water, happy soil, ect, then we can save the world.
Titled Interspecies Money. He states that the core problem of the market economy is that it does not price natural capital correctly. To ameliorate this, he proposes an idea that the crypto community has pursued for sometime now: tokenize everything.
“It is proposed that the Bank for Other Species (or, more likely, its private sector settlement agents) will create a digital twin for other species that will serve as their identity online. In practical and legal terms, it is the digital twin that holds the value—the equivalent of a few cents, a few dollars, or even a few tens of thousands of dollars in LM (rare life-forms may hold sums equivalent to a rare Rolex watch). Computational and human proxies will allow the nonhuman to express simple preferences. Money will be spent or invested based on these preferences.”
Since an ecosystem cannot be trained to use a smartphone, the AI acting through the digital twin ecosystem and embedded environmental devices will actually choose how to spend this money. Packy’s runs with Ledgards writing:
Financialization is a dirty word, but the system is particularly dirty for those whose interests don’t have a price. Ledgard wants to fix that, and help reduce extreme poverty in the process. It’s just one example – albeit the most colorful – of a movement called Regenerative Finance (ReFi). ReFi is a beautiful idea – a re-imagining of the financial system using the tools humanity now has at its disposal to better account for the needs of all stakeholders, current and future. It puts a price on externalities, charging those who create negative externalities (like the Once-ler) and rewarding those who create positive externalities (like the Lorax, who speaks for the trees)….Regenerative Finance (ReFi) is a multi-trillion dollar opportunity to do well by doing good, and Celo is becoming its home.
“A price on externalities” though a digital system requires machines to be omniscient. The engineers, corporate DAOs, religious elite, collaborate with the machines to determine what is positive and negative. Celo, the “regenerative finance” and web3 movement builds the database infrastructure, which secures the interoperable identifiers for each “externality” Lageard lays out in the requirements for creating his proposed system:
The requirements for interspecies money include the ability to give nonhumans a digital identity, the ability to accurately address financial value, the availability of distributed computing, the ability to gather sufficient data to build a verification system trusted by markets and governments, the ability to model the gathered data with AI and other systems, and, above all, the support and trust of local communities.
Celo, web3 and the ESG paradigm all center on these requirements.
Building a Blockchain Suited for Social Impact
While a significant player on its own, the Celo network shows us a microcosm of larger patterns. The larger patterns comprise energies financializing and digitizing all conceivable natural processes in pursuit of an integrated, engineered world system. Beyond dominating the material, managing thought and focus is required for manifesting such an ambition.
Celo, like many others, constructs narratives that tap into peoples genuine and heart centered desire to help others and the world. As a technology, Celo has been specifically designed to target the poor and displaced, while also focusing broadly on social and environmental impact infrustructures. This overview provides a wider view of the project and its relationships to power.
A company called c-Labs builds the Celo blockchain. The founders of c-Labs, Sep Kamvar, Rene Reinsburg, and Marek Olszewski, met at the MIT Media Lab.
Their core technological innovation revolves around being a ‘mobile first’ blockchain to maximize potential social impact. Their ethos and marketing centers on the phrase “regenerative finance” (ReFi), covered in Part I of this series. This budding movement in the web3 world centers on projects focusing on ‘social welfare’, often citing the UN’s Sustainable Development Goals, and generally involves either bringing the unbanked into blockchain, digitizing agriculture and ecological systems, and general social impact infrastructure such as IXO.
By enabling access to the blockchain for anyone with a phone (or even a flip phone) they target poor or displaced people to onboard them into blockchain based financial applications and blended humanitarian services, building a digital ID system in the process as well as bridge to traditional compliance networks.
The main focus for Celo resides on creating the technology best suited for social impact. From the whitepaper “For a cryptographic social payments system to prosper, sending a payment should be as easy as sending a text message, and the volatility of the currency should be minimal.” They have created a system where someone can receive crypto with their phone numbers serving as the public key for their blockchain wallet. This focus is essential for the international aid world to utilize public blockchain systems.
They also rely heavily on “Zero-Knowledge Proof” cryptography, which refers to a class of cryptographic designs that allow two parties to interact on the blockchain without revealing any information about each other. The design principles also help general scaling of transactions and creating interoperable blockchains.
Often people mistakenly see privacy concerns in technology as something that mostly consumers care about. However the drive for privacy in the blockchain world comes primarily from corporate and government interests. A country or company does not want all of their financial relationships immediately disclosed the moment they make a transaction, this could mean the loss of competitive advantage or unsavory information coming to light.
