Decentralized finance technology projects continue to dominate news headlines related to the cryptocurrency markets, and the latest development in this regard is known as Celo, a platform that allows smartphone users to conduct certain blockchain transactions.
Similar to other DeFi projects, Celo is a side chain ecosystem that supports ERC-20 token transactions. The DeFi world is focusing on these tokens, which are issued and mined on the Ethereum network, because the parent blockchain has been running into issues of slow settlements and higher fees. Celo is currently a Layer-2 project, but an upcoming fork will make it a Layer-1 instance, which means that it will be able to handle transactions on other networks such as Solana.
As can be expected, news about the hard fork, which Celo developers are calling "Donut," have proliferated on Twitter, the premier social network for cryptocurrency news. This milestone will be completed in the near future, which explains why the native Celo token has gained more than 50% in value over the last couple of weeks. Easy mobile access to ETH network tools is something to be excited about, and this why the Celo token is enjoying healthy trading volumes. Needless to day, digital currency traders who rely on technical analysis are warning about the high potential of a market pullback shortly after the Donut hard fork goes live.
This is the second time in the last few months that a DeFi project is bringing side chain technology to the cryptocurrency world. DeFi protocols are getting the attention of banking executives who are concerned about a future when digital currency tokens will be preferred by large segments of the consumer population.
While side chain solutions are more efficient than traditional solutions, they don't offer the same level of anonymity for users and it may be difficult to ensure full confidentiality. Moreover, when users want to conduct digital transactions at home, they still need access to a computer with a bank account. DeFi gives users more control over transaction volume than traditional side chains. DeFi blockchain technology gives you immediate convenience, but these projects need to scale more gradually.