Coinbase announced the launch of its own Layer 2 Ethereum Network called “Base”. Nairametrics understands that the network was built on what is known as the “Optimistic Rollup technology” and was designed to provide faster and cheaper transactions for Ethereum users.
Coinbase also announced a partnership with the Optimism Foundation, a non-profit organization, that writes software codes to scale the Ethereum technology, as the core developer for the new network. Base is also built on the MIT-licensed OP Stack.
The technology being implemented is known as the “Superchain.” It is a layer 2 scaling solution that allows multiple transactions to be processed off-chain and then batched together and submitted to the Ethereum blockchain as a single transaction. This will allow for faster and cheaper transactions while still maintaining the security and decentralization of the underlying blockchain.
More details about Base: The reasoning behind launching Base falls within Coinbase’s mission statement. Coinbase believes on-chain is the next online and will help onboard over a billion users into the cryptocurrency space. In pursuit of this goal, Base will serve as both a home for Coinbase’s on-chain products and an open ecosystem where anyone can build.
- The announcement said: “To bring in billions of users to the cryptoeconomy, dapps need to be easier, cheaper, and safer to interact with. For this to happen, we need to make it even easier for developers to build these dapps.”
- According to the announcement, Base is built with the security and scalability you need to power your decentralized apps. It leverages the underlying security of Ethereum, along with Coinbase’s best practices, to enable you to confidently onramp into Base from Coinbase, Ethereum L1, and other interoperable chains.
- Base is also expected to make it easier to build decentralized applications on the Ethereum blockchain. Per the announcement, Base makes it easy to build decentralized apps with access to Coinbase’s products, users, and tools. Users are expected to enjoy seamless Coinbase product integrations, easy fiat onramps, and powerful acquisition tools, which will enable developers to serve the existing 110 million verified users on Coinbase who all have over $80 billion in assets on the platform.
Base is also expected to reduce Ethereum’s transaction fee charges, especially during times of high activity on the network. The announcement explains that Base will offer a full EVM equivalence at a fraction of the cost and is committed to pushing forward the developer platform.
Developers, for example, will be able to set up gasless transactions for their dapps with easy developer APIs for account abstraction, and securely build multichain applications with easy-to-use bridges.
What the Industry is Saying: The Ethereum community appears to have taken a bullish view of Coinbase’s Base. A prominent member of the crypto community and host of the Bankless Show, Ryan Sean Adams, said the move “is a massive vote of confidence for Ethereum,”.
He also noted that this could set a precedent for cryptocurrency companies and financial institutions to use Ethereum as the settlement layer of choice. He said:
- “They choose Ethereum instead of launching their own L2. This is a massive vote of confidence for Ethereum. This sets precedent that other crypto companies will follow, then Fintechs, then banks. Eventually the world will use Ethereum as a settlement and property rights system.”
Meanwhile, Sebastien Guillemot, co-founder of blockchain infrastructure firm dcSpark, suggested that Coinbase made a wise decision to go with a layer 2 as opposed to an independent sidechain, noting that “almost all” cryptocurrency transactions and value locked on Ethereum resides on layer 2s these days.
But there has also been some criticisms. Gabriel Shapiro, the general counsel of investment firm Delphi Labs, explained in a February 23 Twitter post that launching a centralized layer-2 network “opens the door” to unwanted SEC scrutiny.
What you should know: Coinbase has approximately 110 million verified users and has partnered with 245,000 companies in over 100 countries since it was founded in 2012. Its cryptocurrency exchange is the second largest in terms of trading volume, behind Binance according to CoinGecko. Adams added, “If Coinbase converts 20% of its 110m verified users to Layer 2 users in the coming years, this alone will 10x the total number of crypto native users.”
According to Coinbase CEO Brian Armstrong, he explained that the layer-2 network is currently in its testnet phase.