In a recent interview with Decrypt, Coinbase CEO Brian Armstrong confirmed the company’s decision not to issue a token for its layer-2 network, Base.
Contrary to previous speculations and a statement by Coinbase Chief Legal Officer Paul Grewal, Armstrong emphasized that there are no plans to create a Base network token. This announcement is significant as it reflects Coinbase’s strategic approach towards its layer-2 network development and its interaction with the broader crypto ecosystem.
Base, which launched in August, has shown remarkable growth, becoming the third-largest layer-2 network in terms of total value locked (TVL), boasting around $500 million in TVL and a million interacting wallets since its inception.
Layer-2 networks, built atop existing blockchain systems like Ethereum (ETH), offer faster and cheaper transaction capabilities, addressing scalability issues inherent in base layer networks. The rapid ascension of Base in this competitive landscape is noteworthy and highlights its potential impact on the cryptocurrency market.
Armstrong’s vision for Base extends beyond Coinbase’s proprietary interests. He envisions Base as a community-driven project, interoperable with the wider crypto ecosystem. Base’s foundation on the Optimism (OP) stack on Ethereum is a strategic move to ensure this broad compatibility and community engagement. This approach, coupled with Coinbase’s backing, aims to establish trust and stability in the network.
Moreover, Armstrong has set ambitious performance targets for Coinbase transactions, aiming for an “under one second and one cent” average transaction time. Achieving these objectives will necessitate substantial improvements to Base and broader integration of layer-2 solutions across Coinbase’s platform.
Armstrong elaborates, “That’s not just with Base,” adding, “That’s things like integrating the Lightning Network on Bitcoin, it’s integrating other layer-1s that are very fast, like Solana.” He notes that currently, about 7% of transactions through Coinbase use layer-2, with internal goals set to “get that number way up” as part of a “multi-year effort.”
Armstrong acknowledges the burgeoning interest from other exchanges in developing their layer-2 solutions, like Kraken and OKX, but cautions against a fragmented landscape where each application operates its own layer-2 network. He advocates for consolidation around a few layer-2 networks to optimize efficiency and interoperability in the crypto space.