Exploring the Role of Smart Contracts in Decentralized Finance on the Celo Blockchain

Learn How To Get Started in Blockchain Development With Celo, Developing and Deploying a Smart Contract on Celo.

Introduction

One of the key components of DeFi is the use of smart contracts, self-executing agreements that are stored on a blockchain. In this article, we’ll explore the role of smart contracts in DeFi on the Celo blockchain, and show you how to develop and deploy a smart contract on the Celo network.

Celo’s EVM compatibility is one of its most significant advantages of using Celo Network, as it enables developers to easily migrate their dapps from the Ethereum blockchain to Celo with minimal code modifications (if any) and a simple configuration file change. This article will demonstrate how to accomplish this task by creating a sample smart contract project and deploying on the Celo Network. While a comprehensive article of creation of a sample Dapp projects is beyond the scope of this article, it is not limited to the project here alone. However, this article can be used as a general reference for deploying any Ethereum-based project and more on the Celo blockchain.

The aim of this article is to guide developers who have previously deployed dapps on the Ethereum blockchain or otherwise in replicating the process on the Celo blockchain. Additionally, this tutorial is also suitable for first timers who wish to learn how to deploy dapps on Celo.

What you would learn:

• What is a Smart Contract?
• The Role of Smart Contracts in DeFi on Celo
• Developing and Deploying a Smart Contract on Celo
• Celo Developer Tools
• Use Cases for Smart Contracts in DeFi on Celo
• Conclusion

What is a Smart Contract?

A smart contract is a self-executing agreement that is stored on a blockchain. It contains code that defines the rules and regulations for a particular transaction or agreement. When certain conditions are met, the contract automatically executes, triggering the transfer of funds, the exchange of assets, or the completion of another action.

Smart contracts are particularly useful in DeFi because they can eliminate the need for intermediaries, reducing costs and increasing transparency. They can be used to create a range of financial products, including lending and borrowing platforms, decentralized exchanges, and insurance contracts.

The Role of Smart Contracts in DeFi on Celo

Celo is a mobile-first blockchain platform that is designed to be fast, scalable, and secure. It uses a Proof of Stake (PoS) consensus algorithm, which allows for high throughput and low transaction fees. Celo also supports the creation and deployment of smart contracts, which are essential to the development of DeFi on the platform.

Smart contracts on Celo are written in Solidity, a programming language that is used to write smart contracts on the Ethereum blockchain. This means that developers who are familiar with Ethereum smart contracts will find it easy to develop on Celo. Celo also provides a range of developer tools, including a command-line interface (CLI) and a web-based IDE, to simplify the development and deployment of smart contracts.

Developing and Deploying a Smart Contract on Celo

Celo is a blockchain platform that is designed to make financial tools accessible to everyone, regardless of their location or access to traditional financial services. One of the key features of Celo is its support for smart contracts, which are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. In this article, we will explore the process of developing and deploying a smart contract on Celo, and provide a code sample to illustrate the process.

Step 1: Set up your development environment

To develop and deploy a smart contract on Celo, you will need to have a development environment set up. This will typically involve installing the necessary tools and dependencies, such as Node.js and the Celo CLI. You will also need to set up an account on the Celo network and obtain some testnet CELO and cUSD tokens for testing purposes.

Start by cloning your personal repo or follow up and create a sample project like we have below

git clone <your-repo-link-here>

After cloning or creating a repository, then we definitely have all the contracts required to deploy a Dapp.

Let’s install all the dependencies of the dapp by using

npm install

Step 2: Using CELO CLI

Initially, we must identify a means to engage with the Celo blockchain. In the context of this article, we will utilize the Celo CLI to achieve this objective.

npm install -g @celo/celocli

CeloCLI offers a straightforward approach for interacting with the Celo blockchain and proves to be a valuable asset for all Celo developers. Additional details about CeloCLI can be obtained here.

Once installed, it is essential to confirm that CeloCLI is directed towards the appropriate endpoint. To verify this, we will undertake the following steps:

celocli config:get

Our node should be pointing to node: https://alfajores-forno.celo-testnet.org

In case your endpoint is something else, you can change it by using

celocli config:set --node https://alfajores-forno.celo-testnet.org

At present, our CeloCLI is linked to a Testnet, but in order to proceed, we require an account to work with. Fortunately, we can utilize CeloCLI to create a new account on the testnet by executing the following command:

celocli account:new

Then our terminal should look something like this. (Definetly! Everyone will have different values though!)

