Celo Blockchain is returning to the Ethereum ecosystem with the L2 transition

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Celo, a blockchain platform, has proposed to return to the Ethereum ecosystem by transitioning from an independent layer-1 blockchain to an Ethereum layer-2 (L2) solution. The move aims to leverage OP Stack as the architecture for Celo's Ethereum L2 blockchain, enabling seamless integration with Ethereum's tooling and libraries.

The proposal discussed on Celo's governance forum outlines critical elements of the transition. It includes establishing an off-chain data availability layer operated by Ethereum node operators and secured by restaked Ether (ETH). The existing validators would also be transformed into decentralised sequencers for the L2 solution.

Layer-1 and Layer-2 blockchains differ in purpose and design. While layer-1 networks operate independently, layer-2 solutions enhance the performance of layer-1 blockchains. The transition to Ethereum L2 would offer benefits such as increased security and lower gas fees compared to other L2 solutions.

The proposal assures end-users would not be affected by the migration, and CELO token holders would retain control over core contracts by voting on governance proposals. Moreover, CELO tokens would be used to pay for gas within the new L2 ecosystem.

It is expected to facilitate increased liquidity flow between Celo and other chains. It may introduce additional costs for sequencers, including fees on the data availability layer and gas on Ethereum.

The proposal is scheduled for discussion on a governance call on July 21, followed by a "temperature check" the following day. If adopted, the transition would enable Celo to benefit from Ethereum's robust tooling and libraries, enhancing compatibility and expanding possibilities for developers.

Celo has been actively improving its mobile experience and incorporating features that target developing economies, where demand for technological payment solutions is high. By embracing the Ethereum L2 solution, Celo aims to unlock further potential and strengthen its position within the competitive blockchain landscape.

As the governance discussions unfold and the technical details are finalised, the community eagerly awaits the outcome, which could mark a significant milestone in the evolution of Celo's blockchain ecosystem and its integration with the broader Ethereum network.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash