Celo’s migration to Layer 2 sparks debate as Coinbase declines support

Coinbase’s decision not to support Celo’s migration from a Layer 1 blockchain to a Layer 2 solution on Ethereum has sparked a major debate in the crypto community.

In a recent announcement, Coinbase urged users to withdraw their CGLD (Celo L1) tokens by January 13, 2025, to avoid losing access to their funds. The migration, planned via a hard fork on January 16, 2025, will stop block production on the Celo L1 network, making funds held on Coinbase inaccessible.

While the crypto exchange clarified that CGLD tokens could be transferred to CELO-compatible wallets, the platform’s lack of support for the upgrade has drawn criticism, with many highlighting the potential implications for the ecosystem of Ethereum scale.

“Monopolistic optics”

Marek Olszewski, co-founder of Celo, expressed his disappointment, stating that Coinbase’s decision undermines the broader Ethereum-centric vision of scaling through Layer 2 solutions. He asked if other EVM-enabled Layer 1s might be hesitant to adopt similar migrations due to this resistance of the main exchanges.

“It’s disheartening that Coinbase has chosen not to support the Celo L2 upgrade. This seems like a wrench in Ethereum’s Layer 2-focused scaling roadmap. Why would other EVM-enabled L1s follow suit now?”

Ethereum lawyer Anthony Sassano also chimed in, suggesting the problem could stem from internal miscommunication at Coinbase, but urged the exchange to reconsider its position.

Alex Witt, general partner at Verda Ventures, added to the discourse on Coinbase’s decision and questioned the inconsistency in the exchange’s approach. He noted that both Celo Layer 2 and Coinbase’s own Base Network operate on Optimism’s technology stack, and suggested that the optics of this decision seemed “monopolistic,” implying that Coinbase could be leveraging its influence centralized to favor the Base over other networks based on Optimism like Celo. .

Witt acknowledged Coinbase’s broader mission of “increasing economic freedom in the world” and expressed hope that the rationale for this decision would diverge from those related to optics.

Celo Layer 2 Migration

In July 2023, cLabs, the a16z-backed team behind the Celo blockchain, proposed transitioning to a Layer 2 network on Ethereum. After an extensive eight-month evaluation process, the proposal to use Optimism’s OP Stack received government approval. To ensure compatibility and stability, Celo introduced two Layer 2 testnets: Dango, which launched in July, and Alfajores, which will undergo changes on September 26.

Since Celo’s migration plans have been public knowledge for over a year, one user therefore wondered why Coinbase’s announcement came so late.

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