CLabs, the organization behind the Celo blockchain, is considering a transition from an independent EVM-compatible layer-1 blockchain to an Ethereum layer-2 solution. The proposal, currently under discussion on Celo’s governance forum, outlines the adoption of OP Stack architecture to facilitate this shift, enabling seamless integration with the Ethereum ecosystem.
By embracing an Ethereum layer-2 solution, Celo intends to tap into the vast array of tools and libraries available within the Ethereum ecosystem. This transition eliminates the need to constantly monitor and update tooling and libraries, making it significantly easier for Celo developers to leverage the full range of Ethereum resources.
One of the key differentiators of this proposed transition is the incorporation of an off-chain data availability layer, operated by Ethereum node operators and secured by restaked Ether (ETH). This innovative approach ensures enhanced security while enabling Celo’s current validators to transform into decentralized sequencers for the layer-2 solution.
Layer-1 and Layer-2 blockchains serve different purposes and possess distinct architectural designs. While layer-1 networks operate independently, layer-2 solutions aim to augment the performance of layer-1 blockchains. This transition allows Celo to benefit from increased security measures while maintaining low gas fees for transactions. Gas costs are expected to be notably lower compared to other layer-2 solutions due to the adoption of off-chain data availability.
Notably, end-users and CELO token holders will not be directly impacted by the migration. CELO token holders will continue to exercise control over core contracts through voting on governance proposals, ensuring a seamless transition and continuity within the Celo ecosystem. Additionally, CELO tokens will be utilized for paying gas fees on the Ethereum layer-2 solution.
While the proposal focuses primarily on technical aspects, it is crucial to consider the potential impact on the Celo ecosystem. The transition has the potential to foster increased liquidity between Celo and other blockchain networks. However, it may also introduce additional costs for sequencers, such as fees associated with the data availability layer and gas fees on Ethereum. The question of whether sequencers’ rewards will match the current validators’ rewards remains unanswered.
As the competition among blockchains intensifies, Celo has been dedicated to enhancing its mobile experience by incorporating new functionalities and specific features. Furthermore, the Celo ecosystem continues to target developing economies, where there is a growing demand for technological payment solutions.
The proposal is scheduled for discussion on a governance call on July 21, followed by a “temperature check” on July 22 to gauge community sentiment. If approved, this transition to an Ethereum layer-2 solution will position Celo at the forefront of blockchain interoperability, opening up new avenues for growth and collaboration within the decentralized finance landscape.
