Vitalik Buterin, the co-founder of Ethereum, recently praised the growing Celo network. In a post on X, Buterin highlighted Celo as a tool for delivering decentralized financial services with low transaction fees.
This mention came shortly after he cautioned against overhyping Layer 2 (L2) networks, emphasizing his support for projects promoting decentralization and accessibility. Celo, a decentralized blockchain platform, aims to offer financial services to users with minimal transaction costs.
One of its most notable features is the Valora app, allowing users to send funds like a chat message. The platform has witnessed a surge in stablecoin activity, primarily due to its minimal transaction fees and the increased adoption of decentralized finance (DeFi) applications and decentralized exchanges (DEXs).
Celo set to transition to layer 2
Launched initially as a Layer 1 (L1) network, Celo is reportedly planning to transition to a Layer 2 (L2) Ethereum Virtual Machine (EVM)-compatible network, similar to Optimism and Arbitrum. Celo, which raised over $100 million in 2020 with backing from Coinbase Ventures and a16z, has steadily evolved since its inception. This shift would bring it closer to Ethereum’s ecosystem while maintaining its focus on low-cost transactions.
Buterin has long supported projects aligned with Ethereum’s goal of extending financial services to the unbanked. One key advantage of Celo is that it enables users to pay gas fees using stablecoins, eliminating the need to purchase ETH or CELO. This, coupled with lower gas allocations for contracts compared to Ethereum, positions Celo as a cost-effective alternative for users.
Surge in stablecoin transactions
Celo has seen a sharp rise in stablecoin activity, recently surpassing TRON’s transactions. The network’s growing adoption has driven its daily active users to peak levels, with nearly 700,000 active addresses per day. Stablecoins, including USDT, have played a significant role in this growth, with Celo now handling over $1.12 billion in monthly stablecoin transactions.
Despite this, inflows from Ethereum to Celo remain relatively modest at $2.96 million, with only 6% comprising stablecoins. Nonetheless, the Celo network maintains an impressive number of active accounts, with more than 176 million accounts in total and over 820,000 weekly active addresses on average.
CELO token sees market rally
Following Buterin’s endorsement, CELO tokens experienced a price rally, increasing from $0.55 to $0.64 on Binance. Trading volumes surged, indicating growing interest in the token. While CELO has yet to recover fully from the 2022 bear market, the token remains a popular choice for traders on platforms like Upbit and Binance.
CELO’s trading activity is notably concentrated in South Korea, accounting for more than 46% of its activity. Despite this, CELO does not currently trade at a premium in the region.
The Celo network attracts attention due to its low-cost transactions, increasing stablecoin activity, and potential transition to Layer 2. Buterin’s mention of the platform underscores its growing significance in decentralized finance.