Base Addresses Sequencer Fee Storage Amid Rising Concerns

• Base’s sequencer fee transfers to Coinbase raise transparency concerns.
• Critics argue that Base should reinvest its earnings in Ethereum.

Base, Coinbase’s Ethereum Layer 2 network, has been criticized for transferring its sequencer fee earnings to Coinbase. Critics have said that this act lacks transparency and questions if it fits into the decentralized principles of the Ethereum project.

Controversy surfaced as Santisa, the chief investment officer at Lucidity, pointed out the problem on X. He shared data through Etherscan that indicated Base had been consistently transferring ETH from its sequencer wallet to Coinbase. This most recent transfer had to do with 240 ETH. According to Santisa, Coinbase has received most of the sequencer fees that Base has paid since its inception.

Base’s Fee Transfers to Coinbase Raise Transparency Concerns

Base collects the fees for processing the transaction on Base, which the network usually uses to fund and develop the network. However, one of the notable blockchain developers, Andre Cronje, criticized the approach taken in Base, questioning where those fees cannot be invested in the Ethereum ecosystem. He cited that while Base has already produced $120 million in fees, only $10 million goes into paying for the security and data availability of Ethereum. That means almost all its proceeds do not even benefit Ethereum directly.

While giving any such talks, Base dismissed any rumors that said the network liquidates ETH. Instead, according to Base representative, Surojit Sadarangani, the aim is to spend as much of its funds as possible in ETH. Also, he included that the network makes all its layer one Ethereum transactions and pays Ethereum Layer 1 fees exclusively in ETH and denominates outside grants in ETH. He clarified to the community at large that indeed, Base seeks to increase operations on-chain.

Speculation over ETH sales also stirred concerns. Some users pointed out that although Coinbase collected more than $100 million in fees, the company’s financial statement still only showed a 772 ETH increase in their possession. Sadarangani stated that there were no significant sell-offs in ETH. He highlighted that Coinbase and Base together hold more than 100,000 ETH, making them the largest public company owners of the asset and demonstrating their commitment to supporting the Ethereum ecosystem.

The controversy underlines the tension between centralizing forces and the decentralized ideal of Ethereum. Even though Base is a critical player in Ethereum’s Layer 2, its handling of sequencer fees has raised demands for greater transparency with the ideals of Ethereum.