Celo VS. Polygon(Matic)
Published December 25th, 2022
Celo and Polygon are two coins in the top 100 cryptocurrencies list. We have wondered what is so different about them.
Polygon is capable of processing up to 7,200 TPS, whereas Celo can process up to 400 TPS. Celo is more decentralized than Polygon, having 110 validators, while Polygon currently has 78. Celo also has lower transaction fees costing about 0.000015 CELO per basic transaction. Polygon, on the other hand, has transaction fees between 0.0005 to 0.0007 MATIC for basic transactions. Celo has a great technological advantage that allows people to send crypto using phone numbers.
In this article, we compare Celo and Polygon from 3 distinct perspectives, a Technological basis, Adoption and Tokenomics. All of these factors interconnect with each other and either make the cryptocurrency successful or stagnant. Which is better, Celo, or Polygon? We answer that in this article.
Let’s get right into it!
A Quick Summary About Celo and Polygon(Matic)
Celo
Celo is a blockchain network that has Celo Gold as its native cryptocurrency. It operates on the Proof of Stake consensus mechanism. Celo launched in April 2021, raising about 77 Million in total from venture capitalists and other investors. It is currently in the top 100th coin on CMC by capitalization.
One of the unique features of Celo is that people can transfer Celo assets through phone numbers and without the use of CGLD. Celo gold AKA CGLD is Celo’s native cryptocurrency. Celo Network has algorithmic stable coins like cUSD, cEuro, and cReal.
By allowing crypto to be transferred easily through phone numbers Celo has become a financial network dedicated to mobile users.
We have another article that goes more in depth on Celo.
Polygon(Matic)
Polygon is a popular blockchain network that rebranded itself from Matic. It launched in May 2019, through Binance. Polygon at the core is a Proof of Stake blockchain network which is considered a side chain of Ethereum.
Polygon is both considered a Layer 1 and Layer 2 blockchain protocol because it helps relieve the congestion of Ethereum and because it manages its own security. Polygon is a scaling solution for Ethereum.
Its architecture is made up of 3 layers, staking smart contracts on Ethereum, the Heimdall Layer, and the Bor Layer. Staking contracts on Ethereum handle of the staking for the Proof of Stake layer, and snapshots from the polygon mainnet state.
The Heimdall Layer is the consensus mechanism layer which is composed of Nodes that validate transactions by publishing blocks. The Bor layer is composed of nodes that aggregate transactions into blocks and submit them to the Heimdall layer for verification and finalization.
Celo vs Polygon: A Comparative Analysis of Their Tech Features
How does Celo and Polygon compare from a technological perspective? Let’s find out in this section. Both cryptocurrency networks serve as financial networks, but which one is more advanced? We analyzed the technology of both Celo and Polygon and summarized it in the table below.
| Celo Vs. Polygon, Technologically | ||
|---|---|---|
| Comparison | Celo(CGLD) | Polygon(Matic) |
| Consensus Mechanism | Proof of Stake | Proof of Stake |
| Max Transactions Per Second Throughput | 400 | 7,200 |
| Number of Validators/ Nodes Online | 110 | 76 |
| Number of Currently Active Developers | 30-35 | 63 |
| Block Production Time | 5 Second | 2 Seconds |
| Transaction Confirmation Time | 2 Minutes | 1 minutes |
| Average Simple Transaction Fee | 0.0000105 to 0.000015 CELO | 0.0005 to 0.0007 MATIC |
| Data Storage Support | IPFS | Filecoin and IPFS |
| EVM Support | Yes | Yes |
| Other Technological Features | Send/Receive crypto using phone numbers | ZKEVM |
| Number of Block Explorers | 3 | 4 |
| Number of DApps Developed and Integrated | About 29 | 314 |
| Number of Cross-Chain Bridges Integrated | 8 | 55 |
| Number of Wallets Developed | About 10 | 10+ |
| Networks Main Purpose | Financial platform for mobile users | Universal |
Polygon has integrated Filecoin support according to one of their blog posts. Celo on the other hand hasn’t, they just use Distributed File management using the IPFS protocol.
Analysis
Celo and Polygon are both running on the proof of Stake consensus mechanism. Polygon is better than Celo in that its transaction processing technology can process up to 7,200 TPS. Celo can only do about 400 max.
Celo as a network is more decentralized than Polygon in that it has more validator nodes(110 Vs 76). People can get more transactions more thoroughly if there are more validators that are independent.
Polygon as a network has about double the developers constantly innovating on it as opposed to Celo. As we can see in the next image, Polygon currently has about 63 active developers.
Polygon is also better than Celo in that it takes Polygon 1 minute to confirm transactions, whereas for Celo it takes 2 minutes. Block production is faster in the Polygon network. Blocks are produced every 2 seconds in the Polygon Network, and 5 seconds in the Celo Network.
Both Celo and Polygon have ultra-low transaction fees, though Celo has lower transaction fees than Polygon. This shouldn’t be a concern since both cryptocurrency networks offer ultra-low fees.
