Layer 1 blockchain network, Celo has completed the transition to becoming an Ethereum layer 2 protocol. The firm confirmed the strategic move through an official blog post on Wednesday. 

As a result of the move, Celo is now based on the OP ($0.84) technology stack and an optimistic roll-up implementation. Consequently, Celo has now stopped block production on its layer 1 chain to move to the new Ethereum rollup. 

Similarly, the protocol revealed that as part of the transition, the network now offers faster transaction completion and low network fees. Celo stated that users can use stablecoins like USDT ($1.00) and USDC ($1.00) as network fees on the layer 2 blockchain. 

The transition implies that transactions on the layer 1 blockchain are linked to Ethereum, providing the layer 2 network with more advanced security and decentralization. Additionally, with the latest development, the layer 2 network will enjoy more compatibility with Ethereum native solutions and protocols. 

Celo launched in 2020 as a layer 1 network, functioning as a stand-alone Ethereum Virtual Machine blockchain. In 2023, the network discussed the possibility of becoming a full Ethereum layer 2 network by leveraging OP Stacks for the framework. 

As per the proposal, the architecture will save Celo the need for various updates to become an Ethereum layer 2 blockchain. According to a discussion on the project’s forum, the move for the transition became a necessity for the advancement of the network. 

The proposal also pointed to how the migration will allow more liquidity to the new layer 2 network. 

Side note on Celo Network 

Meanwhile, in September 2024, Celo caught the attention of Ethereum co-founder, Vitalik Buterin after overtaking Tron in daily active addresses for stablecoin. The industry expert applauded the blockchain for improving global access to basic payment and finance.

Likewise, the blockchain began gaining traction in terms of stablecoin transactions in February 2024 when Circle, the issuer of the second-largest stablecoin by market cap, USDC launched the token on the network. Popular applications like Ammer Pay, Bitmama, and Centrifuge contributed hugely to the rising figure. 

In 2023, Binbits reported that Celo partnered with Opera to launch Minipay, a dedicated wallet for stablecoins. However, the move to become a layer 2 network will further support the popularity of Celo. 

So far, Celo said it has carried out more than 760 million transactions, having more than 11 million total active wallets. The firm said before the transition, the Celo ecosystem had more than 1,000 native projects with users across 150 countries. 

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