This article was originally published on 2018-06-29.
Updates on 2018-07-20: After learning about the detailed token metrics, including the lock-up terms for private sale, we believe the project offers great short-term potential as well. Therefore, we are updating our short-term rating to A.
Updates on 2019-3-12: After announcing that the public sale will be conducted on Binance Launchpad, we have updated our report with detailed token metrics and the latest progress of the project.
- Project name: Celer Network
- Token symbol: CELR
- Website: https://www.celer.network
- White paper: https://www.celer.network/doc/CelerNetwork-Whitepaper.pdf
- Hard cap: $35 million ($31 million already raised in seed and private rounds)
- Maximum market cap at ICO on a fully diluted basis: $105 million
- Bonus structure: Token price at seed round: $0.0065 / token price at private round: $0.015 / token price at Launchpad round: $0.0067
- ERC20 token: Yes
- Countries excluded: Afghanistan, Albania, Belarus, Bosnia & Herzegovina, Burundi, Canada, Central African Republic, Cote dIvoire, Cuba, Democratic Republic of the Congo, Ethiopia, Guinea, Guinea-Bissau, Iran, Iraq, Lebanon, Liberia, Libya, Mainland China, Malaysia,Myanmar (Burma), New Zealand, North Korea, Republic of Macedonia (FYROM), Serbia, Somalia, South Sudan, Sri Lanka, Sudan, Syria, Thailand, Trinidad & Tobago, Tunisia, Uganda, Ukraine, United States of America (USA), Venezuela, Yemen, Zimbabwe
- Timeline: March 19, 2019 (please visit Binance Launchpad’s website for the most up-to-date information on their upcoming token sale)
- Token distribution date: Within 15 days after the token sale ends
Video summary (video is 7:53 long):
What does the company/project do?
Celer Network aims to be the first off-chain operating network to bring Internet-level scalability to blockchains. It can scale out to billions of trust-free, secure, and private off-chain transactions per second.
Because transactions are processed off-chain by only those involved, the network’s throughput can increase almost linearly even as more nodes and applications are added to the network.
The team stands behind their off-chain solution to blockchain scalability. In their view, on-chain consensus improvements such as sharding and various Proof-of-X may make the blockchain relatively faster. However, on-chain consensus has its fundamental limitations, making it difficult to achieve Internet-level scalability (i.e. billions of transactions per second).
Celer Network is being designed to serve as an entry point for scalable decentralized applications (dApps) with a simple, user-friendly interface. For users, connecting to Celer Network could potentially be as easy as connecting to the Internet. With Celer Network’s proposed technology, blockchain applications could become more scalable and achieve mass adoption.
Celer Network’s technology architecture is called the cStack, a four-layered architecture which is based on the design principles and architecture that made the Internet successful. The cStack is comprised of:
- cApps: The network’s application ecosystem, which is designed to be scalable and privacy-preserving. The team has already developed one working cApp.
- cRoute: A protocol used to route generalized states, such as conditional payments, in a trust-free manner between users. According to the team, this will enable 15x higher throughput compared to other solutions, such as the principle used in Raiden and Lightning’s routing algorithms, with high failure resilience.
- cOS: A development framework and runtime for scalable off-chain dApps that handles the operation, storage, tracking, and dispute of off-chain states.
- cChannel: A generalized state channel and sidechain suite that supports fast state transitions and maximizes liquidity utilization. This essentially means that Celer could go beyond supporting simple payments to various other applications including gaming, online auctions, insurance, prediction markets, and decentralized exchanges.
This diagram shows the various components of Celer Network four-layered architecture, called the cStack:
Here is the video demo of the Celer Network MVP, which showcases the project’s first scalable off-chain mobile cApp: cGomoku, a Gomoku duel game (video is 15:49 long):
How advanced is the project?
Celer Network is still in working process. The project’s full-stack MVP demo on Ethereum was released in May 2018. The technical whitepaper was released in June 2018. The future development roadmap is as follows:
- cChannel: enhanced generalized state channels with more use case support
- cRoute: initial implementation & testing
- cOS: SDK public v2.0 release, focus on integrated flow of mobile and web
- cEconomy: PoLC and LiBA security audit, SGN testnet alpha launch
- Community: onboard third-party Apps
- cChannel: gradual Ethereum mainnet roll out and continued blockchain expansion and integration
- cRoute: test and initial deployment
- cOS: SDK public v3.0 release
- cEconomy: PoLC mainnet launch
- Community: begin to onboard off-chain service providers
- cChannel: full cross-chain interoperability
- cRoute: production measurement and optimization
- cEconomy: SGN and LiBA mainnet launch
- cOS: SDK public v4.0 release to enhance UX for real-world use cases
- Community: continue to grow Celer-enabled application ecosystem with sustainable new app adoption funnel strategy
What are the tokens used for and how can token value appreciate?
The CELR token is the network’s native protocol token and will be used in various ways within Celer Network to bring value and provide network effect and stable liquidity. In addition to its use as the platform currency, uses for the CELR token will include the following:
- Proof of Liquidity Commitment (PoLC): The network features a virtual mining process that acquires liquidity for the off-chain ecosystem in order to maintain a stable and abundant liquidity pool. To participate, users will need to commit/lock their idle liquidity for a certain period of time and in exchange, will be rewarded with CELR tokens.
- Liquidity Backing Auction (LiBA): This auction process enables off-chain service providers to solicit liquidity from lenders, which are ranked based on their interest rate, amount of provisioned liquidity and amount of staked tokens. For lenders, this means that the more CELR tokens they stake, the higher their rank/priority.
- State Guardian Network (SGN): Before a user goes offline, he/she can submit their state to the SGN and request it to be guarded for a certain period of time for a certain fee. To become a stake guardian, CELR token holders need to stake their tokens in order to earn guarding opportunities and service fees. The more tokens that are staked, the more service fees will be earned by the stake guardian.
CELR tokens should appreciate in value as more users join and use the network. This is driven by numerous factors, including the number and type of applications available on the platform, ease of use, transaction speed, etc.
Other uses of the CELR token (i.e. PoLC, LiBA and SGN) incentivizes users by providing various rewards and fees, which should also help increase the demand for the token and therefore, its value.
All the team members are based in California, US. The biographies of the four co-founders are summarized below. The actual size of the team and information on their roles and backgrounds has not been provided publicly yet.
Dr. Mo Dong, Co-Founder – Background in learning-based networking protocol design, distributed systems, formal verification and game theory. Previously the engineering team lead and product manager at Veriflow, a startup specializing in network formal verification, where he worked for almost 4 years. Taught a course in programming smart contracts in Chinese and obtained his Ph.D. in Computer Science from the University of Illinois at Urbana-Champaign in 2017.
Dr. Junda Liu, Co-Founder– Background in networking infrastructure with prior research in high performance and large-scale networks. Previously worked at Google for almost 7 years in various roles, including senior engineer (Android; platform networking) and software engineer. Obtained his Ph.D. in Computer Networks from the University of California, Berkeley in 2011.
Dr. Xiaozhou Li, Co-Founder – Background in distributed systems, networking, storage, and data management. Previously worked for 2 years at Barefoot Networks as a software engineer and in various research assistant/intern positions with Princeton University, Microsoft, Intel Labs and the University of Pennsylvania. Obtained his Ph.D. in Computer Science from Princeton University in 2016.
Dr. Qingkai Liang, Co-Founder – Background in distributed systems and network control algorithms. Previously a research assistant at the MIT Laboratory for Information and Decision Systems where he worked for more than 4 years. He has also been in various intern roles with Google and Bell Labs. Obtained his Ph.D. in Computer Networks from MIT in 2018.
Advisors of the project include Dr. Christos Kozyrakis, a Professor of Electrical Engineering and Computer Science at Stanford University; Dr. Alan Mishchenko, a Research Scientist at UC Berkeley; and Dr. Shoucheng Zhang, a Professor of Physics at Stanford University and the founder and Chairman of Danhua Capital.
Investors of the project include Pantera Capital, DHVC, FBG Capital, and The Stable Fund.
- Celer’s generalized state channels are better and more efficient than other projects tackling the same problem. It has demonstrated to be 15x faster with a much higher channel utilization ratio because of the channel balancing mechanism.
- A recent article reported that 99% of transactions over $200 failed on Lightning Network, showing that the network is still fairly inefficient.
- A recent article by Starkware highlighting some of the drawbacks of Lightning Network which is fairly in-depth and valid in our view.
- The founders have a very strong technical background, particularly in computer networking infrastructure, formal verification, etc., with prior experience working at major tech companies including Google, Intel, Microsoft, and Nokia Bell Labs.
- Celer Network is blockchain agnostic and can be integrated with any blockchain, therefore the risks of the project becoming obsolete due to the blockchain that it is integrated with have reduced substantially. The project has announced partnership with various blockchain protocols, including DFinity, aelf, Qtum, Quarkchain, and others.
- Since the launch of Celer’s testnet one month ago, the project has achieved impressive adoption: over 12,000 generalized payment channel opened, 4,000 users from 47 countries, and 47,000 generalized state channel games played.
- The team is close to the blockchain development community, with partnership with L4 and collaboration with other researchers working on different layer 2 scaling solutions.
- The staking mechanism makes the network more efficient and provides good token utility.
- The project faces competition from other off-chain payment networks include Raiden, Lightning Network, Funfair, Perun Network, and others.
Our thoughts of the tokens for short term and long term are as follows:
For short-term holding: A
The previous 2 Binance Launchpad projects both generated impressive short-term returns and quick path to liquidity. Out of the Binance Launchpad projects so far, we believe Celer has the best fundamentals with the lowest Launchpad hard cap. Therefore, we expect the Launchpad sale for Celer would sell out quickly.
Note that tokens from Launchpad sale account for less than half of the initial circulating supply, with the majority of the initial supply coming from the private round completed in August 2018. However, the average token price for private round is $0.015, or 2.24x the price of Launchpad sale. Therefore, we believe it is unlikely that private round holders would sell their tokens if the initial market price is not attractive compared to their cost basis.
For long-term holding: S
We like the long-term prospect of the project. In fact, we believe Celer is among the most technically advanced projects that we have looked at, led by a capable team.
We believe on-chain and off-chain scaling solutions are both needed to take decentralized applications to mainstream. No matter how robust on-chain scaling solutions become, the latency is still far higher than off-chain solutions. We believe end users care about user experience more than anything else.
Celer, being blockchain agnostic, has a higher chance to succeed than projects that are only compatible with a single blockchain. The partnership that the team has secured and interest in the testnet demonstrate that the team is also business-minded and traction is strong.
We also like how CELR tokens help the network to become more efficient and address some of the weaknesses of layer 2 solutions. Therefore, we believe CELR tokens have great long-term potential.
For more information about the ICO, please visit the following links:
Telegram (announcements only): https://t.me/celernetworkann
* The information contained in this article is for education purpose only and not financial advice. Do your own research before making any investment decisions.
Our rating system is based on 5 tiers: S/A/B/C/D, with S being the highest and D being the lowest rating.