> ## Documentation Index > Fetch the complete documentation index at: https://docs.celo.org/llms.txt > Use this file to discover all available pages before exploring further. # Celo Protocol > How the Celo protocol works today — an Ethereum Layer 2 on the OP Stack with EigenDA, 1-second blocks, gas paid in stablecoins, and on-chain governance This page is for anyone who wants to understand how Celo works — developers evaluating the chain, operators joining the network, or readers following a protocol-level question. Celo is an **Ethereum Layer 2**: an OP Stack rollup that posts its data to [EigenDA](/operate/specification/eigenda) and settles to Ethereum, run since March 2025, when Celo completed its migration from a standalone Layer 1. What makes it distinct from other L2s is what the protocol itself guarantees: [1-second blocks](/operate/specification/deployments), transaction fees [below a cent](/operate/specification/transaction-fees), gas payable in stablecoins from any ordinary account, and a stablecoin system and identity layer built in at the protocol level. ## How the network is built Celo runs the [OP Stack](https://docs.optimism.io/), the modular rollup framework, with two deliberate substitutions — described in detail in [Celo's L2 architecture](/learn/network/architecture): * **Execution.** A sequencer orders transactions into [1-second blocks](/operate/specification/deployments). Execution is EVM-equivalent: contracts, wallets, and tooling that work on Ethereum work on Celo. The one Celo-specific precompile that survives from the L1 era implements [token duality](/operate/specification/token-duality), which lets CELO behave as both the native token and an ERC-20 without wrapping. * **Data availability.** Instead of posting transaction data to Ethereum as blobs, Celo posts it to [EigenDA](/operate/specification/eigenda); only the data-availability commitments go to Ethereum. This is what keeps fees low and predictable at 1-second block cadence. * **Settlement.** State roots are proposed to Ethereum, where a fault-proof system with a challenge window secures withdrawals. Independent [challengers](/learn/protocol/challengers) can dispute invalid state roots during that window, and a [Security Council](/learn/protocol/security-council) holds the protocol's emergency keys. The full specification of these mechanisms — transaction types, fee rules, finality, upgrade history — lives in the [Specification section](/operate/specification/index). ## Paying for transactions Celo keeps two fee properties that shape everything built on it: * **Fees stay below a cent.** The protocol configures the OP Stack's L1 and operator fee components to zero and relies on EigenDA's low data costs, so a typical transaction costs less than \$0.01 — the mechanics are specified in [Transaction fees](/operate/specification/transaction-fees). * **Gas can be paid in stablecoins.** [Fee abstraction](/build-on-celo/fee-abstraction/overview) is implemented at the node level — not through paymasters or relayers — so any externally owned account can pay gas in USDm, USDC, USDT, or another allowlisted currency using a [CIP-64 transaction](/operate/specification/transaction-types). A user or an AI agent can hold nothing but dollars and still transact. ## Stablecoins Stable value is a protocol-era concern on Celo rather than an afterthought. [Mento](https://www.mento.org/), the stablecoin protocol that began as part of Celo's core contracts, issues USDm, EURm, and a family of [local-currency stablecoins](/build-on-celo/build-with-local-stablecoin), alongside third-party issues like USDC and USDT. Because of fee abstraction, these are not just assets on the chain — they are the currencies the chain itself accepts for gas. ## Staking, epochs, and rewards CELO holders lock their tokens and vote for validator groups, and elections run every epoch — roughly daily — through permissionless smart-contract calls. Since the L2 migration, elected validators no longer produce blocks; they [operate community RPC nodes](/contribute-to-celo/community-rpc-nodes/how-it-works) that serve the network. Voters, groups, and operators earn [epoch rewards](/learn/protocol/epoch-rewards/index), which also fund the [community fund and carbon offsetting](/learn/protocol/epoch-rewards/community-fund). ## Governance Every meaningful parameter of the protocol — from fee currencies to contract upgrades — is controlled by [on-chain governance](/learn/protocol/governance/overview). CELO holders lock tokens to vote on proposals; approved upgrades to the core contracts execute on-chain. The [governable parameters](/learn/protocol/governance/governable-parameters) page lists exactly what governance can change. ## Identity Celo's original mission — payments that work on a phone — left it with an identity layer most chains lack. [SocialConnect](/build-on-celo/build-on-minipay/overview) maps phone numbers to addresses privately through ODIS, which is what lets MiniPay users send stablecoins to a contact instead of a hex string. [Self](/build-on-celo/build-with-self) brings zero-knowledge proofs of personhood, age, and nationality on-chain, and the [ERC-8004 trust registries](/build-on-celo/build-with-ai/8004) extend the same model to AI agents. ## What the protocol is optimized for Put together — sub-cent fees, 1-second blocks, gas in stablecoins, phone-number identity, proof-of-human — the protocol is built for two audiences: **people using mobile-first apps** like MiniPay's 10M+ activated wallets, and **AI agents** that pay, get paid, and prove who stands behind them using [x402, ERC-8004, and the rest of the agent stack](/build-on-celo/build-with-ai/overview). ## Related * [Celo's L2 architecture](/learn/network/architecture) - The OP Stack layout in detail * [Specification](/operate/specification/index) - The normative protocol specification * [Fee abstraction](/build-on-celo/fee-abstraction/overview) - Pay gas in stablecoins * [Governance](/learn/protocol/governance/overview) - How the protocol changes * [Network overview](/learn/network/overview) - Chain IDs, RPCs, explorers This documentation is built and hosted on [Mintlify](https://mintlify.com), a developer documentation platform.