Claims about data privacy in the tech world only go as far as hiding personally identifying information from the data. Those claims are suspicious in and of themselves, but they never address the broader issue which revolves around the use of data period. All digital information generated feeds the algorithms running on the cloud, the focus on personally identifying information completely ignores the literal harvesting and alchemical representation of mind into a mathematical construct.
Celo and CBDC
Digital wallets function as the interface to digital identity. This is where an individual would actually make transactions, participate in fintech, receive UBI, access licenses, health status, ect. People generally focus on the larger aspects of CBDC, but the wallets are a huge part of implementing the program. For now, mobile phones dominate the global market, so any CBDC or large digital initiative needs mobile applications to be viable.
The Valora wallet, spun out of cLabs in 2021 through Celo co-founder Marek Olszewki, provides the main interface to the Celo blockchain for mobile devices. Nearly all projects, especially those targeting the poor and displaced, use the Valora wallet. Mercy Corp, Grameen Foundation and the World Food programme are examples of organizations they work with.
As a separate company, Valora raised 20 million led by A16Z. The CEO Jackie Bona worked for Google for seven years, Twitter for three and Spotify for three. At Google she received the second highest executive reward for her work as a founding member of the YouTube monetization team. At all three companies she focused on international product marketing.
Celo’s mobile-centered technology, that allows anyone with a phone number to receive crypto, helps fulfill a major goal of CBDC, reaching the unbanked. At the Global CBDC Challenge hosted by The Monetary Authority of Singapore, the Valora wallet showcased Celos potential use for central banks implementing a retail CBDC system. Out of 300 participants, cLabs was named 1 of 15 finalists. The IMF, World Bank, Bank of International Settlements, UN and Asian Development Bank all took part in the event as well.
Ezechiel Copic appears to be a main liaison between Celo and central banking networks. He worked at the New York Federal Reserve Branch for over 6 years, was director of Central Banks and Global Policy at the World Gold Council for 4 years, is the Vice Team lead at the International Telecommunications Union (UN) for their Digital Currency Initiative, a member of the EU Blockchain Expert Panel, and a member of the World Economic Forum.
He co authored the WEFs Digital Currency Governance Consortium White Paper Series and wrote a white paper for Celo, titled Shaping the Future of Digital Currencies, which lays out a design where a private CBDC network hosted by the central bank interoperates with the Celo public blockchain in order to bring CBDC to retail users.
This allows the central bank to maintain a private network where they control the issuance of CBDC to banks and other payment providers. Those entities then bridge to the public Celo blockchain and handle the KYC and verification of individuals. With this design, any blockchain based application could use CBDC as their native currency, and with Celos focus on mobile users this would help the banks financial inclusion prerogative. Several technical details unique to Celo makes this bridging system possible.
Founders, Other People, and Investors
The three founders of Celo have significant connections to both the global and technological elite. The following bios are quoted from an article written by a16z web3 advisor Packy McCormick.
Sep Kamvar studied Chemistry at Princeton and got his PhD in Computational Mathematics from Stanford. While at Stanford, he co-created EigenTrust, a P2P reputation system, and founded a personalized search company, Kaltix. Google acquired the company in 2003, pre-IPO. Sep ran personalization for Google from 2003-2007, before heading to MIT, where he was the LG Career Development Professor of Media Arts and Sciences and ran the Social Computing group at the MIT Media Lab.
The Social Computing Lab studied the psychophysiological responses of preschoolers at Montessori schools through wearable sensors. The project started by Kamvar, is called the Wildflower Network, where the social computing lab established a network of Montessori schools as laboratories to gather data on children. They aim to track all movements with cameras and sensors. The project has expanded to at least 35 schools in ten cities (including one in Puerto Rico) as of 2019, and they plan to follow the tech ethos of maximum expansions. The Chan Zuckerburg, Walton foundations and Omydiar network have all donated to the foundation.
Rene Reinsberg grew up in Germany and graduated from WHU – Otto Beisheim School of Management, one of Europe’s top business schools, where he wrote his thesis on options pricing. He interned at McKinsey, worked in Global Capital Markets at Morgan Stanley out of school, and consulted on finance and community-building projects for the World Bank before heading to MIT for his MBA. While there, he cross-registered at Harvard Law (Cyberlaw), MIT Computer Science Artificial Intelligence Lab (Linked Data Ventures and AI), and MIT Media Lab (Social Design, where he met Sep).
While at the World Bank Rene Resenburg worked in Caracas, Venezuela focusing on ‘community projects’ and the Civil Society Initiative.
