Celo Has Officially Transitioned from a Standalone EVM-compatible Layer-1 (L1) Blockchain to an Ethereum Layer-2 (L2)

Celo has officially transitioned from a standalone EVM-compatible Layer-1 (L1) blockchain to an Ethereum Layer-2 (L2), marking a significant milestone for the blockchain ecosystem.

Celo has successfully completed its transition to an Ethereum Layer 2 network, converging with Optimism’s OP Stack and EigenDA for maximal throughput and EigenChain for data availability.

The move, which was finalized at block height 31,056,500 on Wednesday, strengthens Celo’s security by tying it to the Ethereum network. It also enhances interoperability with Ethereum and preserves Celo’s hallmark features—low transaction fees and rapid processing times.

The official Celo countdown website confirmed the transition, announcing that Celo is now live as an Ethereum Layer 2. This milestone culminates 20 months of planning, testing, and governance discussions since the initial proposal by cLabs in July 2023.

“The Celo L2 migration has been completed. Celo validators have intentionally halted L1 block production as the protocol transitions to an Ethereum Layer 2.

Less than two hours later, block height 31,056,500 on Celo L2 will mark the completion of the migration. By that time, Celo L2 will begin processing transactions on the Ethereum blockchain.

Afterward, at least one public RPC (Forno) and indexers will come online shortly. By the end of the week, the Celo L2 Explorer will also be available for users to explore the new Celo blockchain and transactions.”

How the Transition Impacts Users and Developers

The shift to an Ethereum Layer 2 provides significant advantages.

Relying on Ethereum’s infrastructure strengthens the network and improves security.

It also increases transaction speed, with blocks being produced in one second on Ethereum compared to five seconds on Celo.

Celo will retain its ultra-low transaction fees of $0.0005, ensuring cost-effective transactions for users.

Native Ethereum bridging will reduce dependence on external bridging solutions, which have historically been exploited.

With this transition, Ethereum developers can seamlessly build on Celo with minimal adjustments, improving developer compatibility.

"Today marks an exciting return home for Celo as we join the Ethereum ecosystem with our own Layer 2, combining the best of both networks to scale Web3 with global reach," said Marek Olszewski, CEO and co-founder of cLabs.

Following the announcement, CELO's price rose nearly four percent, indicating market optimism about the move.

However, this transition comes at an intriguing time for Layer 2 networks.

Recently, Solana (SOL) co-founder Anatoly Yakovenko questioned the necessity of Layer 2 solutions, arguing that Solana's monolithic Layer 1 architecture provides sufficient strength and efficiency.

Additionally, Binance founder Changpeng Zhao reignited the debate on whether AI projects should be built on Layer 1 or Layer 2 networks, sparking further discussion on the best approaches for blockchain scaling.

Meanwhile, Ethereum has seen a 95% drop in transaction fee revenue amid the shifting Layer 2 playing field as users and developers seek lower costs and improved efficiency.

As Celo fully integrates into the Ethereum ecosystem, users and developers can expect increased liquidity, seamless transactions, and enhanced security features.

"Celo has done a lot for crypto's global adoption, and I am excited to see Celo fully embracing the Ethereum family," Ethereum co-founder Vitalik Buterin commented.

However, the network must also brace for potential diversion of transaction fee revenue away from Ethereum's main chain.

Celo's ultra-low fees are attractive, but ensuring long-term network security and incentives for validators remains a challenge. It may need to explore alternative revenue streams, such as MEV (Maximal Extractable Value) capture or strategic partnerships.

Despite the backlash against L2 networks, Joanna Zeng, co-founder and CEO of SOON, an SVM rollup on Ethereum, advocates for L2s.

"L1s will not change their base layers, but they can still benefit from better scalability. Instead of arguing against L2s, the real opportunity is proving the strength of SVM by expanding beyond Solana," Zeng told BeInCrypto.