To ensure the confidentiality of our private key, developers commonly utilize .env files to configure environment variables, which are hidden during the uploading of our project to an open source platform by adding them to the .gitignore file. In the same directory, create a .env file and enter the following line:

PRIVATE_KEY=<YOUR_PRIVATE_KEY>

We will use this private key later in this tutorial. Now that we have an account, we need to obtain funds for signing transactions on the blockchain. To do so, we will use the Alfajores testnet faucet, which can be accessed here. To verify that we have received funds, use the following command:

celocli account:balance <YOUR_PUBLIC_ADDRESS>

Step 3: Write your smart contract

Once your development environment is set up, you can start writing your smart contract code. The code sample below shows a simple smart contract that allows users to store and retrieve a string value on the Celo blockchain:

const Web3 = require('web3');

const myContractAbi = <ABI>; // Replace with your own ABI
const myContractAddress = '<ContractAddress>'; // Replace with your own contract address
const myCeloAddress = '<YourCeloAddress>'; // Replace with your own Celo address
const myCeloPrivateKey = '<YourCeloPrivateKey>'; // Replace with your own Celo private key
const web3 = new Web3('<CeloNodeUrl>'); // Replace with your own Celo node URL
const myContract = new web3.eth.Contract(myContractAbi, myContractAddress);
async function setString(_myString) {
  const setStringFunction = myContract.methods.setString(_myString);
  const gas = await setStringFunction.estimateGas({ from: myCeloAddress });
  const tx = {
    from: myCeloAddress,
    to: myContractAddress,
    gas,
    data: setStringFunction.encodeABI(),
  };
  const signedTx = await web3.eth.accounts.signTransaction(tx, myCeloPrivateKey);
  const receipt = await web3.eth.sendSignedTransaction(signedTx.rawTransaction);
  return receipt.transactionHash;
}
async function getString() {
  return myContract.methods.getString().call();
}

Yeah, Crazy Right? Give it a chill. Now lets explain the code above.

This code is written in JavaScript and uses the Web3.js library to interact with a smart contract on the Celo network. Here is a breakdown of what the code does:

• The first line imports the Web3.js library, which is a JavaScript library used for interacting with the Celo network.

const Web3 = require('web3');

• The next four lines declare some variables that will be used later in the code. myContractAbi is the ABI (Application Binary Interface) of the smart contract, which defines its functions and how to interact with them. myContractAddress is the address of the smart contract on the Celo network. myCeloAddress is the address of the account that will be used to interact with the smart contract, and myCeloPrivateKey is the private key of that account, which is used to sign transactions.

const myContractAbi = <ABI>; // Replace with your own ABI
const myContractAddress = '<ContractAddress>'; // Replace with your own contract address
const myCeloAddress = '<YourCeloAddress>'; // Replace with your own Celo address
const myCeloPrivateKey = '<YourCeloPrivateKey>'; // Replace with your own Celo private key

• The next line creates a new instance of the Web3 object, which is used to interact with the Celo network. <CeloNodeUrl> should be replaced with the URL of a Celo node, which is used to communicate with the Celo network.

const web3 = new Web3('<CeloNodeUrl>'); // Replace with your own Celo node URL

• The next line creates a new instance of the smart contract by passing in its ABI and address. This allows you to interact with the smart contract’s functions using the myContract object.

const myContract = new web3.eth.Contract(myContractAbi, myContractAddress);

• The setString function allows you to call the setString function on the smart contract. It takes a string parameter, _myString, and returns a transaction hash.

vbnetCopy codeasync function setString(_myString) {
  const setStringFunction = myContract.methods.setString(_myString);
  const gas = await setStringFunction.estimateGas({ from: myCeloAddress });
  const tx = {
    from: myCeloAddress,
    to: myContractAddress,
    gas,
    data: setStringFunction.encodeABI(),
  };
  const signedTx = await web3.eth.accounts.signTransaction(tx, myCeloPrivateKey);
  const receipt = await web3.eth.sendSignedTransaction(signedTx.rawTransaction);
  return receipt.transactionHash;
}

The function first creates a new instance of the setString function by calling myContract.methods.setString(_myString). Then it estimates the gas required for the transaction and creates a transaction object that includes the from address, to address, gas amount, and encoded data. It then signs and sends the transaction, and returns the transaction hash.