Polygon, on the other hand, has integrated Filecoin support as a storage solution for NFTs. Celo only takes advantage of the widely used IPFS technology. This gives Celo developers and users one less option when they are minting NFTs and launching applications.
Celo shines in that one of its unique features is that users can send cryptocurrency using only phone numbers. Celo users can send stable coins without having CGLD, the native currency. Polygon, on the other hand has a unique feature in that it has ZKEVM technology.
Both Celo and Polygon have great block explorers which makes it useful for users to observe the network. The technological foundation of Polygon is better since there are more applications developed and deployed on Polygon.
Luckily most of these applications can be deployed on Celo easily since Celo is also EVM compatible. Polygon has more decentralized applications, which include more DEXs, Cross-chain bridges, and Wallets. Polygon as a network is better than Celo since it has more integrated applications on it.
Make no mistake Celo still has many DApps, like Block Explorers, great wallets, DEXs, Cross-chain Bridges, and more!
While Polygon is a universal financial platform that people can use, Celo is specifically made so that people with mobile phones can use it. People in countries where only phones are accessible can use Celo more easily than Polygon. This gives Celo a potential technological advantage over Polygon.
Take, for example, transferring money through Venmo or through Zelle, two popular money transfer methods in the United States. Transferring money through these means involves using a phone number, a name, a username, or an Email. These are simple and easy to remember phrases.
It’s easier for people to send money using these phrases as opposed to sending money using an address such as 0xdAC17F958D2ee523a2206206994597C13D831ec7 (This is the Smart Contract for USDT as an example). Sending money on Celo using a phone number is far easier for people to use than sending money on wallets using the Polygon network.
This makes Celo easier to adopt as a financial network than Polygon.
Comparing the Tokenomics of Celo and Polygon: Which One Comes Out on Top?
The tokenomics of each cryptocurrency influence how the cryptocurrency appreciates in price, either negatively or positively. The Tokenomics of one coin may be better than the other which may result in one outperforming the other.
In this part of the passage, we analyze the economic factors of the Polygon and Celo coins to pinpoint traits that can induce negative and positive effects on their price appreciation. Based on these factors we can predict if one coin outperforms the other.
In the table below we have some factors that influence the tokenomics of Celo and Polygon and we compare them.
| Tokenomics in Celo Vs. In Polygon | ||
|---|---|---|
| Comparison | Celo | Polygon |
| Circulating Supply | 478 Million Tokens | 8.73 Billion Tokens |
| % Circulating Supply of Total Supply | 48% | 87% |
| Max Supply | 1 Billion tokens | 10 Billion tokens |
| Circulating Supply Token Inflation | 8.48% | 2% |
| Token Use Cases |
|
|
| % Locked in Staking | 65% | 36% |
| Burning Mechanism? | No | About 19-20% of all transaction fees are burnt |
| Market Cap (As of Dec. 2022) | 230 Million USD | 7 Billion USD |
To perform Celo transactions, Celo Gold can be used but it is not necessary since other stable coins can be used.
On the Polygon network, a set number of Polygon coins are used for validators to propose changes. People can use their tokens to vote on it. (1 token = 1 vote)
Analysis
The majority of Polygon coins are already in circulation, as opposed to Celo Gold coins which are locked up in contracts. Celo Gold coins are unlocked as time goes on by investors, the team, and other parties. These parties eventually flood the markets with them, causing price depreciation.
This all means that more Celo will enter the markets and cause the price appreciation of Celo to be hindered. Polygon has a clear advantage here. Most of the coins that are going to go into circulation for Polygon are due to the staking rewards that keep the network secure. They incentivize validators to keep running.
As a result, Celo may have lower price performance than Polygon. This is also illustrated by the fact that the circulating supply inflation of Celo is about 8.5%. For Polygon it is about 2%. Lower inflation is better for price performance.
Note: By Circulating supply inflation we mean the inflation that the circulating supply encounters by way of unlocking vested coins and minting more coins.
One advantage that the Celo Gold coin has over Polygon from a tokenomic perspective is that more coins are locked in staking. This means that more coins can be deposited into exchanges readily for Polygon which can create more sell side pressure for Polygon.
Polygon coins have another advantage that Celo Gold doesn’t have, this being a burning mechanism. As coins are burnt by the Polygon network it decreases the available Polygon supply. A lowering supply may accelerate the appreciation of Polygon.
Polygon and Celo coins generally have the same use cases and points of demand. They are essentially used and needed to perform the same functions.
Celo coins may appreciate faster than Polygon since Celo has a lower marketcap than Polygon. It requires less capital to push the price upwards as opposed to Polygon.
All in all – Polygon has better tokenomics than Celo. Assuming the same capital flows go into both coins, It is easier for Celo to appreciate because it has a smaller marketcap on the lower time frames.
