Coinbase Launches Base: A Massive Confidence Vote For Ethereum

Coinbase has announced the launch of Base, its new layer-2 network, in a significant development for the ETH blockchain network. Furthermore, the crypto community lauds ETH’s move as a “watershed moment”. Someone received a massive vote of confidence.

The layer-2 network Optimism powers the foundation, and the ETH blockchain secures it. Its main goal is to become a network for developing blockchain-based smart contracts (DApps). According to Coinbase CEO Brian Armstrong, the layer-2 network is currently in the test net phase.

According to Ryan Adams from Bankless Show, Coinbase’s launch of Base signals Ethereum’s strong endorsement. He considers it a “massive vote of confidence”. Furthermore, Adams hopes it will motivate other cryptocurrency firms and financial institutions to use ETH as their preferred settlement layer.

Coinbase, founded in 2012, has partnered with 245,000 companies in 100+ countries. It has about 110M verified users. According to CoinGecko, its cryptocurrency exchange is the second-largest in terms of trading volume, behind Binance.

Consequently, Ryan Adams believes that if 20% of Coinbase users move to Layer 2, it will result in a tenfold increase in crypto-native users in the coming years.

Coinbase Base: Concerns Over SEC Scrutiny

However, not everyone in the crypto community is bullish about the launch of Base. Launching a centralized layer-2 network could attract SEC attention, which worries Gabriel Shapiro of Delphi Labs. He expressed his concerns.

Gabriel Shapiro cautioned that a centralized L2 network engaging in DeFi transactions or trading tokens could lead to new secondary market claims by the SEC. In addition, he noted that tokens could face alleged securities charges, and DeFi transactions might attract regulatory attention.

Shapiro’s concerns come as the SEC has recently increased its enforcement efforts against several stablecoin issuers and staking service providers.

Shapiro expressed his opinion that the launch of Base could be a “bad step” for Coinbase, and it might harm the rest of the ecosystem, especially if the SEC finds any vulnerability to exploit.

However, despite concerns, the launch of Base is considered significant for Ethereum and the wider crypto community. Sebastien Guillemot, the co-founder of blockchain infrastructure firm dcSpark, praised Coinbase for choosing a layer-2 network over an independent sidechain, noting that most crypto transactions and values locked on ETH now reside on layer 2s.

Related Reading | Bitcoin Entering New Regime With Potential For Explosive Growth

Additionally, Ryan Watkins, the co-founder of crypto-focused hedge fund Syncracy Capital, described the news as a “watershed moment” in the Ethereum rollup ecosystem. He thinks that Coinbase has an advantageous position to attract the following 10 million users and institutions to ETH.

The author’s views are for reference only and shall not constitute any investment advice. Therefore, please ensure that you fully understand and assess the products and associated risks before making a purchase.

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