The Ethereum community appears to have an optimistic view of Coinbase’s recently announced Layer 2 network, Base, which has been described as a “massive vote of confidence” and a “watershed moment” for the blockchain network.
Secured in 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 its testnet 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 make onchain the next online and integrate over 1 billion users into the crypto economy. https://t.co/Znuu3o3pJw
— Base (@BuildOnBase) February 23, 2023
Members of the crypto community such as Bankless Show host Ryan Sean Adams believe the move “is a huge vote of confidence for Ethereum” that could set a precedent for cryptocurrency companies and financial institutions to use Ethereum as the backend. settlement of choice.
2/ This sets a precedent that other crypto companies will follow, then Fintechs and then banks. Eventually, the world will use Ethereum as a settlement and property rights system.
— RYAN SΞAN ADAMS – rsa.eth (@RyanSAdams) February 23, 2023
Coinbase has approximately 110 million verified users and has partnered with 245,000 companies in over 100 countries since it was founded in 2012. Its cryptocurrency exchange is the second largest in terms of trading volume behind Binance, according to CoinGecko .
“If Coinbase converts 20% of its 110 million verified users into Tier 2 users in the next few years, that alone will be 10x the total number of native crypto users,” added Adams.
Adam also commended Coinbase for opting for open source Base and believes the new layer 2 network will bring even more demand for block space on Ethereum.
Coinbase has just announced that it is launching a layer 2, called Base, on Ethereum and powered by Optimism.
Ethereum is becoming the world’s settlement layer.
— sassal.eth (@sassal0x) February 23, 2023
Meanwhile, Sebastien Guillemot, co-founder of blockchain infrastructure company dcSpark, suggested that Coinbase made a wise decision to use a layer 2 as opposed to an independent sidechain, noting that “nearly all” cryptocurrency transactions and the amount locked on Ethereum reside in layer 2s these days.
Coinbase announced Base, a new L2 (based on Optimism L2)
L2s continue to dominate the industry
– Almost all txs in crypto are in L2s
– Almost all TVL in crypto are in L2s
– More developers working on L2s than basically all L1s
Sidechains (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 as a “watershed moment” in the Ethereum rollup ecosystem, in a Feb. publish before opining that “there was probably nobody better” positioned than Coinbase to onboard the next ten million users and institutions to Ethereum.
Not everyone was optimistic though.
Gabriel Shapiro, general counsel of investment firm Delphi Labs explained in a February 23 Twitter post that the launch of a centralized Layer 2 network “opens the door” to unwanted SEC scrutiny.
Related: Coinbase beats Q4 profit estimates amid slump in transaction volume
“A centralized L2 that trades a lot of tokens, many of which may be purported securities, or does a lot of DeFi transactions that may be allegedly regulated (securities swaps, etc.), opens the door for the SEC to make new types of secondary market claims. ,” explained Shapiro, adding:
“Imo, this will accelerate the SEC’s “secondary market” agenda regarding blockchain securities issues because they can’t let an SEC registrar “get away with” potential violations and build a legal arbitration strategy right underneath from the nose of the SEC.”
Shapiro’s concerns come as the SEC has recently increased its enforcement efforts against various stablecoin issuers and betting service providers in recent times.
Regarding the launch of Base, the lawyer opined that it could be a “bad step for them” and could inflict “collateral damage” on the rest of the ecosystem, particularly in the event that the SEC finds a vulnerability to expose:
overall, if indeed Coinbase’s motives are regulatory in nature, it’s not only a bad step for them, but could threaten dangerous collateral damage to the rest of the ecosystem.
if their motives are regulatory they should have waited until the whole infrastructure could be truly decentralized
— _gabrielShapir0 (@lex_node) February 23, 2023