The Ethereum community seems to be supportive of Coinbase’s recently revealed layer-2 network, Base, which has been called a “watershed moment” and a “huge confidence vote” for the blockchain network.
Base, a layer-2 network driven by Optimism and secured on Ethereum, seeks to eventually develop into a network for creating decentralized applications (DApps) on the blockchain. According to Brian Armstrong, CEO of Coinbase, the layer-2 network is now in its testnet phase.
The move, in the opinion of some members of the cryptocurrency community, is “a massive vote of confidence for Ethereum,” according to Ryan Sean Adams, host of the Bankless Show. This could set a precedent for cryptocurrency businesses and financial institutions to use Ethereum as their preferred settlement layer.
Since its founding in 2012, Coinbase has collaborated with 245,000 businesses in more than 100 countries and has around 110 million verified users. According to CoinGecko, its cryptocurrency exchange has the second-largest trading volume behind Binance.
Adams continued, “This alone will 10x the total number of crypto native users if Coinbase converts 20% of its 110m verified users to Layer 2 users in the coming years.”
Adam applauded Coinbase for choosing to open-source Base and thinks the layer-2 network will increase Ethereum’s need for block space.
Coinbase chose a layer 2 rather than a standalone sidechain, according to Sebastien Guillemot, co-founder of the blockchain infrastructure company dcSpark, who also noted that layer 2s now house “virtually all” bitcoin transactions and value locked on Ethereum.
In a tweet on February 23, Ryan Watkins, co-founder of the cryptocurrency-focused hedge fund Syncracy Capital, called the announcement a “watershed moment” for the Ethereum rollup ecosystem. In order to bring the next 10 million consumers and institutions to Ethereum, he continued, “certainly no one better” is in a position than Coinbase.
Yet, not everyone was optimistic. Launching a centralized layer-2 network “opens the door” to unwelcome SEC inspection, argued Gabriel Shapiro, general counsel of investment firm Delphi Laboratories, in a post on Twitter on February 23.
“A centralized L2 that trades lots of tokens, any number of which could be alleged securities, or does lots of DeFi transactions that arguably might allege to be regulated (securities swaps, etc.), opens the door to the SEC making new kinds of secondary market claims,” wrote Shapiro. He went on to say: “imo, this will accelerate the SEC’s “secondary market” agenda re: blockchain securities issues because they can’t let an SEC register
The SEC has lately increased its enforcement efforts against a number of stablecoin issuers and staking service providers, which is why Shapiro is concerned.