Coinbase is building its own Ethereum Layer-2 network called 'Base'

Coinbase is building its own Ethereum Layer-2 network called ‘Base’

Coinbase today unveiled Base, its own Ethereum Layer-2 network. The company says Base will be the new home for Coinbase’s on-chain products and, it hopes, an open ecosystem for millions of new decentralized applications.

Although it was only publicly announced today, a testnet for Base has been live since the beginning of the month, said Coinbase Senior Director of Engineering Jesse Pollak. Decrypt.

“It’s a bet that we can help enable the next million apps, which will attract the next billion users. let this happen as soon as possible,” he said. “Our goal is to launch the mainnet in the next few months.”

This makes Coinbase, which has been listed on Nasdaq under the symbol COIN since April 2021, the first publicly traded company to launch a layer 2 blockchain network on top of Ethereum. On Wednesday, COIN ended the trading day at $61.18 per share, down 1% for the day, after trading as high as $67.17 after beating analysts’ forecasts for its fourth-quarter earnings. quarter.

Layer 2 networks help make transactions faster and cheaper than an underlying blockchain, in this case Ethereum, by processing batches of transactions on a separate chain and then sending receipts back to the mainnet. Base will be “a deployment agnostic superchain powered by Optimism,” according to a blog post Coinbase shared with Decrypt before its announcement on Thursday.

Base enters a crowded and rapidly growing cohort. As of Wednesday night, there was over $6 billion worth of ETH on Layer 2, an increase of 17% from a month ago, according to L2 beat.

The website tracks 26 different Ethereum scaling networks, including Arbitrum One and Optimism. These two networks alone represent respectively 53% and 31% of the L2 market shares. But unlike these L2s, Base will not launch a network token. On other networks, tokens help pay gas fees and are used to encourage development.

“We’ve seen a lot of people using tokens to drive activity. But our thesis is that tokens aren’t the only way to drive activity,” Pollak said. “Creating great products is a great way to drive business by making things actually useful.”

It should be noted, however, that Optimism and Arbitrum initially launched their networks without a token either. Optimism has since dropped It is OP governance token for early adopters of its network and Refereeing has long been rumored plan the same.

Base launches with dozens of partners who have committed to integrating and supporting the ecosystem, including oracle network Chainlink, Ethereum block explorer Etherscan, and DeFi protocol Aave.

Coinbase has stated that it intends for Base governance to be fully decentralized, although this will not be the case initially.

“Coinbase will gradually transition to a role where we are a contributor to Base, we provide services and products that are built on Base, and we are not the decision maker for everything in the Base network – this is done through more governance decentralized,” Pollak said.

To that end, Coinbase will join Optimism as lead developer on the open source OP stack. Pollak leads the small Coinbase team dedicated to working on Base.

“Our goal is to keep the core team really lean and address this reality that we can have an outsized impact if we build onchain,” he said.

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