Challenges Faced by Celo in Transitioning to Ethereum Layer-2 Network
Celo, a well-known Layer-1 blockchain, encountered a 5% drop in its native token value as it prepares to transition to an Ethereum Layer-2 network within Optimism’s Superchain ecosystem. This transition has sparked controversy within the crypto community.
Support from Exchanges
- Coinbase, the largest US-based crypto exchange, announced that it would not support Celo’s migration to Layer 2.
- Tether’s CEO Paolo Ardoino confirmed continued support for Celo post-transition into the Ethereum ecosystem.
Impact on CELO Token
Data from CryptoSlate revealed that the uncertainty surrounding the transition caused a 5% drop in the CELO token value to $0.81039.
Community Response
The community had mixed reactions to the differing views from exchanges:
- Celo’s developer cLabs CEO expressed disappointment with Coinbase’s decision and questioned its potential impact on other EVM-compatible Layer-1 chains.
- Kraken’s Inkchain founder reassured support for the migration into Layer 2.
Suggested Solutions
Despite the setback, suggestions were made to address the challenges:
- Celo community may consider renaming its existing Layer-1 chain to “Celo Gold (CGLD)” to align with Coinbase’s support framework.
- EigenLayer founder speculated that Coinbase’s decision may be an oversight and urged the exchange to reconsider.
Regulatory Complexities
CEO of Bastion highlighted the operational and regulatory challenges exchanges face when adding support for new chains, especially in the US.
