Cryptocurrency exchange giant Coinbase has announced the launch of its new layer-2 network, Base, a platform aimed at building decentralized applications (DApps) on the blockchain.
The network is powered by Optimism and secured on Ethereum, which has been described as a “massive vote of confidence” for the Ethereum network.
Coinbase’s Support for Ethereum
Ryan Sean Adams, Founder of Mythos Capital and writer of the popular DeFi newsletter, Bankless, has hailed Coinbase’s decision to choose Ethereum over launching its own L2 network. Adams believes this move sets a precedent for other crypto companies, fintech, and eventually banks to use Ethereum as a settlement and property rights system.
Benefits of a Decentralized Approach
One of the advantages of using a maximally decentralized approach to launch a chain is that it doesn’t require a token or a walled garden, making it more open-source and consistent with the values of the DeFi movement.
By converting 20% of its 110 million verified users to Layer 2 users in the coming years, Coinbase could alone 10x the total number of crypto native users, which could have a significant impact on the wider crypto industry.
Regulation by Code
The launch of Base is also a response to regulators who have been asking the industry how they will protect retail without their control. Coinbase’s answer is regulation by code, a trustless money system built on transparent, open DeFi protocols. In addition, the launch of Base will supercharge L2 infrastructure, tooling, and development, which will be bullish for Ethereum block space demand.
The current regulatory regime in the U.S. is oppressive to the crypto community. The fact that Coinbase was able to get this through their legal and compliance team in the U.S. is bullish, as it shows that decentralized technologies are gaining traction even in challenging regulatory environments.
The Potential of DeFi
The base is a testament to the power of Ethereum and the potential of DeFi to transform the financial system by providing a more open, transparent, and trustless alternative to traditional finance.
Source: https://coinpedia.org/news/heres-why-coinbases-innovative-new-blockchain-is-turning-head/