The platform currently does not plan to release any tokens for its L2.
Coinbase announced the introduction of Base, its own Ethereum layer-2 network, on February 23. According to the firm, Base will be the new home for Coinbase’s on-chain products and an open environment for millions of new decentralized apps.
While this information was only recently made public, a testnet for Base has been operational since the beginning of the month, according to Coinbase Senior Director of Engineering Jesse Pollak.
What Does This Mean for Coinbase?
Coinbase is the first publicly traded firm to build a layer-2 blockchain network on top of Ethereum, and it has been listed on the Nasdaq under the ticker COIN since April 2021. COIN closed the day down 1% at $61.18 per share on Wednesday after reaching a high of $67.17 following the company’s Q4 earnings beat.
Layer-2 networks help make transactions faster and cheaper than an underlying blockchain, in this case Ethereum, by processing batches of transactions on a secondary chain and then giving receipts back to the mainnet.
Moreover, according to the platform, the “OP Stack” employed by Optimism will be the foundation for Base. Beginning as highly centralized, Coinbase plans to proceed further with its clear strategy of how the network will decentralize over time.
Yet, it is worth noting that Optimism and Arbitrum first built their networks without using a token. Arbitrum has long been suspected of planning a similar airdrop of its OP governance token to network early adopters.
More About Coinbase:
Base is joining an already crowded and fast-rising group. According to L2Beat, there was more than $6 billion in ETH on layer 2s as of Wednesday evening, a 17% rise from a month ago.
The site monitors 26 Ethereum scaling networks, including Arbitrum One and Optimist. These networks account for 53% and 31% of the L2 market. Nevertheless, unlike those L2, Base will not issue a network token. Tokens are used to pay for gas expenses and to incentivize development on other networks.Furthermore, Base is launching alongside several partners pledged to invest in and promote the ecosystem, including Ethereum block explorer Etherscan, Oracle network Chainlink, and DeFi protocol Aave.