Coinbase, a well-known cryptocurrency exchange, recently found itself in the spotlight after the company’s CEO, Brian Armstrong, ruled out the possibility of issuing a dedicated token for the newly launched layer-2 network named Base. This decision surprised many, especially in light of earlier speculations. In the article, we will examine the implications of this decision for Coinbase and the entire cryptocurrency market.
In the world of cryptocurrencies, where innovation and rapid changes are commonplace, Coinbase, one of the leading digital exchanges, recently caused quite a stir. Brian Armstrong, CEO of Coinbase, in an interview with Decrypt, firmly denied plans to introduce a special token for the layer-2 network, known as Base.
This stance is somewhat surprising, considering the earlier comments of Paul Grewal, Coinbase’s Chief Legal Officer, who suggested that issuing a token “might be feasible in the future”. However, according to Armstrong’s words, the company currently has no plans to create any token for Base.
What does this mean for Base? This network, launched in August, quickly gained popularity, becoming the third largest layer-2 network in terms of total value locked (TVL), reaching about 500 million dollars. In just a few months, Base attracted about a million wallets, indicating its growing role in the cryptocurrency market.
Armstrong emphasized that Coinbase wants Base to be not just a “Coinbase project” but something much broader, collaborating with the entire cryptocurrency community. Base was built on Ethereum’s Optimism stack, which in itself indicates a pursuit of interoperability and integration.
An interesting strategy of Coinbase is to aim for the average transaction on the platform to last less than a second and cost less than a cent. Achieving this requires not only the development of Base but also integration with other layer-2 solutions, such as the Lightning Network for Bitcoin or fast layer-1s, like Solana.
Armstrong compares the transition to layer-2 to the change from dial-up to broadband internet, highlighting its importance for the development of new applications. This is a necessary step to increase efficiency and lower transaction costs on the Coinbase platform.
In the context of the entire cryptocurrency industry, Coinbase’s decision not to issue its own token for the Base network can be interpreted as a strategic move. It’s possible that the company is betting on stability and trust, instead of additional token mechanisms that could introduce more volatility and complications.
On the other hand, more and more of Coinbase’s competitors, such as Kraken or OKX, are considering launching their own layer-2 networks, which may lead to further market fragmentation. Armstrong suggests that the industry should consolidate around one or two layer-2 networks, which could bring greater efficiency and coherence.
Coinbase’s decision not to issue a token for the Base network is an important moment in the development of the cryptocurrency market. It shows a pursuit of stability and interoperability, rather than focusing on creating additional tokens. In the longer term, this may have a significant impact on how users and developers use blockchain networks and layer-2.