New Coinbase Blockchain Seen as ‘Massive Vote of Confidence’ for Ethereum

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.

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.

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.

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.

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.

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“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: