Coinbase Faces Community Backlash for Refusing to Support Celo's Layer 2 Migration

The exchange confirmed the migration, set for January 16, 2025, and advised users to withdraw their CGLD tokens by January 13 to avoid losing access to their funds.

Coinbase has announced that it will not support Celo’s upcoming migration from its Layer 1 blockchain to a Layer 2 within the Optimism Superchain ecosystem. The news has drawn criticism from the Celo community, including key figures in the blockchain space.

The exchange confirmed the migration, set for January 16, 2025, and advised users to withdraw their CGLD tokens by January 13 to avoid losing access to their funds. Coinbase, which lists Celo’s Layer 1 network as CGLD, clarified that users could send their tokens to other wallets that support CELO, the ticker used by other platforms for the Celo token.

Marek Olszewski, CEO of cLabs, the primary developer behind Celo, said “It’s disheartening that Coinbase has chosen not to support the Celo Layer 2 upgrade.” Olszewski said. He also raised concerns about the broader implications for Ethereum’s Layer 2 scaling plans, questioning whether other EVM-compatible Layer 1 blockchains would follow Coinbase’s lead.

Ethereum’s Layer 2 strategy focuses on improving scalability through rollups, which process transactions off-chain while relying on Ethereum for security. With Celo moving to Layer 2, Olszewski suggested that Celo Layer 1 validators could opt to retain the current chain and rebrand it as Celo Gold (CGLD), potentially creating a memecoin, though he added that Coinbase could eventually list the new Layer 2 token under its correct ticker, CELO.

The news sparked further disappointment within the community, with Alex Witt, General Partner at Verda Ventures, pointing out the contradiction in Coinbase’s stance, given that Base, a network incubated by Coinbase, is also part of the Ethereum-aligned Optimism Superchain. Witt questioned why Celo, which shares close ties with Base, would not be supported in the same way.

Ethereum educator Anthony Sassano and EigenLayer founder Sreeram Kanna speculated that the decision might be due to an internal communication issue at Coinbase, suggesting that the exchange may reconsider its position as the Layer 2 transition progresses.

Celo's Layer 2 upgrade, planned for April 2024, has been in the works since July 2023 and received governance approval. The transition will integrate Celo with the Optimism Superchain, with CELO continuing as the native token and migrating to an ERC-20 format to align with Ethereum's standards. The total supply of Celo tokens will remain unchanged at 1 billion.

The news comes shortly after BiT Global also accused Coinbase of delisting Wrapped Bitcoin (wBTC) to gain a competitive edge for its own Bitcoin wrapper, Coinbase Wrapped BTC (cbBTC).

The claim follows Coinbase’s announcement that it would suspend trading of wBTC on Dec. 19, citing undisclosed failures to meet its listing standards.

BiT Global, which recently gained partial control over wBTC’s custodied Bitcoin, criticized Coinbase’s move as a strategy to eliminate its “largest and most influential competitor.” A spokesperson for BiT Global stated, “Coinbase has elected to strip investors of their right to make that decision by delisting wBTC to prop their own wrapped Bitcoin option.”