The Ethereum community appears to have a bullish view of Coinbase’s newly announced layer-2 network, Base, which has been described as a “massive vote of confidence” and a “watershed moment” for the blockchain network.
Secured on Ethereum and powered by the Optimism layer-2 network, Base aims to eventually become a network for building decentralized applications (DApps) on the blockchain. The layer-2 network is currently in the testnet stage, according to Coinbase CEO Brian Armstrong.
0/ Hello world.
Meet Base, the Ethereum L2 that offers a secure, low-cost, and developer-friendly way for anyone, anywhere, to build decentralized applications.
Our goal with Base is to create an online onchain and onboard the next 1B+ users to the cryptoeconomy.https://t.co/Znuu3o3pJw
– Base (@BuildOnBase) February 23, 2023
Members of the crypto community such as Ryan Sean Adams, the host of the Bankless Show, believe that the move “is a massive vote of confidence for Ethereum,” which can set a precedent for cryptocurrency companies and financial institutions to use Ethereum as a settlement layer of choice.
2 / This sets a precedent that other crypto companies will follow, then Fintech, then banks. Eventually the world will use Ethereum as a system of settlement and property rights.
— RYAN SΞAN ADAMS – rsa.eth (@RyanSAdams) February 23, 2023
Coinbase has approximately 110 million verified users and has partnered with 245,000 companies in more than 100 countries since it was founded in 2012. The cryptocurrency exchange is the second largest in terms of trading volume, after Binance according to CoinGecko.
“If Coinbase converts 20% of its 110m verified users to Layer 2 users in the coming years, this will only be 10x the number of crypto’s original users,” Adams added.
Adam also praised Coinbase for opting to open-source Base and believes the new layer-2 network will bring more blockchain space in demand on Ethereum.
Coinbase just announced that they are launching layer 2, named Base, on Ethereum and powered by Optimism.
Ethereum is the world’s settlement layer.
— sassal.eth (@sassal0x) February 23, 2023
Meanwhile, Sebastien Guillemot, co-founder of the blockchain infrastructure company dcSpark, suggested that Coinbase made a wise decision to go with layer 2 as opposed to an independent sidechain, noting that “almost all” cryptocurrency transactions and values locked in Ethereum reside in the layer . 2s today.
Coinbase announces new Base, L2 (based on Optimism L2)
L2s continue to dominate the industry
– Almost all tx in crypto are in L2s
– Almost all TVL in crypto is in L2s
– more devs work on L2s than basically every L1Sidechains (which are not L2s) are a waste of time
— Sebastien Guillemot (@SebastienGllmt) February 23, 2023
Ryan Watkins, co-founder of crypto-focused hedge fund Syncracy Capital, described the news in a February 23 tweet as a “watershed moment” in the Ethereum rollup ecosystem. He added that “there is probably no one better” than Coinbase to sign the next 10 million users and institutions to Ethereum.
Not everyone is bullish though.
Gabriel Shapiro, general counsel of investment firm Delphi Labs, explained in a February 23 Twitter post that exposed the centralized layer-2 network “opening the door” to unwanted SEC scrutiny.
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“A centralized L2 that trades a large number of tokens that can be considered securities, or a large number of DeFi transactions that can be considered regulated (securities swaps etc.), opens the door for the SEC to create new types of secondary market claims,” Shapiro wrote, adding:
“Imo, this will speed up the SEC’s “secondary market” agenda: block securities issues, because they can’t let SEC registrants “get rid of” potential violations & build legal arbitrage strategies under the SEC’s nose.
Shapiro’s concerns come as the SEC recently ramped up its enforcement efforts against several stablecoin issuers and end-to-end staking service providers.
Regarding the launch of Base, the lawyer said it could be a “bad move for them” and cause “additional damage” to other ecosystems, especially if the SEC finds vulnerabilities to disclose:
overall, if indeed Coinbase’s motive is the rule of nature, it is not only a bad move for them, but it can threaten dangerous collateral damage for the rest of the ecosystem.
If the motive is regulated, it should wait until the whole infrastructure can be decentralized.
— _gabrielShapir0 (@lex_node) February 23, 2023