• The getString function allows you to call the getString function on the smart contract. It does not take any parameters and returns the value of the myString variable stored on the smart contract.

javascriptCopy codeasync function getString() {
  return myContract.methods.getString().call();
}

The function first creates a new instance of the getString function by calling myContract.methods.getString(). It then calls the call() function to execute the function on the smart contract and return the value of the myString variable.

Step 4: Compile and deploy your smart contract

Once you have written your smart contract code, you will need to compile it using the Celo CLI. The following command can be used to compile the contract:

celoc compile MyContract.sol

This will generate a bytecode file and an ABI file for your contract. The bytecode is the machine code that will be executed on the Celo blockchain, while the ABI is the interface that other contracts and applications can use to interact with your contract.

Next, you will need to deploy your contract to the Celo network. This can be done using the following command:

celoc deploy MyContract --args "arg1,arg2"

In this command, arg1 and arg2 are any constructor arguments that your contract requires. Once the contract is deployed, you will receive a contract address that you can use to interact with your contract.

Step 5: Interact with your smart contract

Now that your contract is deployed, you can interact with it using the Celo CLI or a web3 provider. For example, you can use the following command to call the setString function and set the value of myString:

celoc contract:call <contract-address> setString --args "Hello, World!"

You can then use the following command to call the getString function and retrieve the current value of myString:

celoc contract:call <contract-address> getString

This will return the string “Hello, World!”.

Deploying your Smart Contract on Celo

In order to deploy our dapp to the Celo blockchain, we simply need to modify the truffle-config.js file to be compatible with the Celo blockchain. To accomplish this, we will utilize the Contract Kit and Wallet-local tools provided by Celo. Additionally, we must install dotenv to enable the use of our Private Key.Changing Truffle-config

To install all of these, use

npm i --save @celo/contractkit @celo/wallet-local dotenv

ContractKit is a library designed to assist developers and validators in interacting with the Celo blockchain, making it an ideal tool for developers seeking a straightforward means of integrating Celo Smart Contracts into their applications. Wallet-Local, on the other hand, provides a local wallet instance for use with ContractKit. To import the Private Key we added to the .env file into truffle-config without hardcoding it, we will use the dotenv file.

Insert the code below into our truffle-config.js file.

require("dotenv").config();                      // to import all the environment-specific variables into this file
const ContractKit = require("@celo/contractkit");
const { LocalWallet } = require("@celo/wallet-local");

const PRIVATE_KEY = process.env.PRIVATE_KEY;
const testnetURL = "https://alfajores-forno.celo-testnet.org";
const localWallet = new LocalWallet();
/*
Contractkit is used to access web3 object to interact with node's Json RPC API.
It takes two arguments, first being testnet url and second a wallet instance for signing transactions.
*/
const kit = ContractKit.newKit(testnetURL, localWallet);
async function setConfig() {
  kit.addAccount(PRIVATE_KEY);
  kit.defaultAccount = localWallet.getAccounts()[0];
}
setConfig();
module.exports = {
  networks: {
    testnet: {
      provider: kit.connection.web3.currentProvider, // to connect with Alfajores testnet
      network_id: 44787,
    },
  },
};

Now our configuration file is all set to work with the Celo Blockchain.

Let’s compile our smart contracts using

Truffle compile

and after compiling is completed, let’s migrate our smart contracts to Celo.

Truffle migrate --network testnet

Congratulations on successfully deploying our Ethereum Dapp to Celo! 🎊 While it may have been a lengthy article, we made it through the first half.

Celo Developer Tools

Celo is a blockchain platform designed to make decentralized finance more accessible to anyone with a mobile phone. It provides an infrastructure for creating and using financial applications, and has gained traction in recent years due to its fast, low-cost transactions and focus on mobile accessibility. To facilitate development on the Celo platform, a number of developer tools have been created that help developers build, test, and deploy smart contracts and other applications.

In this blog post, we will explore the various Celo developer tools available and how to use them.

Celo Wallet

The Celo Wallet is a mobile wallet that allows users to store, send, and receive Celo assets. It can be used to manage multiple accounts, view transaction history, and interact with dApps built on the Celo platform. As a developer, you can use the Celo Wallet to test your dApp by connecting it to your local node or the Alfajores test network.

