Celo, a popular Layer-1 blockchain, has experienced a 5% drop in its native token following a controversial decision regarding its transition to an Ethereum Layer-2 network within Optimism’s Superchain ecosystem.
Coinbase, the largest US-based cryptocurrency exchange, recently announced that it would not be supporting Celo’s migration to a Layer 2 network. In contrast, Tether’s CEO Paolo Ardoino confirmed that the stablecoin issuer would continue to support the network after its transition to the Ethereum ecosystem.
As a result of this uncertainty, Celo’s CELO token saw a 5% decrease in value, dropping to $0.81039 at the time of writing.
The community’s response to these conflicting views has been mixed, with many expressing disappointment in Coinbase’s decision. Marek Olszewski, CEO of cLabs, the developers behind Celo, questioned whether Coinbase’s stance might deter other EVM-compatible Layer-1 chains from adopting Ethereum’s Layer-2 scaling solutions.
On the other hand, Andrew Koller, the founder of Kraken’s Inkchain, reassured the community that his exchange would support the transition to a Layer 2 network. He expressed Kraken’s commitment to Ethereum scaling and making the platform work for Celo users.
Despite the setback, Olszewski suggested that the Celo community could potentially rename its existing Layer-1 chain to “Celo Gold (CGLD)” to align with Coinbase’s current support framework. This could simplify future adoption if Coinbase decides to support the Layer-2 upgrade.
Community members have urged Coinbase to reconsider its decision, with EigenLayer founder Sreeram Kannan speculating that the exchange’s choice may have been an oversight rather than deliberate opposition. He emphasized the potential benefits of supporting Celo’s integration into the OP Stack and encouraged Coinbase to revisit its stance.
Nass Eddequiouaq, the CEO of Bastion, a crypto startup funded by a16z, highlighted the operational and regulatory challenges that exchanges face when adding support for new chains, particularly in the US. He noted that exchanges often wait to see which branch of a fork gains traction before adding support for it and phasing out the other.
Overall, the community is closely watching how this situation unfolds and hoping for a resolution that benefits all parties involved. It remains to be seen how Coinbase will respond to the community’s feedback and whether they will reconsider their decision regarding Celo’s transition to a Layer-2 network within the Ethereum ecosystem.