Celo Decides to Use OP Stack for Building Layer-2

On the evening of April 22, 2024, cLabs, the blockchain development team behind Celo, has decided to build its Layer-2 solution on Optimism's OP Stack, following a proposal and vote by CELO token holders under governance rules.

This decision comes after an 8-month evaluation and testing phase with various scaling solutions, including Arbitrum Orbit, ZK Stack from zkSync Era, and Polygon CDK.

As previously reported by Coin68, Celo first announced its intention to transition to a Layer-2 Ethereum in July 2023, and the proposal was approved with a vote of 128 out of 131.

Initially planning to build a layer-2 based on Optimism's OP Stack, similar to Base and Zora Network, cLabs received invitations from Polygon Labs, Matter Labs (behind zkSync Era), and Arbitrum Foundation to utilize their toolkits. Ultimately, cLabs stuck with their initial choice.

Transitioning to a Layer-2 on Ethereum is expected to bring several benefits to Celo, including:

• Reinforcing development alignment with Ethereum and EVM compatibility.
• Inheriting Ethereum network security.
• Simplifying liquidity transfer between the two chains.

OP Mainnet and other chains within the Optimism ecosystem utilize Optimistic Rollups for off-chain transaction aggregation to process Ethereum transactions faster, addressing cost issues and scalability on Ethereum.

cLabs shared that their decision to build their Layer-2 solution on OP Stack aligns with their needs, maintaining the network's unique features while potentially improving performance and compatibility with various other layer-2 solutions like Polygon's Type 1. Anticipated improvements include reducing block times from 5 seconds to just 2 seconds and increasing transaction throughput by 50%.

Moving to the Optimism ecosystem is a step towards integrating Celo into Optimism's Superchain ecosystem, which includes OP Mainnet, Base, Zora, and Mode Network. Just last week, the "retina scan" project Worldcoin announced plans to develop a Layer-2 network called "World Chain" also built on OP Stack.

Celo's decision is seen to have a positive impact on the OP token. At the time of writing, OP is trading around $2.56, representing a more than 5% increase in the past 24 hours.

1-hour chart of OP/USDT pair on Binance as of 09:10 PM on April 22, 2024

Token CELO is trading in the range of $0.85 - $0.87 following the news, equivalent to a 6.5% increase over the past 7 days.

1-hour chart of CELO/USDT pair on Binance as of 09:10 PM on April 22, 2024