Dear Celo Community,
Following many open and collaborative discussions with validator operators during biweekly validator community calls, the Celo Layer 2 network will initially launch with a centralized sequencer with decentralized sequencing coming in a future release. This decision reflects a pragmatic approach to launch as an L2 network sooner than would be otherwise possible with a decentralized sequencer, and ensures a smooth and high-performing launch. Decentralizing sequencing remains a key priority on the Celo roadmap, with research and development already underway. The phased approach allows the community to focus on delivering immediate network efficiency while dedicating resources to developing and implementing a decentralized sequencer post-launch.
In this transitional phase, validators continue to remain essential to the ecosystem. This proposal outlines how validators will take on the interim role of community RPC providers, aligning incentives to ensure their continued engagement and positioning them for critical responsibilities in the future decentralized sequencing model.
Background
The Celo validator network has been pivotal in ensuring network security and reliability. With the shift to Celo L2, security will be primarily derived from Ethereum, reducing the immediate requirement for validators to perform the same role as before. Over time, validators will take on a renewed role in providing economic security and participating in decentralized sequencing.
This interim proposal keeps validators actively involved by leveraging their proven operational expertise as community RPC providers, a role that ensures their contributions remain critical to the network’s success while preparing them for decentralized sequencing.
Proposal
Validators as Community RPC Providers
Under the new L2 architecture, validators will transition to operating community RPC nodes. These nodes provide essential infrastructure, enabling reliable access to the blockchain and supporting smooth network operations. This role ensures validators remain engaged while the decentralized sequencer model is developed and implemented. Additionally, by keeping current staking rewards and the election protocol that elects these RPC providers, this will ensure that stakers remain engaged.
Decentralized Sequencing Roadmap
Decentralized sequencing is a key priority for Celo’s L2 roadmap. While centralized sequencing will support the initial launch, decentralization work is already underway and will accelerate post-launch.
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Development of Decentralized Sequencing: cLabs and the broader community will prioritize the creation of a decentralized sequencer, potentially collaborating with shared sequencers, such as Espresso, within the Ethereum ecosystem or building a tailored solution for Celo.
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Validator Participation: Validators will play a central role in decentralized sequencing, earning rewards for their contributions and leveraging their operational expertise.
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Election Process Continuity: The current staking and election mechanisms will continue, ensuring validators are selected based on community preferences and their operational performance.
Performance Monitoring and Incentives
To ensure high-quality service delivery, a performance monitoring system will track uptime and reliability of community RPC nodes:
- A health check service, managed on-chain by a multisig (with validator representatives), will evaluate performance.
- Validators who meet performance standards will receive rewards in cUSD as an incentive for maintaining reliable infrastructure.
We will be preparing a separate proposal for the formation and governance of this health check committee, outlining its responsibilities and composition. Stay tuned for more details and opportunities to contribute to this important initiative.
Cost Adjustments and Operational Benefits
Operating community RPC nodes requires significantly lower machine specifications than validator nodes, resulting in reduced costs for validators. Additionally, proxy nodes previously needed for validator operations may no longer be necessary, further lowering expenses.
Future Roles for Validators
As the decentralized sequencer model is developed, validators will transition to sequencing roles. The community will also explore additional opportunities for validators to support network operations, especially as Celo evolves to enable Layer 3 (L3) applications.
Rewards
To align incentives and ensure active validator engagement during this transitional period, rewards for operating a community RPC node may be adjusted pending governance approval. These adjustments are part of a broader tokenomics update, which include changes to staking rewards and inflation metrics. For more details, please refer to the separate “The Great Celo Halvening - Proposed Tokenomics in the Era of Celo L2” proposal.
In that proposal, each elected RPC provider would receive 30K cUSD annually to ensure reliable operation and high performance. This reward structure would be revisited upon the implementation of decentralized sequencing.
Closing
This proposal ensures a smooth transition for validators during the interim period of centralized sequencing, while paving the way for their active involvement in a decentralized future. By maintaining strong incentives and aligning validators’ roles with the network’s evolving needs, the Celo community can secure its long-term success.
We welcome feedback from the community as we refine this plan and work together to achieve a robust and decentralized Celo L2 network.
– The cLabs Team