Coinbase, the second-largest crypto exchange by trading volume, is diving into the blockchain world in a move that some market players are excited about.
On Thursday, the exchange launched Base, an Ethereum-focused layer-2 (L2) blockchain, in an effort to enter the decentralized ecosystem through its own chain and expand further into the developer space, Jesse Pollak, lead for Base and head of protocols at Coinbase, previously told TechCrunch.
Base’s L2 is a “secure, low-cost, developer-friendly” chain that aims to help builders create dApps on-chain, the company stated. A number of crypto businesses, platforms, marketplaces and infrastructure firms have committed to building on Base, a Coinbase spokesperson told TechCrunch.
Those that plan to be involved include Blockdaemon, Chainlink, Etherscan, QuickNode, Aave, Animoca Brands, Dune, Nansen, Magic Eden, Pyth, Rainbow Wallet, Ribbon Finance, The Graph, Wormhole and Gelato, to name a handful.
“The launch of Base reinforces the importance of L2s in growing the blockchain ecosystem,” said Dmitry Shklovsky, co-founder of QuickNode, which is a partner and node provider for Base. “More onramps and more equitable, developer-friendly L2s are key health indicators that we are moving in the right direction.”
L2 blockchains build on top of layer-1 (L1) blockchains like Ethereum, Solana and Avalanche in an effort to reduce bottlenecks, constraints and other network-clogging effects. Instead of putting every transaction on an L1 chain, L2s bundle transactions so tasks can be delivered in a more efficient manner.
L1s like Ethereum are secure but impractical for high-throughput volumes due to prohibitively expensive gas, or transaction, fees, spokespeople from The Graph Foundation and Edge & Node said in an email to TechCrunch. “L2s make the blockchain space more accessible by a broader range of both devs and users, allowing cheaper, faster transactions that still take advantage of the security of L1s like Ethereum.”
L2s are essential for accessibility and scalability in the space, Shklovsky said. “L1s typically prioritize security and decentralization over scalability. L2s reduce the workload on the main chain, making the network faster and more user-friendly, allowing chains to scale quickly without compromising decentralization or security.”
Growing the L2 space
Base is built on the MIT-licensed OP Stack in collaboration with the layer-2 blockchain Optimism, which is also focused on the Ethereum blockchain. “Optimism is not a competitor [to Base], but rather a collaborator,” Shklovsky said.
The Optimism stack is open source and relied upon by many in the web3 space, The Graph and Edge & Node spokespeople said. “This demonstrates the positive-sum and collaborative spirit of web3, in contrast to the competitive landscape that has become the norm in web2. When developers build in the open, everyone benefits without having to reinvent the wheel from scratch every time a new technology is created.”