The announcement came at the end of February 2023, and had crypto users and crypto businesses excited but slightly tentative. The aim of Base, what the blockchain is called, is to lower transaction fees and improve speeds across Ethereum and other major blockchains. Digital assets can now be transferred with optimized ease thanks to the reduced costs and speeds.
The blockchain is a layer 2 solution. What is that? We’ll find out.
Table of Contents
- Coinbase Launches Blockchain – Base
What is Coinbase?
Coinbase is a cryptocurrency (crypto) exchange. Crypto users would utilize the platform in order to buy, sell, transfer, and even store crypto with the Coinbase wallet. The company stated that it would be launching its own layer 2 blockchain in order to onboard the next wave of crypto supporters.
Layer 2 Blockchain Solutions Explained
What is a layer 2 blockchain? Unlike a main chain (layer 1), such as Ethereum, layer 2 solutions are built on top of them with the purpose of scaling and increasing efficiency. Coinbase’s launch of Base is such a solution to the Ethereum blockchain.
What Base Brings to the Table
Open Source Concept
Base is a joint effort between Coinbase and Optimism using Optimism’s OP stack, which is a developer toolkit for the Optimism network. The blockchain is completely open source, and Coinbase hopes it will be fully decentralized by 2024.
Compatibility
Although it started out as an answer to Ethereum’s speed and transaction cost issues, Coinbase has made it clear that it plans on integrating other Ethereum layer 2 solutions into its network, such as Arbitrum, and even other layer 1s such as Avalanche.
Natively, the blockchain will be integrated with Coinbase’s exchange, NFT marketplace, wallet and developer products.
The Base blockchain was very aptly named, as Coinbase would like developers to view the blockchain as a “base” using its abilities as a bridge to access products on other chains. Coinbase is looking to become a “gateway to web3” rather than just your average crypto exchange.
Web3 Growth
Still very much confident in the future of cryptocurrency and crypto products, Coinbase wants to encourage web3 development and the growth of decentralized applications and related services.
Base Ecosystem Fund
With the launch of Base also comes the announcement of the Base Ecosystem Fund, which looks to lend support to early projects built on Base. The fund will work with Coinbase Ventures and invest in projects that meet predetermined criteria. The total amount of capital remains undisclosed.
No Native Token
Most blockchain networks will have a native token, but representatives at Coinbase have stated that they have no intention of launching one. This then begs the question of how transaction costs will be paid on the chain. Coinbase answers that all fees will be paid in ETH, Ethereum’s native token.
There are concerns about how Coinbase plans to appeal to users and attract necessary customers if it doesn’t have its own native token. Many chains in the past of committed to offering free tokens. The Base blockchain is still in its infancy even in terms of off-chain solutions, so there is plenty of time for Coinbase to roll out methods of compensation.
Conclusion
Coinbase launching its own layer 2 blockchain was big news in the crypto community. It’s quite an investment for the exchange but a crucial one to become more than just a crypto platform. Base is still in its beginning stages and intends to integrate with many other layer 1 and 2 network options. The future seems bright for Base and other future users looking to get into the crypto industry.
Related Articles:
- What Are Blockchains and the Tech Behind Them?
- The Ethereum Virtual Machine for Beginners
- What Happened to Cryptocurrency Exchange FTX?
Sources:
- https://www.coindesk.com/tech/2023/02/23/coinbase-launches-layer-2-blockchain-base-to-provide-onramp-for-ethereum-solana-and-others/?outputType=amp
- https://cryptobriefing.com/coinbase-launches-its-own-ethereum-layer-2-solution/
- https://techcrunch.com/2023/02/23/coinbase-launches-blockchain-base-to-help-developers-build-dapps-on-chain/amp/
- https://ca.news.yahoo.com/coinbase-rolls-out-new-layer-2-blockchain-base-140026538.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAF4UTg9bjDR38cvwuFx9Q0-iurzBMlxRNg7cQD1nAzaycOhgyNHV7yuEWU5YN3KnQglu7_SrcjbmOtQe8Virin87_Hnf36MBB327lmvMp4qXjhOmNp45LlP_iPWLf_RJxe0BvznJFHg6CQhoy6jnqdFNCNPoXZ0YK5gc5Hzuf4AF
- https://www.forbes.com/sites/stevenehrlich/2023/03/01/coinbase-blockchain-plan-gets-warm-reception-success-hinges-on-converting-crypto-diehards/?sh=646c59451fab
