Celo Joins Ethereum as Layer-2 After Long Testing Phase

After 20 months of testing and preparation, Celo has officially become an Ethereum Layer-2 (L2) network, completing its transformation from a standalone Layer-1 (L1) blockchain. The upgrade, based on Optimism’s OP Stack and using EigenDA for data availability, makes Celo faster, safer, and more compatible with Ethereum while keeping its signature low transaction costs.

The transition was finalized at block height 31,056,500. Validators on the original Celo L1 intentionally paused block production to kick off the migration. Not long after, Celo L2 went live, with block production resuming in under two hours. Public RPC services (Forno) and indexers also came back online shortly after, marking the full switch.

This move has been in the works since July 2023, when cLabs — the team behind Celo — proposed migrating to L2. The main goals were to improve security, simplify development, and support more real-world Ethereum use cases.

One of the biggest upgrades is Celo’s new block time of just one second, compared to five seconds before. This means transactions are confirmed much faster. At the same time, the network keeps its very low fee of $0.0005 per transaction, which is a big plus for both users and developers.

The change also means developers building on Ethereum can now use Celo more easily, with little need to adjust their tools or code. This boosts developer activity and lowers technical barriers. In addition, native Ethereum bridging is now part of Celo’s structure, reducing the need for third-party bridges that have often been exploited in the past.

cLabs co-founder and CEO Marek Olszewski described the migration as a "return home" for Celo — combining Ethereum’s global strength with Celo’s speed and affordability to scale Web3 for more people.

Following the news, the price of CELO jumped nearly 4%, showing strong investor support. But the move also brings fresh attention to an ongoing debate in the blockchain world: Are L2s really needed?

Solana co-founder Anatoly Yakovenko recently argued that L2 solutions aren’t necessary when a Layer-1 is well-built — like Solana’s. Meanwhile, Binance founder Changpeng Zhao brought up questions about whether AI-focused projects should choose Layer-1 or Layer-2 platforms.

Ethereum’s own fee revenue has dropped by 95% in this new L2 environment, as users flock to faster, cheaper networks like Celo. That raises concerns about how to balance cost efficiency with sustainable funding for Ethereum and L2 networks.

Celo’s long-term success may depend on finding new income sources, since ultra-low fees alone might not cover network operations or validator rewards. Some options include MEV (Maximal Extractable Value) capture or strategic partnerships.

Despite critics of L2s, many still believe in their potential. Joanna Zeng, CEO of a project that uses Solana Virtual Machine (SVM) on Ethereum, says L1s don’t need to change their base code to improve scalability. She believes the real opportunity lies in proving L2 strength by going beyond Solana’s limits.

As Celo becomes part of the Ethereum ecosystem, both users and developers can expect smoother experiences, stronger security, and better liquidity. Vitalik Buterin, co-founder of Ethereum, praised Celo’s efforts to help bring crypto to a wider global audience and welcomed its deeper integration with Ethereum.

Still, the move could reduce fee income on Ethereum’s main chain, and time will tell how the ecosystem adapts. For now, the transition stands as a key moment — showing how L2 networks can evolve to meet the demands of modern blockchain use.