Cryptocurrency exchange Coinbase has launched ‘Base’, a Layer-2 scaling network that offers a “secure, low-cost and developer-friendly way” for users to build decentralized applications (DApps) on the Ethereum network. The company sees its latest blockchain ecosystem as a gateway for users to access the broader crypto economy in a truly trustless manner.
Coinbase, which is the world’s second-largest crypto exchange by trading volume, understands the importance of decentralization and acknowledges that a single entity cannot accomplish the goals of the ever-growing crypto sector. In the beginning, the L2 network will be controlled by Coinbase, but further down the roadmap, Base will be fully decentralized.
Coinbase And OP Labs Working Together
Coinbase partnered with Layer-2 blockchain Optimism (OP) – a scaling solution that enables low-cost, fast, and efficient transactions on Ethereum – to build Base on the MIT-licensed OP Stack.
The open-source, decentralized, and permissionless blockchain will serve as the home for Coinbase’s on-chain products, and a platform for users to build Ethereum-based applications and scaling networks. The base will be powered by the underlying security of Ethereum, allowing users to on-ramp from other interoperable networks like Ethereum and Coinbase.
When building DApps on Base, developers can seamlessly access Coinbase’s products, users, and tools. The applications will have the potential to serve more than 110 million Coinbase users across the world and access over $80 billion worth of crypto assets in the Coinbase ecosystem.
Coinbase and OP Labs, core developers of Optimism, began working with Ethereum Improvement Proposal (EIP) 4844 for Base in October 2022. The protocol aims to reduce transaction costs on Layer-2 networks by 10-100 times, making crypto services more affordable for everyday users.
Coinbase has also been working with Ethereum core developers over the past year to implement EIP 4844 in the ‘Surge’ hard fork upgrade for Ethereum, which is scheduled for summer 2023.
In order to achieve interoperability and composability with other Layer-2 networks, Optimism Collective, the decentralized autonomous organization (DAO) governing Optimism, will deploy Base on the OP Stack to be part of the Superchain – an L2 agnostic network envisioned by Optimism.
With the integration, developers can simply design and build their DApps on Base and then deploy them across blockchain networks supported by the Superchain. The base is the second L2 to be deployed on OP Stack after the Optimism Mainnet.
In the beginning, both Base and Optimism Mainnet will operate as independent networks on the Superchain by offering similar decentralized finance (DeFi) services like token lending and swaps. In the future, however, the networks will be more flexible, giving developers the freedom to deploy scaling solutions that fit their specific purpose in either ecosystem.
As part of an effort to support the Superchain and its further development, Coinbase will provide a percentage of the fees earned through transactions on Base to the Optimism Collective. At launch, Base will charge transaction fees in the $0.10 – $0.15 range, which is comparable to that of Optimism and Arbitrum – another L2 scaling solution for Ethereum. However, there are plans to get the prices down to the $0.01 level over the next year.
This year, Coinbase and Optimism will work on laying a solid foundation to attain decentralization and trustlessness for Base and Optimism through a Stage 0 to Stage 1 roll-up progress. This will begin with the launch of fault provers for the OP Stack that will secure both Base and Optimism with the help of validators that will identify and rectify faults within the protocol.
OP Stack will launch a decentralized upgradability feature for smart contracts on Base and Optimism Mainnet that will be overseen by the first-ever security council with a quorum not controlled by a centralized authority. 2023 will also see the launch of an initial version of the Superchain that can process transactions for any OP Stack rollup, including Base and Optimism Mainnet.
With the Stage 2 rollups that are scheduled for 2024, Base and Optimism Mainnet will achieve decentralization and security levels that are on par with Ethereum.
Coinbase plans to integrate the Base chain across its various services such as the Coinbase Exchange, Coinbase Wallet, Coinbase NFT marketplace, and other developer products. The company is in talks with core developers of Polygon (MATIC), Solana (SOL), and Avalanche (AVAX) to expand the blockchain beyond the Ethereum ecosystem.
Coinbase Ventures, the venture capital arm of the crypto firm, plans to launch the Base ecosystem fund that will make pre-seed investments in projects that will be built on the Base chain.
Coinbase also unveiled an NFT collection called “BASEd and Optimistic” honouring the collaboration between Base and Optimistic. The digital collectables are available to mint for free to subscribers of Base’s Mirror newsletter until Monday, and so far 43,202 “BASEd and Optimistic” NFTs have been minted. To mint, users will need ETH on the Optimism network in their Coinbase wallets.
The Base is currently live in its test net phase, and the company expects the mainnet to be launched in the second half of this year. With the Base chain, Coinbase aims “to make on-chain the next online” by onboarding 1 billion-plus users into the crypto economy.
At the time of writing, ETH is trading at $1,650 – down by 0.8% in the last 24 hours. Meanwhile, OP is trading at $3.8 – up by a whopping 11% since Coinbase announced the launch of the Base testnet.