CLabs, the organization behind the development of the Celo blockchain, is planning to make a significant move by transitioning from its independent EVM-compatible layer-1 blockchain to an Ethereum layer-2 solution.
This shift back to the Ethereum ecosystem is aimed at leveraging the benefits of the OP Stack architecture and enabling Celo developers to access the full range of Ethereum tooling and libraries more easily.
The proposed transition includes several key elements. Firstly, an off-chain data availability layer, operated by Ethereum node operators and protected by restaked Ether (ETH), would be established.
This would enhance the security of the network while maintaining low gas fees. The current validators would also be transformed into decentralized sequencers for the layer-2 solution.
Layer-1 and Layer-2 blockchains differ in purpose and design. Layer-1 networks are self-sufficient, while Layer-2 solutions are designed to improve the performance of Layer-1 blockchains rather than operate independently.
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The benefits of this transition, as outlined in the proposal, include increased security and the potential for lower gas costs compared to other layer-2 solutions.
The proposal will be discussed on a governance call on July 21 and subsequently released for a “temperature check” the following day.
Adopting this proposal would not affect end-users or CELO tokenholders, who would retain control over core contracts through voting on governance proposals. CELO tokens would also continue to be used for gas payments.
While the transition appears to be primarily a technical upgrade, it could have various implications for the Celo ecosystem.
On one hand, it may facilitate increased liquidity flow between Celo and other chains. On the other hand, it could impose additional costs on sequencers, including fees on the data availability layer and gas on the Ethereum network.
The potential impact on sequencers’ rewards compared to current validators’ rewards remains uncertain.
Celo has been focusing on improving its mobile experience and incorporating enhanced functionality and specific features to cater to the needs of developing economies.
By aligning with Ethereum’s layer-2 solution, Celo aims to enhance its capabilities while continuing to serve as a technological payment solution in these economies.
In an increasingly competitive blockchain landscape, this move by CLabs demonstrates their commitment to innovation and their recognition of the advantages offered by Ethereum’s layer-2 solutions.
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