The Ethereum community seems to have taken a bullish view of Coinbase newly announced layer 2 network, basewhich has been described as a “massive vote of confidence” and a “watershed moment” for the blockchain network.
Secured on Ethereum and powered by Layer 2 network optimism, Base aims to eventually become the network for building decentralized applications (DApps) on the blockchain. The Layer 2 network is currently in the test network phase, according to to Coinbase CEO Brian Armstrong.
0/ Hello world.
Meet Base, an Ethereum L2 that offers a secure, low-cost, and developer-friendly way for anyone, anywhere to build decentralized applications.
Our goal with Base is to make onchain the next online and onboard 1B+ user into the crypto economy.https://t.co/Znuu3o3pJw
— Base (@BuildOnBase) February 23, 2023
Members of the crypto community, such as Ryan Sean Adams, host of the Bankless Show, believe the move “is a massive vote of confidence for Ethereum” that could set a precedent for cryptocurrency companies and financial institutions. Ethereum as a settlement layer selection.
2/ This sets a precedent that will be followed by other crypto companies, then Fintech, then banks. Ultimately, the world will use Ethereum as a system of settlement and property rights.
— RYAN SΞAN ADAMS – rsa.eth (@RyanSAdams) February 23, 2023
Coinbase has approximately 110 million verified users and has worked with 245,000 companies in over 100 countries since its inception in 2012. Its cryptocurrency exchange is the second largest in terms of trading volume after Binance, according to on CoinGecko.
“If Coinbase converts 20% of its 110 million verified users to Tier 2 users in the coming years, that alone will be 10x more than the total number of native cryptocurrency users,” Adams added.
Adam also praised Coinbase for opting to open-source Base and believes the new Layer 2 network will bring even more demand for Ethereum block space.
Coinbase has just announced that it is launching 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 was wise to use Layer 2 instead of an independent sidechain, noting that “almost all” cryptocurrencies the transaction and value locked on Ethereum lies at layer 2 these days.
Coinbase Announces Base, New L2 (Based on Optimism L2)
L2s continue to dominate the industry
– Almost all TX in crypto are on L2
– Almost all TVLs in crypto are on L2
– There are more developers working on L2 than basically any L1
Sidechains (which are not L2) 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 on Twitter on February 23 as a “landmark moment” in the Ethereum rollup ecosystem. post before opining that “there’s probably nobody better” than Coinbase to onboard another ten million users and institutions to Ethereum.
Not all were bullish, however.
Gabriel Shapiro, general counsel of the investment company Delphi Labs he explained in a Feb. 23 Twitter post that the launch of a centralized Layer 2 network will “open the door” to unwanted SEC scrutiny.
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“A centralized L2 that trades lots of tokens, any number of which could be purported securities, or conducts many DeFi transactions that could likely be purportedly regulated (securities swaps, etc.), opens the door for the SEC to create new types of claims on the secondary market. Shapiro explained, adding:
“Imo, this will accelerate the SEC’s ‘secondary market’ agenda on blockchain securities issues because they can’t let the SEC registrant ‘walk through’ a potential breach and build a legal arbitration strategy right under the SEC’s nose.”
Shapiro’s concerns come as The SEC has recently increased its enforcement efforts recently against several stablecoin issuers and betting service providers.
As for Base’s launch, the lawyer opined that it could be a “bad move” for them and cause “collateral damage” to the rest of the ecosystem, especially if the SEC finds a vulnerability that would reveal:
overall, if Coinbase’s motives are indeed regulatory in nature, this is not only a bad move for them, but could risk dangerous collateral damage to the rest of the ecosystem.
if their motives are regulatory, they should wait until all infrastructure can be truly decentralized
— _gabrielShapir0 (@lex_node) February 23, 2023