Marek Olszewski grew up in Singapore to Polish parents (fun fact: his grandad helped city plan Singapore in the 60/70s) and later studied Computer Engineering at University of Toronto for both undergrad and his Masters. After U of T, he headed to MIT for his PhD in parallel systems, a prescient choice. During his education, he interned at Microsoft, Google, and Sun Microsystems, and was a Facebook Fellow at MIT.
Marc Olszeski’s grandfather kyrstn Olszeski, was part of the UNs team of consultants involved with city planning, and was later appointed head of Singapore’s long term planning and development.
The Three of them met at MIT and began developing Celo in 2017. By 2018 they had graduated from the World Food Programmes Innovation Accelerator, which birthed the world’s largest biometric blockchain based digital ID system Building Blocks.
The Innovation Accelerator is funded primarily by the German Ministry for Economic Cooperation and Development, the German Federal Foreign Office, and the Bavarian State Ministry of Food, Agriculture and Forestry. However other funders and core partners were listed.
Major Investors in Celo include:
Kickstarter- Deutsche Telekom
- Jack Dorsey
- Arriana Simpsom
- Reid Hoffman
- Linda Xie (Scalar Capital)
- Naval Ravikant
- Elad Gil
- Andreessen Horowitz
- Paradigm Capital
We could fall into major rabbit holes with all of these investors, however let’s limit ourselves to one unusual investor for a cryptocurrency, Deutsche Telecom. Today Deutsche Telecom is the largest telecommunication company in Europe and top 5 in the world by revenue.
The company originates from the post agency of the German Empire, the Deautsche Bundespost.
General postmaster of the Deutsche Bundespost, Heinrich von Stephan, approved a telephone experiment by the American Alexander Bell in 1877. Understanding the potential, he then put the new technology under the control of the Bundespost.
Alexander Bell, inventor of the telephone, founded the company which would go on to have monopolistic control of the telecommunications infrastructure of the United States. The discovery of blockchain technology is in part attributed to researchers at the Bell Communications Research lab, Scott Stornetta and Stuart Haber.
Celo on the Cloud
Deutsche Telekom announced their token purchase and position as a validator on the network in April 2021. Being a validator means they run a node in the network of computers that comprises the blockchain. Celo is a Proof of Stake blockchain, and as dictated by the game theoryl engineering that characterizes blockchain, they stake the Celo token to earn rewards for proper behavior.
Deutsche Telekom will operate infrastructure across the Celo ecosystem. To do so, Deutsche Telekom’s subsidiary T-Systems MMS will operate as a validator utilizing the Open Telekom Cloud (OTC). The OTC fulfills the strict security and compliance requirements of the European regulatory framework, ensuring secure financial services are available via smartphone the world over.
A16Z contracts T-systems MMS to stake their Celo tokens as well. Currently, they run nodes on three other blockchain networks, Q, Polkadot and Chainlink. Technically, Chainlink is not a blockchain, rather it’s a protocol that provides “oracle” services to blockchain applications. You can think of it as a data feed that smart contracts can use, since blockchains cannot access information outside the blockchain, oracles are extremely important for building almost any smart contract based application. Deutsche Telekom is a top three data provider for Chainlink.
Besides the role of their cloud computing network to secure the network they also provide SMS services to Celo.
In addition, Deutsche Telekom will open up its SMS API to allow validators to send verification text messages using their service. Increasing the diversity of SMS providers on the Celo platform improves both the security and reliability of the decentralized phone verification protocol, which plays a central part in making the Celo blockchain easy to use.
In other words, they are helping secure not only Celo’s blockchain network, but securing their ability to interact with mobile devices as well. For those unaware, T-mobile is a subsidiary of Deutsche Telekom. In a published interview, with a representative Oliver Nyderle, he was asked what role does Deutsche Telekom played in blockchain:
The Open Telekom Cloud is an important cornerstone of our infrastructure. By far the majority of all blockchain nodes run on cloud platforms from Amazon, Microsoft and Google. Errors on these platforms do not correlate with the Open Telekom Cloud. We thus ensure more decentralization and fail-safety. In addition, the establishment of decentralized identity systems (Self-Sovereign Identities, SSI) as a service and provision via the Internet is one example. Verifiable digital proofs are a central prerequisite for many digital services. But a lack of digital proofs is one of the biggest digitalization obstacles of our time. Decentralized identity management enables interoperable and secure digital identities and verifiable proofs for people, organizations and machines.
