From all indications, the Ethereum community seems to have taken a bullish view of Coinbase’s newly announced layer-2 network, Base. Members of the community have since described it a “massive confidence vote” and a “watershed moment” for the blockchain network.
Base, which aims to become a platform for constructing decentralized applications (DApps) on the blockchain, is secured on Ethereum and powered by the layer-2 network Optimism. As per Coinbase CEO Brian Armstrong, the layer-2 network is presently in the testnet phase.
0/ 🔵 Hello world.
Meet Base, an Ethereum L2 that offers a secure, low-cost, developer-friendly way for anyone, anywhere, to build decentralized apps.
Our goal with Base is to make onchain the next online and onboard 1B+ users into the cryptoeconomy.https://t.co/Znuu3o3pJw
— Base (@BuildOnBase) February 23, 2023
According to Ryan Sean Adams, who hosts the Bankless Show and a popular member of the crypto community, the recent decision could be seen as a significant endorsement of Ethereum. This move has the potential to establish Ethereum as the preferred settlement layer for both financial institutions and cryptocurrency companies, setting a precedent for the industry.
1/ They choose Ethereum instead of launching their own L2. This is a massive vote of confidence for Ethereum.
— RYAN SΞAN ADAMS – rsa.eth 🏴🦇🔊 (@RyanSAdams) February 23, 2023
Since its establishment in 2012, Coinbase has partnered with about 245,000 companies in more than 100 countries of the world and has amassed around 110 million verified users. According to CoinGecko, its cryptocurrency exchange ranks second in trading volume, following Binance.
“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,” Adams stated. Furthermore, Adams praised Coinbase for its decision to open-source Base, and he anticipates that this new layer-2 network will generate an even greater demand for block space on Ethereum.
Coinbase just announced that they are launching a layer 2, named Base, on Ethereum and powered by Optimism.
Ethereum is becoming the world's settlement layer.
— sassal.eth 🦇🔊 (@sassal0x) February 23, 2023
According to Sebastien Guillemot, who is a co-founder of dcSpark, a blockchain infrastructure company, Coinbase’s decision to opt for a layer 2 network over an independent sidechain was a smart move. He pointed out that the majority of cryptocurrency transactions and value locked on Ethereum now exist on layer 2 networks.
Coinbase announced Base, a new L2 (based on the Optimism L2)
L2s continue to dominate the industry
– Almost all txs in crypto are on L2s
– Almost all TVL in crypto are on L2s
– More devs working on L2s than basically every L1
Sidechains (which aren't L2s) are a waste of time
— Sebastien Guillemot (@SebastienGllmt) February 23, 2023
Also, In a tweet on February 23rd, Ryan Watkins, the co-founder of Syncracy Capital, a hedge fund focused on cryptocurrencies, described the news as a “watershed moment” in the Ethereum rollup ecosystem. He further expressed his belief that Coinbase was the ideal candidate to facilitate the onboarding of the next 10 million users and institutions onto the Ethereum platform.
However, not every popular member of the crypto community considers it bullish. On February 23rd, Gabriel Shapiro, who serves as the general counsel for investment firm Delphi Labs, stated in a tweet that the launch of a centralized layer-2 network could invite unwanted attention from the Securities and Exchange Commission (SEC).
“A centralized L2 that trades lots of tokens any number of which could be alleged securities, or does lots of DeFi transactions that arguably might alleged to be regulated (securities swaps etc), opens the door to the SEC making new kinds of secondary market claims, 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.”
The concerns of Shapiro come as the SEC has recently improved on its enforcement efforts against several stablecoin issuers and staking service providers of late.
The attorney expressed concern about Base’s launch, saying that it might be a “bad step for them” and cause “collateral damage” to the rest of the ecosystem, especially in the event that the SEC finds a vulnerability to expose: