CELO’s transition from a layer-1 network to an Ethereum layer-2 chain is proving to be a good move, with a spike in both users and volume.
Celo Network (CELO), a prominent layer 1 blockchain known for supporting decentralized applications (dApps), has seen a significant uptick in activity, with many metrics such as users, volume, and daily transactions rising.
After many months of research, I'm excited to share cLabs' proposal for turning Celo into an Ethereum L2!
This is the start of Celo's return home to Ethereum!https://t.co/gyz7dicQ5A
— Marek | Celo ℓ2 (@marek_) July 16, 2023
In early July, daily transactions exceeded 1 million for the first time this year, following a record-setting end to 2023 with over 13 million transactions, the highest ever on the network.
The number of daily active users also hit a new high in July, surpassing 716,000, as reported by Token Terminal.
Celo specializes in mobile-first decentralized apps (dApps) and smart contracts and offers various software development kits (SDKs) and tools for financial applications.
Celo played a pivotal role in the decentralized finance (DeFi) sector during the 2021 crypto boom.
Since then, its total value locked (TVL) has dropped dramatically from about $1 billion in October 2021 to around $100 million today.
Despite this decline, several multi-chain dApps, including Mento, Uniswap, and Curve DEX, remain active on Celo, highlighting its continued relevance in the DeFi space, albeit on a smaller scale than previously.
Is The Move From Layer-1 To An Ethereum Layer-2 Network Behind CELO’s Recent Resurgence?
In a strategic move to bolster its DeFi presence, Celo is transitioning from its current layer 1 architecture to an Ethereum layer 2 network.
On July 7, Celo introduced Dango, its proprietary scaling solution for Ethereum, which is now in testing. This shift represents a significant strategic pivot aimed at enhancing scalability and interoperability.
Comprehensive Activities in Dango [$104M] 🪂
This summer, I immersed myself in Testnets, diving into the most exciting ones.
Today, @celo unveiled their new testnet, "Dango," which caught my eye.
➤ A Brief Overview
Dango is CELO's Layer 2 solution, a leap forward by cLabs… pic.twitter.com/K3zAQqrOEy
— Blum (@Blum_OG) August 3, 2024
The Celo community has voted to gradually transition to this more efficient Ethereum layer 2 framework, aiming to compete with established solutions like Base, Optimism, and Arbitrum.
By aligning more closely with Ethereum, Celo seeks to leverage the advantages of a larger ecosystem, improving scalability and interoperability.
This transition is expected to bring several benefits to Celo. Enhanced scalability will improve transaction handling, while better interoperability will facilitate smoother interactions between Celo-based dApps and the Ethereum ecosystem.
Additionally, this shift could attract more developers and users to the network, boosting overall activity and utility.
Celo Looking To Overtake Arbitrum And Optimism In The Race To Be The Eth Layer-2 Leader
The Celo community’s decision to transition reflects a proactive strategy to address the network’s limitations and foster future growth.
By connecting with Ethereum, Celo aims to tap into a larger resource pool and user base, potentially revitalizing its DeFi activities and expanding its applications.
CELO is up 9% in the past 24 hours, with a price of $0.41, per Coingecko. Its circulating market cap is roughly $225 million, while its fully diluted valuation (FDV) is $415 million. Optimism ($1.5 billion) and Arbitrum ($1.6 billion) are the two main projects that Celo will be looking to compete with, leaving huge potential for growth compared to the competition.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