Verifiable digital proofs encapsulates blockchains’ function in the digital empire. Deutsche Telecom understands their role in securing the networks which hold the digital identities of the metaverse. Instead of just Amazon, Microsoft and Google hosting the vast majority of blockchain networks, Deutsche adds some of that coveted ‘decentralization’.
Money for the Digital Twins
Digital twinning is required for these systems to to give a non humans digital identities, accurately address financial value, build verification systems trusted by markets and governments, and to model the gathered data with AI and other systems.
Digitizing anything requires networks of unique addresses or identities, every sensor, every Internet-connected device. Giving a non-human digital ID really just means aggregating the various sensors, satellite-linked, embedded devices, into a consolidated digital twin. Each sensor, idenfentidable on its own, creates “verifiable” information about a target entity.
Ledgard and company frame the interspecies currency idea deceptively. They explain it as if the animal or forest is choosing to spend money on something. This is nonsense, of course, since it is humans, and the machines we design, who choose where the financial energy can be directed. The digital twin of the forest or giraffe does not choose, but rather our contrived representation of it does, with our rules programmed in.
Ecosystem Services, Natural Asset capital, and other phrases refer to initiatives intent on quantifying nature’s financial value. Ledgard, Celos, and institutional environmental movements’ fundamental argument for tokenizing natural assets asserts that the reason the economic system has destroyed the earth is because nature is not priced correctly. Mass satellite and IoT monitoring constantly integrates the data used to compute a financial value for trees, mycelium, and bees.
Pricing nature magically creates trillions in value previously unavailable to the capital markets, perpetuating the debt slavery monatary regime. The generated tokens or “interspecies money” will serve as a major type of financial collateral for the metaverse.
This point ties into the technologies used to price natural assets/ecosystem services and how that data is integrated into the blockchain or other secure interoperable databases. If you do not know who is who, and where is what, then the system would never take off. Creating secure identifiers that data can be associated with is the basis of any verification system.
As long as we have computers, and the internet they will be able to model data with AI and consciously reintegrate it with the system, which can be used to garner the support and trust of local communities.
Rejecting the system and its narratives outright could derail it. However, they do not require the trust of local communities; all they require is that local communities use these systems, so it does not matter whether it’s a relationship based on coercion, dependency, or genuine interest. The workings of international aid, UBI, and socially focused financial applications focus on targeting the displaced and impoverished, claiming to lift these people out of situations that industrialized society created.
Celo’s deep connections to powerful global institutions and people contextualizes the nature of their work. Celo has created three large consortiums, Alliance for Prosperity, Defi for the People and the Climate Collective, that pursue different facets of the cybernetic digital brain project. The next installment covers these organizations and their implications.
Notable People at Celo
Anca Bogdana Rusu, head of public relations for the Celo foundation, spent most of her career at The World Bank and International Finance Corporate (IFC), which is part of the World Bank Group. At the IFC, she was a core member of the Mastercard-ICF collaboration for financial inclusion, her work involved meeting with executives and government officials around the world to expand the reach of western financial institutions. She also is an executive chairman of the Global Impact FinTech forum.
Jai Ramaswamy, Chief legal officer for A16Z, is currently a board member at the Celo foundation and was the chief risk and compliance officer for clabs for two years. Ramaswamy worked for the Justice department as a prosecutor for seven years before moving to the private sector. He served as Global head of Compliance and AML at Bank of America for a year and Head of Risk Management at Capital One for three years.
Brynly Llyr has served as general counsel for cLabs since 2018. No stranger to the crypto universe, Llyr was Ripple’s top legal officer from 2016 to 2018. She began her legal career at Ebay then Paypal in senior legal roles.
Richard Parsons, a board member at the Celo foundation, was the board chair of the Rockefeller Foundation from 2016 to 2021. Parson was the son of the head housekeeper of the Rockefeller estate and ended up deeply embedded in the highest levels of business and politics. 23 years old and right out of law school, Parsons joined Nelson Rockefeller’s legal team when he was Governor of New York. In the mid 90s he was appointed president of Time Warner, and eventually took over as CEO from Gerlad Levin after a problematic merger with AOL. In 2009, right after the 2008 financial crisis, Parsons was appointed Chairman and CEO of the recently rescued Citigroup. He was serving as an economic advisor to Obama starting 2008. Involved in the Rockefeller philanthropy network, he also had connections to other New York players such as Rudy Giuliani and Micheal Bloomberg.
Henock Teklu is the Global Head of Structured Credit and a Senior Portfolio Manager at BlackRock, focusing on insurance assets. He was the headline speaker at CELOs march 23 Barcelona conference.
