Celo Tech Talks Proof of Stake


The Celo Tech Talks series aims to share and spread knowledge about Celo technology. In this third installment, Judy Piper, the host, introduces herself as an engineer partner at S-see Labs and gives an overview of the previous sessions. The recordings of the previous talks are available on the Celo Foundation’s Crowdcast and YouTube channel.

Overview of Celo Protocol

Tim Horton provides an in-depth overview of the Celo protocol and its proof-of-stake consensus mechanism. He explains that Celo’s mission is to build a monetary system that enables anyone with a smartphone to access sound currency and basic financial services. To achieve this, Celo uses a proof-of-stake mechanism to deliver the required throughput.

Evolution from Proof of Work to Proof of Stake

Tim mentions that Celo initially started with a modified version of Ethereum’s proof-of-work algorithm. However, they realized the limitations of proof-of-work, such as the possibility of a 51% attack. Proof of stake was chosen as a better alternative, as it allows for more participants and significantly reduces the cost of malicious behavior.

Networking Layer and Efficient Communication

Celo implements a fully connected mesh network between validators, ensuring efficient communication. Instead of relying on gossip protocol, each validator is directly connected to others. Messages are encrypted, and validators decrypt the relevant portions, enabling rapid agreement and scalable validation.

Consensus and Validator Selection

Validators in Celo reach consensus through a sequence of steps, even in the presence of offline or malicious nodes. Unchained randomness helps shuffle the order of validators, and they take turns proposing and validating blocks. Consensus typically takes around a second, and the network is distributed among multiple locations.

Validators and User Accounts

Validators play a crucial role in Celo’s decentralized platform. They receive rewards based on their behavior and performance. Users, on the other hand, can generate multiple accounts, but their actions are tied to accounts rather than identities. Celo introduces the concept of validator groups to make the selection process easier and ensure the quality of validators.

Rewards and Incentives

Celo aligns the incentives of validator groups and validators through a reward structure. Validator groups receive a share of the rewards, and the remainder is distributed to individual validators. Validator uptime and good behavior are incentivized through rewards, while penalties exist for malicious behavior. The rewards received by Celo holders are automatically reinvested in voting, compounding their influence.

Conclusion and Q&A

The Tech Talk concludes with a Q&A session, where Tim answers questions about gas prices, scalability issues of FTL games, and the challenges of proof-of-stake in permissionless settings. Participants are encouraged to visit the Celo Foundation’s website and Medium posts for more information on proof of stake and consensus.