Coinbase recently announced the primetime launch of its new Ethereum Layer-2 network, called Base. According to the exchange, Base will enable secure, low-cost transactions within a developer-friendly environment for building Ethereum-compatible decentralized applications.
Base provides an easy-to-navigate bridge to onboard Coinbase’s considerable user base into the wider Web3 economy. Its launch has attracted a lot of excitement amid speculation it could encourage millions of new users into the decentralized web ecosystem by making it easy for those users to start exploring what it has to offer.
Coinbase says Base provides users with an easy way to access other L1 blockchains, including the Solana network. Base is highly interoperable with many kinds of L1 networks and offers simple on- and off-ramps from crypto to fiat and vice versa thanks to its close association with the exchange.
Following Ramp Network’s integration with Base, Zé Atalaya, Geo Expansion & Token/Chain Integration Manager shared in an interview, he explained that Base’s launch is a strategic move by Coinbase that aims to diversify its product portfolio and ensure it retains its user base of more than 110 million crypto holders amid a recent trend that has seen more people move to decentralized exchanges.
“This initiative is about transitioning those users on-chain, thereby advancing the decentralization of Coinbase’s services,” Atalaya said. “It’s a strategic move aligned with a trend that has seen crypto users shift away from pure, centralized exchanges. But this transition is not going to occur instantly, but rather executed over a gradual timeline.”
Riding The Layer-2 Wave
In addition, the launch of Base enables Coinbase to partake in a second notable trend that has seen more dApps shift to L2 networks for scalability and efficiency reasons, said Jagdeep Sidhu, co-founder and CEO of SYS Labs. “By launching Base, an Ethereum Layer-2 (L2) solution, Coinbase aims to act as both an insurer and custodian, thereby enhancing security and trust within its ecosystem,” he explained.
Some believe that Base will help to accelerate the L2 shift. Ethereum’s scalability struggles have led to huge growth for L2 networks that provide a way for developers to build Ethereum-compatible dApps and services that don’t rely on the heavily-clogged main network. They enable faster transactions for users with substantially lower fees, making things such as DeFi, NFTs and GameFi much more accessible.
Nexo Co-founder Antoni Trenchev said in a post on X that Base will bring fresh momentum to the layered approach for building dApps. He explained that Base uses the open-source Optimism stack to deliver cost-effective Ethereum security and scalability to rival alternatives like Arbitrum or ZKSync.
The value of these networks is likely to skyrocket when the next crypto bullrun arrives, Trenchev believes: “Last bull run it was the L1s that stole the spotlight, but this time we might see the bulls have their way in the L2 arena,” he said.
But Do We Need Another L2?
With so many competing L2s already available, including established networks like Polygon, Arbitrum, Loopring, Immutable X and others, it’s reasonable to ask if the industry really needs yet another L2.
However, the trend is accelerating so rapidly that Base is likely to appeal to many users. According to Sidhu, there is plenty of room for Base to make its impact felt, particularly with its association with Coinbase. He pointed out that L2s are still a relatively new concept and so there is still lots of room for expansion.
Sidhu said the crypto industry can only benefit from a greater diversity of L2s “The current landscape is filled with execution models that are often misplaced as L1,” he said. “There is substantial room for an explosion of L2 solutions, and it’s conceivable that many hundreds will exist. This diversity fosters innovation and caters to various needs and preferences within the decentralized ecosystem.”
A Fast-Growing Ecosystem
Despite only launching recently, Base is already making its presence felt, with not one, but two decentralized exchange (DEX) platforms up and running in the shape of Uniswap and Maverick Protocol, providing users with a way to provide liquidity and trade tokens cheaply. Beam has launched its crypto payments app on Base, Masa Finance enables users to register domain names on the network, and Aragon has announced a low-code tool for creating decentralized autonomous organizations (DAOs) on Base.
These are just a few of the dApps already up and running on Base, and they have helped to attract both users and liquidity to the network in droves.
Ramp’s Atalaya said he was not at all surprised by the rapid pace of expansion on Base, because it combines a user-friendly technology framework with a huge captive audience for early movers. One of the key advantages of Base is that, because Coinbase has such a large user base, developers can focus more on innovation and less on their marketing endeavors.
“This presents a compelling proposition for developers,” Atalaya pointed out. “Base uniquely offers developers the opportunity to operate within a robust technological framework while gaining access to a huge user base right from its inception.”
Sidhu adds that Base’s close association with Coinbase ensures better visibility and, potentially, easier compliance, which may make dApps more appealing to institutional investors. He also cited Base’s novel approach to modular scaling.
“By demonstrating that scalable solutions are readily available, Base educates regular users and young developers about the possibilities within the decentralized space,” Singh said. “It guides them on where to build without worrying about gas optimizations, which often lead to contract exploits. This educational aspect, combined with the backing of a well-known entity like Coinbase, creates a compelling proposition.”
Driving Web3’s Growth
Having already gotten a thriving ecosystem off the ground, Base looks well placed to help grow the Web3 ecosystem. One of the ways it can do this is by providing a simple onramp for existing Web2 brands. Coinbase comes with a trusted reputation, and that will reassure companies that have, until now, been wary of the new, decentralized internet.
Nexo’s Trenchev added that Base can act as a first stepping stone on the way towards global adoption of Web3. One of the things it does is make life easier in terms of onboarding new users. “Gas is denominated in ETH, which is extremely positive for the second-largest cryptocurrency,” he said.
For Atalaya, the most promising thing about Base is the size of its potential user base. If Coinbase can onboard a significant chunk of its 110 million users to Base, they will become participants instead of investors, and that will have a substantial impact on Web3’s growth.
“These users are likely to delve deeper into the Web3 realm once onboarded, and that will catalyze broader adoption,” Atalaya said.
Sidhu agrees that speculation over Base’s positive impact on Web3 is justified, noting that Coinbase has publicly stated it aims to onboard billions of people into the crypto economy. He said Base is the perfect vehicle to achieve this, with its secure, low-cost and developer-friendly environment. “Its commitment to being a bridge rather than an island, and its focus on interoperability, positions Base as a key player in the evolving Web3 landscape,” he said.