New Coinbase Blockchain Sees Massive Confidence Vote For Ethereum

The Ethereum community has happily welcomed the newly launched layer-2 network from Coinbase, Base. This layer-2 network aims to host decentralized applications onto its platform and is currently in a testnet phase.

This move has been described as a “massive confidence vote” and “watershed moment” for Ethereum, as the community takes a bullish view of the newly announced blockchain network.

Coinbase Launches Base- Layer 2 Protocol on Ethereum Mainnet

Base is an all-new layer 2 solution from Coinbase that is secured by Ethereum and operates on the network. Layer 2 solutions essentially help Ethereum, or any other blockchain for that matter, to process transactions off the Ethereum mainnet while maintaining the same throughput, security and decentralization

This helps increase the efficiency of the network and makes it more scalable for applications hosted on the blockchain. Base, similarly, offers a developer-friendly platform to host decentralized applications on the network. It is highly cost-effective and doesn’t compromise security while offering increased output.

Base also makes it possible for over a billion users to access blockchain technology while offering ETH as its native gas token to pay for any transactions on the network. Being an open-source platform, Base follows the competence of both Coinbase and Optimism, creating an interpolable chain that offers an openly accessible ecosystem for dApps developers.   

Utilizing the decade of experience Coinbase has in the crypto industry, Base could set a precedent for cryptocurrency companies and financial institutions to prefer Ethereum as their settlement layer of choice.

To celebrate the launch of this new product, Coinbase released an NFT “Base, Introduced”, which was available to be minted by Sunday midnight EST. In addition to this, Coinase also opened a portal for registration for developers who are interested in building on the platform.

Base: A Massive Vote Of Confidence or Invitation to SEC Scrutiny

The announcement of Coinbase’s all-new product Base was taken upon by much confidence in the industry, although it didn’t fail to invite some skepticism.

Ryan Sean Adams, the host of the Bankless Show, considers the move to be “ a massive vote of confidence for Ethereum,” and the “maximally decentralized way for an exchange to launch a chain, no token, no walled garden, all open source.”

Coinbase currently has 110 million users, and if the company manages to convert 20% of its users to layer 2, in the coming years, it will be 10x the total number of crypto native users, Ryan believes. He appreciated Coinbase for keeping Base open source, commenting that this launch will further help bring about more block space demand on Ethereum.

Sebastien Guillemot, too, has appreciated Coinbase going for layer 2 instead of an independent sidechain, bringing to notice that “almost all” cryptocurrency transactions and value locked on Ethereum reside on layer 2s these days. Guillemot is a co-founder of blockchain infrastructure firm dcSpark, which provides products and solutions for crypto projects.

Ryan Watkins, the co-founder of crypto-focused hedge fund Syncracy Capital, has also been quite optimistic about this release. Suggesting it to be a “watershed moment” in the Ethereum rollup ecosystem. In addition to saying that there’s possibly no one better positioned to bring the next 10 million users to Ethereum than Coinbase.

The “vote of confidence,” however, isn’t shared by everyone as Gabriel Shapiro, general counsel of investment firm Delphi Labs, said that the launching of a layer-2 solution “opens the doors” to unwanted scrutiny from the SEC.

He commented that “imo, this will accelerate the SEC’s “secondary market” agenda re: blockchain securities issues, because they can’t let an SEC registrant “get away with” potential violations & build up a legal arbitrage strategy right under the SEC’s nose.”

This comes at a time when the SEC has been quite diligent with its enforcement efforts, as it has targeted multiple stablecoin issuers over the last year. This move was also suggested to cause “collateral damage” to the rest of the ecosystem by Shapiro, as he referred to it as a “bad step for them”, for Coinbase.

Coinbase’s Base Off To A Rough Start

While the debut of Base was anticipated to be a huge success for Coinbase, it didn’t go as smoothly as planned. Just hours after the launch, the network started facing problems as users headed to social media to complain about the functionality of the network.

This move was a critical step for Coinbase to turn its business into the development space following a decline in traffic on the exchange and an underwhelming quarterly earnings report.

“Base’s bridge is off to a rough start. Every single transaction reverting and the bridge contract is unverified so nobody can figure out what’s going on,” a user commented on Twitter. This issue stemmed from glitches caused by an issue with Coinbase’s wallets, which estimated an inaccurate amount of gas fees required to process a transaction.

As a result of this, the network charged much less than required to process transactions and in return, reverted those transactions instead of processing them. However, this meant that the protocol was flooded with requests, which can be seen as a positive thing for the network.

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