Celo Users Surge on Rising Stablecoin Adoption

Activity on Celo, the Layer 1 blockchain transitioning to become an Ethereum Layer 2, is surging, driven by the growing use of stablecoins.

The network hit a million monthly active addresses in September, representing a 23% gain from August's 925,000 users, according to Artemis data.

Celo’s growth is tied to the use of stablecoins, particularly Celo USD (cUSD), which accounts for 43% of the stablecoin market on the network. Tether (USDT) makes up 30%, while USD Coin (USDC) holds 27% market share.

The total supply of stablecoins on Celo surged in 2024, rising to $298 million from $45.3 million at the start of the year.

In February, Circle launched USDC on Celo, which now has a $41.3 million supply. Tether (USDT) issued $470 million on Celo, though $281 million is locked in the treasury, leaving about $213 million in circulation.

Celo is a blockchain platform focused on making crypto payments accessible via smartphones. Its mobile-first approach allows users to pay with different cryptocurrencies. The platform launched its mainnet in 2020 after raising $36.5 million in two private funding rounds in June 2018. In May 2022, a public token sale on CoinList added another $10 million to its funding.

Surge in Transactions

Transactions on the Celo network are soaring, too.

In September, the network recorded a 219% increase to 34.5 million transactions from 10.8 million in January, per data from Artemis.

Although many transactions involve small, dust-sized amounts of cUSD, transfer sizes across all categories have been growing.

Smaller transactions in the 1cUSD to 10 cUSD increased by 300% from March to September, while medium-sized transfers between 10 cUSD and 100 cUSD recorded an even larger jump of 400% in that time frame, according to Artemis data. Larger transfers in the 100 cUSD to 1,000 cUSD range surged by 567%, and those above 1,000 cUSD skyrocketed by 900%.

Stablecoin transfer volumes – the total value of transactions using stablecoins on the Celo network – also soared.

In September, stablecoin transfer volume reached $1.5 billion, surpassing August and July's $1.1 billion, driven by cUSD, which forms the bulk of Celo’s transactions.

Apps like Minipay and Valora have played a significant role in boosting Celo’s stablecoin usage, especially in Africa. Minipay, a stablecoin wallet launched by web browser Opera, gathered over one million wallets within five months of its launch in 2023 and reached three million by July 2024.

Despite the rising network activity, Celo's total value locked (TVL) is just $128 million, representing an 88% drop from its all-time high of $1.16 billion reached in October 2021, according to data from DeFiLlama.

Spotlight on Celo

Celo’s surge in activity caught the attention of Ethereum co-founder Vitalik Buterin, who took to X on Sept. 25 to praise Celo for surpassing Tron in daily active addresses for stablecoins.

"This is amazing to see. Improving worldwide access to basic payments and finance has always been a key way that Ethereum can be good for the world, and it’s great to see Celo getting traction,” Buterin tweeted.

Celo is transitioning from a Layer 1 blockchain to an Ethereum Layer 2, a move proposed by Celo core developer cLabs in July 2023. This transition is to integrate Celo's with Ethereum’s ecosystem, bringing faster transactions and lower fee costs.

Initially, Celo was designed to be compatible with the Ethereum Virtual Machine (EVM), allowing Ethereum smart contracts to run on its network. However, when it came to implementing the EIP-1559 upgrade — a mechanism that burns a portion of transaction fees — Celo took a different approach. This variation in implementation caused higher transaction costs on Celo's network, making it more expensive to maintain compatibility with Ethereum.

In April, Marek Olszewski, cLabs Chief Technology Officer (CTO) said that the cost of staying compatible with Ethereum ended up being “quite great.”

Celo initially proposed using Optimism's OP Stack but explored alternatives from Polygon Labs, Offchain Labs, and Matter Labs. After nine months of review, Celo finalized its decision in April to stick with the OP Stack. The network is currently running two testnets, with plans for a mainnet launch in November.