cLabs, the team behind the development of the Celo blockchain, is considering a move back to the Ethereum ecosystem. The proposed transition would involve using OP Stack as the framework to evolve into an Ethereum Layer 2 (L2) blockchain. cLabs is responsible for the creation of the Celo blockchain, which currently operates as an independent Ethereum Virtual Machine (EVM)-compatible Layer 1 (L1) blockchain.

The proposal, which is currently under discussion on Celo's governance forum, suggests that the transition to Ethereum L2 would eliminate the need for continuous updates to maintain compatibility with tooling and libraries. This would make it easier for Celo developers to leverage the full range of Ethereum tools and libraries.

Key features of the proposed transition include an off-chain data availability layer managed by Ethereum node operators and secured by staked Ether (ETH). Current validators would also be transformed into decentralized sequencers for L2. The primary differences between L1 and L2 blockchains lie in their purpose, design, and architecture. While L1 networks are designed to be self-sufficient, L2 solutions aim to enhance the performance of L1 blockchains rather than operating independently.

The proposed transition is expected to enhance security while maintaining low gas fees.

The proposal is scheduled for discussion in a governance call on July 21, followed by a "temperature check" the next day.

If the proposal is adopted, end-users would not be affected by the migration, and CELO token holders would retain control over core contracts by voting on governance proposals. CELO tokens would also continue to be used for gas payments.

While the transition appears to be primarily technical, it could have various impacts on the Celo ecosystem. It could potentially enable more liquidity to flow between Celo and other chains but could also incur additional costs for sequencers, such as fees on the data availability layer and gas on Ethereum. It is also unclear whether the rewards for sequencers would align with the current rewards for validators.

Celo has been focusing on enhancing its mobile experience by adding more functionality and specific features. The Celo ecosystem is also targeting developing economies, where there is a high demand for more technological solutions for payments.