Celo Blockchain Logs Notable Activity Spike, Transitions to Ethereum Layer 2 Amid DeFi Restructuring

Celo, a layer 1 blockchain known for supporting decentralized applications (dapps), has recently experienced a notable increase in activity.

Celo, a layer 1 blockchain network, has recently experienced a notable surge in activity, driven largely by decentralized applications (dapps) on the Celo blockchain. According to data from Token Terminal, daily transactions on the Celo network surpassed 1 million for the first time in 2024. This marks a significant increase compared to the network’s average daily transaction volume earlier this year.

Furthermore, the number of daily active users on the Celo network also reached a peak earlier in July, reaching over 716,000. While June marked the highest number of active users so far, July is on track to surpass this record, based on data from Celo’s official explorer.

Celo’s focus as a layer 1 blockchain network is on mobile-first dapps and smart contracts, providing various software development kits (SDKs) and tools geared towards financial applications.

Historical Performance and DeFi Activity

Celo was notably active in decentralized finance (DeFi) during the 2021 boom. However, since then, it has seen a significant decline in traction. The network’s total value locked (TVL) has dropped sharply from approximately $1 billion in October 2021 to about $100 million at present.

Despite this decline, some multi-chain dapps continue to be active on the network, suggesting that while Celo’s native ecosystem may be weaker compared to other established blockchains, it still retains some level of utility and engagement.

The most prominent DeFi applications on Celo include Mento, Uniswap, and Curve DEX. These apps remain active, highlighting the network’s continued relevance in the DeFi space, albeit on a smaller scale than during its peak.

Transition to Ethereum Layer 2: A Strategic Move

In a strategic move to bolster its presence in DeFi, Celo is transitioning from its current layer 1 structure to an Ethereum layer 2 network. On July 7, Celo launched Dango, its native scaling solution for Ethereum, which is currently in the testnet phase. This new layer 2 network is set to become Celo’s flagship network, reflecting a significant shift in the network’s strategy.

The Celo community has voted to gradually transition from the layer 1 format to a more efficient Ethereum layer 2 network. This transition aims to place Celo in direct competition with other established layer 2 solutions like Base, Optimism, Arbitrum, and Blast. By integrating more closely with Ethereum, Celo seeks to leverage the larger ecosystem’s advantages, enhancing its scalability and interoperability.