Coinbase defends why it is not supporting Celo’s migration into an Ethereum L2 network

Crypto exchange Coinbase has announced that it will delist and stop supporting Celo layer-1 blockchain token CGLD by January 13, 2025. This move is in response to Celo’s planned migration into a layer-2 network.

According to Coinbase Assets’ announcement, the migration will not be supported, and customers holding CGLD on Coinbase must withdraw it before it becomes inaccessible. The announcement noted that the Celo Layer-1 network will cease to be functional.

It said:

“Celo L1 network will stop producing blocks and customers will no longer be able to send or receive assets on the Celo L1 network. All funds remaining on Coinbase will become inaccessible, and must be withdrawn before January 13, 2025.”

The exchange further noted that users can move the token to other wallets and exchanges, noting that most wallets list the token as CELO. Thus, users can simply move CGLD to any wallet compatible with CELO. Following the announcement, CELO price fell 5%, dropping to $0.813.

Celo is an L1 blockchain compatible with the Ethereum Virtual Machine (EVM). It recently finalized plans to migrate into L2, which its developer, cLabs, believes will make the network more sustainable.

Crypto community criticizes Coinbase decision

Coinbase decision to halt support for Celo has triggered an avalanche of reaction from the crypto community, with many describing it as antithetical to Coinbase mission. Mento Labs engineering partner Philip Paetz noted that this could demotivate other chains planning to become L2.

He said:

“Sad to see coinbase dropping Celo. Feels at odds with their mission to increase economic freedom in the world, guess that only applies for Base. Also demotivating for other chains thinking about becoming an L2 on Ethereum.”

Marek Olszewski, the CEO of cLabs, also agreed with this view, noting that it is disheartening and seems like a “wrench in Ethereum’s Layer-2 centric scaling roadmap” because other EVM-compatible L1s will now think twice about transitioning to L2 if it means losing Coinbase support.

Others, such as crypto investor Alex Witt, believe Celo should enjoy migration support, particularly since it uses the OP stack, the same technology supporting Coinbase L2 Base. They noted that Coinbase already supports Base, which is part of the OP Superchain, and should be able to implement similar support rails for Celo. As Ethereum L2 bull Patrick McCorry noted, there is no point in joining the Superchain if there will be no migration support.

Community calls on Coinbase to reconsider its stance as Kraken announces support for Celo migration

Meanwhile, Olszewski has proposed a solution: Celo Layer-1 validators can keep the current L1 and rename it to Celo Gold (CGLD) so that Coinbase can continue listing the token, possibly as a memecoin. By doing this, he believes that Coinbase can later support the migrating Layer-2 and list CELO as a token on its exchange.

Milk Road owner Kyle Reidhead also noted that Base, not Coinbase, is part of the OP Superchain. He observed that Coinbase likely did not consider the Superchain in making its decision but expected the exchange to change its position, saying:

“I’m sure it’s just a typical process and they need time to audit / review. No need to get up and arms here everyone – especially no need to FUD the superchain.”

Many other stakeholders seem to share this view, including Daily Gwei founder Anthony Sassano, who believes it is an internal communications issue and hopes Coinbase can reverse its position. EigenLayer founder Sreeram Kannan also shares a similar view, describing it as an internal oversight.

With many in the Ethereum community backing Celo, one of Coinbase major competitors, Kraken has openly declared support for Celo migration. Andrew Koller, the founder of Kraken L2 Ink which is part of the OP Superchain, said the exchange is committed to Ethereum scaling.

He said:

“Kraken and Ink 💜 the superchain and are fully committed to Ethereum scaling and making Kraken work for Celo users. We’ve asked the relevant teams to explore this to see if we can hit everything in time for Jan. 16th – stay tuned!”

Still, some industry experts believe Coinbase decision might be justified. Former a16z crypto executive Nass Eddequiouaq noted that technical, regulatory, and operational considerations come with supporting a new chain. He noted that Coinbase might just be waiting to see how the hard fork plays out before choosing which iteration of the Celo network to support.

Meanwhile, Coinbase has clarified its statement, debunking claims that it does not support other L1 and L2 networks. In a post on X, the exchange stated that it intends to be a bridge to the crypto economy. According to Coinbase, although it does not support Celo technical migration, it will reevaluate CELO L2 and decide whether to list it after it is complete.

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