Celo blockchain proposes a return to the Ethereum ecosystem, a transition to L2

CLabs, the organization responsible for developing the Celo blockchain, is search to return to the Ethereum ecosystem by moving from an independent EVM-compatible layer-1 blockchain to an Ethereum layer-2 solution.

According to the discussion of the proposal on the Celo governance forum, the transition will include leveraging the OP Stack as an architecture to become the Ethereum L2 blockchain, removing the need to monitor tool and library compatibility through upgrades, thus “making it easy for Celo developers to take full advantage of Ethereum tools/libraries.”

Other key differentiating factors will include an off-chain data availability layer operated by the Ethereum node operator and protected by the restarted Ether (ETH), along with turning the current validator into a decentralized sequencer for L2.

Layer-1 and Layer-2 blockchains differ mainly in their purpose, but also in their design and architecture. While the L1 network is designed to be self-contained, the L2 solution is aimed at improving the performance of the L1 blockchain rather than operating independently.

cLab proposes an upgrade. Source: Celo governance forum.

The benefits of the transition are expected to include increased safety while maintaining low gas costs. “We expect no material change in gas costs. Since the proposal is for an L2 solution with off-chain data availability, gas costs could be substantially lower than other L2s,” read the proposal, which is scheduled to be discussed in a governance call on 21 July before being released for a “temperature check” the next day.

By adopting the proposal, end users will not be affected by the migration, and CELO token holders will maintain control over the core contract by voting on the governance proposal. Apart from that, the CELO token will also be used to pay for gasoline.

While this transition appears to be purely technical in nature, it could affect the Celo ecosystem in a different way. As per forum discussions, this could potentially allow more liquidity to flow between Celo and other chains, but also result in additional costs for the sequencer, such as costs at the data availability layer and gas on Ethereum. In addition, it is also unclear whether the sequencer’s reward will match the current validator’s reward.

With blockchain becoming more and more competitive, Celo has been working to improve its mobile experience by incorporating enhanced functionality and certain features. The Celo Ecosystem also targets emerging economies, where more technology solutions for payments are in demand.

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