Celo CLI

The Celo CLI is a command-line interface tool that allows developers to interact with the Celo blockchain from the terminal. It provides a number of useful functions such as deploying contracts, interacting with smart contracts, and sending transactions. The Celo CLI is a valuable tool for developers who prefer working from the command line or need to automate certain tasks.

Remix

Remix is an online IDE that provides a browser-based environment for developing, testing, and deploying smart contracts. It has a number of features that make it a great tool for developers working on Celo, such as the ability to connect to the Celo network, debug contracts, and use the Solidity compiler to write and compile smart contracts. Remix is a great tool for developers who prefer an online environment for their development work.

Truffle

Truffle is a development framework for Ethereum and other blockchain platforms that provides a suite of tools for developing, testing, and deploying smart contracts. Truffle can be used to create and manage a development environment, compile and migrate contracts, and run tests. With the addition of Celo support, Truffle can now be used to develop and deploy smart contracts on the Celo platform.

Hardhat

Hardhat is a development environment for Ethereum and other blockchain platforms that provides a suite of tools for building and deploying smart contracts. Hardhat can be used to compile, test, and deploy contracts, as well as run simulations of the blockchain. It also includes support for Celo, making it a valuable tool for developers working on the Celo platform.

Use Cases for Smart Contracts in DeFi on Celo

Decentralized Finance (DeFi) on Celo is an emerging space that offers a lot of opportunities for developers and entrepreneurs to create innovative applications that are transparent, accessible, and secure. Smart contracts, which are self-executing digital programs, are at the core of DeFi on Celo. These contracts allow for the creation of new financial products and services that can be built on top of the Celo blockchain. In this article, we’ll explore some of the use cases for smart contracts in DeFi on Celo.

Decentralized exchanges (DEXs)

One of the most popular use cases for smart contracts in DeFi is the creation of decentralized exchanges. DEXs are trading platforms that allow users to exchange assets directly without relying on intermediaries such as centralized exchanges. Smart contracts enable DEXs to be decentralized, meaning that no central authority controls the exchange. Celo already has some decentralized exchanges like Moola and UbeSwap, which use smart contracts to execute trades, hold assets in escrow, and distribute tokens to traders.

Stablecoins

Stablecoins are cryptocurrencies that are pegged to the value of a fiat currency or commodity. They are popular in DeFi because they provide a stable store of value for traders and investors. Smart contracts are used to create and manage stablecoins, such as the cUSD and cEUR stablecoins on Celo. These stablecoins are backed by a reserve of assets held in a smart contract, which ensures that their value remains stable over time.

Yield farming

Yield farming is the practice of earning a return on investment by providing liquidity to DeFi protocols. Smart contracts are used to automate the process of yield farming and distribute rewards to liquidity providers. Platforms like Ubeswap and Moola offer yield farming opportunities for liquidity providers, allowing them to earn rewards in exchange for providing liquidity to the platform.

Lending and borrowing

Lending and borrowing platforms on Celo use smart contracts to create trustless and transparent systems for borrowers and lenders. These smart contracts execute the terms of the loan, such as interest rates, collateral requirements, and repayment schedules, without the need for intermediaries. The Celo network already has some lending and borrowing platforms like Valora and CeloCamp, which offer decentralized lending and borrowing opportunities.

Insurance

Smart contracts are also being used to create decentralized insurance products on Celo. Insurance protocols use smart contracts to execute insurance policies automatically, ensuring that claims are paid out transparently and efficiently. These smart contracts eliminate the need for intermediaries, reducing costs and increasing efficiency. Examples of insurance protocols on Celo include Unslashed and SURE.

Conclusion

With this new found knowledge, we are now capable of deploying any Dapp of our choosing to Celo using the same process. Do not be deterred by any obstacles, as Celo provides excellent opportunities for new projects. So go ahead and try cloning any Ethereum project and deploy it on Celo!

You now have a fair understanding of getting started in Blockchain Development With Celo. In this article you have learned:

• What Smart Contract is
• Smart Contracts’ Function in Decentralized Finance on the Celo Blockchain
• Creating and Launching a Mini Smart Contract on the Celo Blockchain
• Deploying your Smart Contract on Celo
• Tools for Developers on the Celo Blockchain
• Applications of Smart Contracts in Decentralized Finance on the Celo Blockchain

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See you next time, happy cooking!

Vinyl.