The Ethereum community seems to have taken an optimistic view of Coinbase’s newly announced second layer network, Base, which has been described as a “massive vote of confidence” and a “watershed moment” for the blockchain network.
Base, secured on Ethereum and fueled by the optimism of a Layer 2 network, aims to eventually become a network for building decentralized applications (DApps) on the blockchain. The layer-2 network is currently in its testing phase, according to Coinbase CEO Brian Armstrong.
0 / Hello, world.
Meet Base, an Ethereum L2 offering a secure, low-cost, developer-friendly way for anyone, anywhere to build decentralized applications.
Our goal with Base is to get the following onchain users online and on board the 1B+ plane in the crypto economy.
– Base (BuildOnBase) February 23, 2023
Members of the crypto community like Bankless Show host Ryan Shawn Adams believe the move is a “major vote of confidence for Ethereum,” which could set a precedent for cryptocurrency companies and financial institutions to use Ethereum as a settlement layer of choice.
2/ This sets a precedent for other crypto companies to follow, then fintechs, and then banks. Eventually the world will use Ethereum as a settlement and equity system.
– RYAN SΞAN ADAMS – rsa.eth (@RyanSAdams) February 23, 2023
Coinbase has nearly 110 million verified users and has partnered with 245,000 companies in more than 100 countries since its founding in 2012. The cryptocurrency exchange is the second largest by trading volume, after Binance according to CoinGecko.
“If Coinbase converts 20% of its 110 million verified users into Layer 2 users in the coming years, that alone will double the total number of original crypto users,” Adams added.
Adam also praised Coinbase for choosing an open source platform and believes that the new layer-2 network will bring more block space demand on Ethereum.
Coinbase just announced that it is launching Layer 2, called Base, on Ethereum and is backed by Optimism.
Ethereum has become the world’s settlement layer.
sassal.eth (@sassal0x) February 23, 2023
Meanwhile, Sebastien Guillemot, co-founder of blockchain infrastructure firm dcSpark, suggested that Coinbase made a wise decision to go with layer 2 instead of an independent sidechain, noting that “nearly all cryptocurrency transactions” and the value locked on Ethereum are in layer 2s. These days.
Coinbase Announces Base, New L2 (Based on Optimistic L2)
L2s continue to dominate the industry
Almost all ciphertexts are on L2s
Almost all TVL encoded files are on L2s
More developers working on L2s than on all L1s
A side chain (which are not L2s) is a waste of time
– Sebastien Guillemot (@SebastienGllmt) February 23, 2023
Ryan Watkins, co-founder of cryptocurrency-focused hedge fund Syncracy Capital, described the news on February 3rd. Tweet 23 as a “watershed moment” in the Ethereum blockchain ecosystem. He added that “there is probably no one better” than Coinbase to bring the 10 million users and organizations onto Ethereum.
However, not everyone was so optimistic.
Gabriel Shapiro, general counsel for investment firm Delphi Labs, to explain in feb. 23 posted on Twitter that the launch of a Layer 2 centralized network “opens the door” for the SEC to unwanted scrutiny.
Related: Coinbase beats fourth-quarter earnings estimates amid lower transaction volume
“A centralized L2 that trades lots of tokens of which any number could be purported securities, or does lots of arguably regulated DeFi transactions (security swaps etc.), opens the door for the SEC to create New Types of Secondary Markets Shapiro wrote, adding:
“IMO, this will accelerate the SEC’s ‘secondary market’ agenda regarding blockchain securities issues, because they cannot allow the SEC registrar to ‘get away from’ potential violations and build a legal arbitration strategy under the SEC’s nose.”
Shapiro’s concerns come as the Securities and Exchange Commission (SEC) recently increased its enforcement efforts against several recent stablecoin issuers and betting service providers.
Regarding the launch of Base, the attorney opined that it could be “a bad move for them” and cause “collateral damage” to the rest of the ecosystem, particularly in the event the SEC finds a disclosure loophole:
Overall, if Coinbase’s motives are regulatory in nature, not only is it a bad move for them, but it could threaten serious collateral damage to the rest of the ecosystem.
If their motives are regulatory, they should wait until all infrastructure is truly decentralized
-_gabrielShapir0 (lex_node) February 23, 2023