Celo Evolves into Ethereum Layer-2 Network Utilizing Optimism Rollup Technology

Summary

• Celo Transitioned to Ethereum L2: The Celo blockchain has successfully migrated from a layer-1 network to operate as a layer-2 protocol on Ethereum, utilizing Optimism rollup technology for enhanced scalability and efficiency.

• Motivations Include Scalability and Security: The shift to L2 aims to leverage Ethereum’s robust network effects, providing Celo with increased security, greater access to Ethereum’s liquidity, and deeper integration with Ethereum-native applications.

• Key Improvements Implemented: The upgrade brings benefits such as one-second block times, sub-cent transaction fees, support for USDT/USDC as gas currencies, and a significantly simplified codebase, all while preserving Celo’s historical data and token functionality.

The Celo network, initially established as a standalone layer-1 blockchain in 2020, has completed its strategic shift to become an Ethereum Layer-2 (L2) protocol.

Announced through an official statement on platform X on March 26th, Celo confirmed the successful migration, emphasizing that it now operates as an L2 solution fully integrated with the Ethereum ecosystem.

This network upgrade introduces several enhancements, including significantly reduced block times, now processing transactions in approximately one second.

Transaction costs are also substantially lowered, with fees reduced to fractions of a cent.

Furthermore, the network now supports Tether’s USDT and Circle’s USDC as designated gas currencies, facilitating smoother and more versatile transaction processes.

The transition to an Ethereum L2, first publicly outlined in mid-2023, marks a significant architectural change for Celo.

This migration was finalized after the original layer-1 Celo blockchain ceased block production, with operations seamlessly transferring to the new L2 framework underpinned by Optimism’s technology stack and its optimistic rollup methodology.

Rollups, specifically optimistic rollups, are designed as layer-2 scaling solutions aimed at improving the efficiency and throughput of primary blockchains like Ethereum.

These solutions function by aggregating multiple transactions off-chain before bundling and posting them as a single transaction on the main Ethereum chain.

Optimistic rollups derive their name from the underlying principle of “optimistic” transaction processing, where transactions are assumed valid unless proven otherwise during a designated challenge window, during which fraud proofs can be submitted if inconsistencies are identified on the primary chain.

Marek Olszewski, the CEO of cLabs, the primary development team behind Celo, explained in a statement to Cointelegraph that this migration to an Ethereum L2 architecture strengthens Celo’s security and enhances its scalability.

He further stated that this move effectively “leverages Ethereum’s network effects.”

Accessing Broader Liquidity and Composability

Irfan Shaik, the founder of Interstate, a distinct roll-up protocol, also offered a positive assessment of Celo’s strategic pivot.

Shaik emphasized the preeminent position of Ethereum in the blockchain space in terms of network effects, stating, “Ethereum has the greatest network effects of any chain.”

He added that transitioning to an L2 allows networks previously experiencing fragmented liquidity as layer-1 solutions to tap into the expansive liquidity pool available within the established Ethereum layer-1 ecosystem.

Olszewski also underscored the benefits of adopting the Optimism technology stack, highlighting the improved “deeper composability with Ethereum-native apps and protocols.”

The redesigned system also boasts a more streamlined and efficient codebase, reducing lines of code by approximately 365,000.

According to Olszewski, this simplification not only decreases the potential attack surface but also results in a “lighter, cleaner, and faster codebase.”

Crucially, Olszewski noted that the upgrade process successfully preserved Celo’s almost five-year transaction history and was conducted in a permissionless and trust-minimized manner.

Furthermore, the native CELO token has been migrated to the Ethereum blockchain.

Olszewski believes this token migration should logically lead to increased liquidity for CELO within the broader cryptocurrency markets.

He concluded by asserting, “What this means is that Celo becomes a fully aligned Ethereum layer 2 — by architecture, by ecosystem, and by mission,” underscoring the complete integration and alignment of Celo within the Ethereum landscape.

Also Read: The USDT stablecoin from Tether is joining the Celo network 

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