But it is harder for it to appreciate in larger time frames because of the negative effects that the ecosystem has such as inflation and coin unlocking.
It is also easier for Celo to dump in price than Polygon because of these tokenomic effects. If Celo did not have these negative effects, it could appreciate to a greater degree.
Adoption Rates Compared: Is Celo or Polygon Gaining More Traction?
Let’s see Adoption in Celo Vs. In Polygon. We can use this information to see if Celo can replace Polygon in the future. Building infrastructure is imperative to make a successful ecosystem.
For cryptocurrencies, this involves having developers build DApps, tools, and utilities. We can also use this information to see what it takes for Celo to reach a similar valuation as Polygon.
| Adoption in Celo Vs. in Polygon | ||
|---|---|---|
| Comparison | Celo | Polygon |
| Total Accounts created (As of Dec. 2022) | 7.5 Million Accounts | 201 Million Accounts |
| Total Transactions Submitted (As of Dec. 2022) | 189 Million Transactions | 2.311 Billion Transactions |
| Total Value Locked in DeFi (As of Dec. 2022) | 99 Million | 994 Million |
| Total DEXs in Ecosystem | About 6 | About 58 |
| Number of Currently Active Developers | 30-35 | 63 |
| Number of DApps Developed and Integrated | About 29 | 314 |
| Number of Cross-Chain Bridges Integrated | 8 | 55 |
In this comparison, Polygon has much more adoption than Celo. We can use this comparison to see what it would take for Celo to reach similar MC valuations as Polygon. Clearly, Polygon has more adoption. There are about 9 times as many DEXs on Polygon and as many as 7 times as many cross-chain Bridges.
The TVL(total Locked Value) in Polygon is also 9 times as much as in Celo. For Celo to potentially reach valuations of Polygon it would have to grow 10 times as much with DApps, as well as TVL.
Increasing the ecosystem by 10 times would result in Celo potentially increasing its marketcap from 230 Million to 7 Billion. This would be a 30x price appreciation. It would also have to get 20 times as many user accounts on the blockchain network.
Other Differences and Similarities between Celo and Polygon
One difference between Celo and Polygon is that Polygon is considered a Layer 2 while Celo is a Layer 1 blockchain. Polygon is an Ethereum scaling solution which is a sidechain that connects to Ethereum using smart contracts. Celo on the other hand is a standalone blockchain protocol.
Polygon was launched in April 2019. Celo was launched in May 2020, about a year later than Polygon. Polygon currently has raised a total of 501.5 Million dollars in capital. Celo, on the other hand, has raised about 77 Million in capital from venture capitalists and other investors.
Can Celo Replace Polygon in the Future?
It is unlikely that Celo will ever replace Polygon for the simple fact that Polygon has overall better technology and a large base of developers and users.
One advantage that Celo does have is that users can use their algorithmic stable coins and transfer them to others using Mobile Phone Numbers.
This small technological advantage of Celo may increase the number of people who use the Celo Network.
Which Crypto Will Reign Supreme in the Future: Celo or Polygon?
Not Financial Advice.
Celo may outperform Polygon in the future simply because it is a smaller marketcap. Less capital is required to move the price. However, Polygon will retain its value after it appreciates.
While Celo is a lower marketcap in comparison to Polygon, it is unlikely that it will ever reach similar valuations as Polygon. The marketcap of Celo reached about 2 Billion in valuations in Nov. 2021.
The next time around it may double in marketcap to about 4 Billion. Celo fell by about 94%, while Polygon fell about 89% in value in 2022, however, Polygon was quick to recover. It is now only about 72% down while Celo is 95% down from its all-time high.
When it comes to retaining value, Polygon is the clear winner. This would not have been possible without the tokenomic effects that Polygon has.
Conclusion: Which is Better Celo or Polygon?
Polygon has generally better technology. It has a potentially higher throughput of 7,200 TPS. It also has twice as fast transaction confirmation times as Celo. Celo on the other hand, has lower transaction fees of about 0.000015 CELO.
Celo is a bit more decentralized than Polygon since it has 110 Validators instead of the 78 Validators in Polygon. This is also evident since 65% of the Celo circulating supply is locked in governance and staking contracts which are used to vote for validators. Polygon only has 38% of the supply locked in staking.
Polygon as an ecosystem has better technology as evidenced by its abundance in DEXs, Cross-chain Bridges, and DeFi applications. Celo still has great DApp technology, just not as much as Polygon. Polygon also has much more adoption, and ecosystem activity than Celo.
Celo has more circulating supply inflation than Polygon. Polygon, on the other hand, burns 20% of the transaction fees whereas Celo doesn’t burn any coins.
One of the advantages that Celo has over Polygon is a specific type of technology that allows people to send cryptocurrency in the Celo network using only mobile phone numbers.
One advantage of Polygon is that it has integrated the Filecoin protocol so that developers and users can take advantage of the decentralized storage solutions that Filecoin provides.
All – in – all, we can see that Polygon is better than Celo.