This token can benefit from the mega project “Base”.

With more than 110 million users and more than 80 billion US dollars in customer funds, Coinbase is one of the most important players in the crypto market. But despite its enormous size, the exchange does not yet have its own blockchain network, in contrast to crypto exchanges such as Binance or Crypto.com. This is exactly what the crypto giant wants to change with “Base”.

Coinbase: What is Base?

Coinbase Base uses the Optimism stack, a Layer 2 network for specialized blockchains, to create its own blockchain network. For more information on Optimism’s Optimistic Rollup technology, see the following post:

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Unlike BNB Chain & Co., Coinbase does not build its own layer 1 blockchain with Base, but builds its blockchain as L2 directly on the Ethereum ecosystem. Opposite Bankless Coinbase announced that it had decided not to build its own Layer 1 blockchain for fear of foreclosing its chain from Ethereum.

Base is scheduled to go live on mainnet in about two months. After the start, users can use the network with Coinbase, MetaMask, the Coinbase Browser Wallet or other Web3 wallets, among others.

What are Coinbase’s goals with Base?

Coinbase no longer wants to be solely a crypto exchange offering crypto services to its customers offers. Rather, the company wants to expand its service and give its customers direct access to a large number of decentralized applications (dApps).

According to its own statements, the crypto giant wants create a trustworthy frontendthat offers users direct and secure access to decentralized applications.

Coinbase as a direct gateway to the on-chain world

The exchange wants to become a gateway that connects its users directly to dApps on its own Ethereum Layer 2 network.

For most customers of the exchange, a simple and relatively risk-free solution for operating dApps is desirable. According to a block post from the exchange, the company aims to offer a simple out-of-the-box user experience that eliminates user fears and enables a new experience when using dApps.

That’s why Coinbase relies on Optimism (OP)

After Arbitrum, Optimism is the biggest on the Rollup Technology-based ETH-L2 project on the crypto market. This is one of the reasons why the project should have attracted the attention of the crypto exchange. Moreover, Coinbase and Optimism have been working together for over a year several Ethereum upgradesdesigned to improve L2 networks.

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Another advantage of a rollup technology-based L2 like Optimism is that Base, as a so-called OP chain, benefits from the security of the Ethereum mainchain.

Coinbase therefore has to not yourself like Polygon’s sidechain or BNB Chain’s Layer 1 network, bear the cost of securing its own network. This allows Base to save some capital that would otherwise have to be invested in securing its network.

Another advantage Base has as an OP Chain is that it is able to interact with other OP Chains. Tokens can therefore flow freely between the different projects building their chains using the OP Stack.

Will Base get its own token?

The crypto exchange has explicitly announced that Base will not get its own token and transactions on the network will have to be paid for in ETH.

In addition, part of the transaction fees that users pay on Base (probably 20 percent) will be used to promote the development of the Optimism ecosystem.

Bullish for the OP token

Optimism thus seems to be the clear winner of Coinbase’s project. The Ethereum-Layer-2 not only acquires the support of one of the largest players in the crypto space, but benefits also directly from the future growth of the project.

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At the same time, Coinbase’s choice of Optimism confirms the quality of the OP Stack. It could therefore become more likely that further projects migrate to Optimism. This is one of the reasons why Optimism could become one of the most important ETH-L2 networks, which, like the CosmosHub (ATOM), is at the center of a network on which a large number of blockchain projects are built.

Conclusion

In conclusion, Base could have the potential to become the backbone of a network secured from a regulatory perspective. The exciting thing is that Base could possibly become one of the first blockchain networks on which institutional investors can also let off steam, as it meets certain regulatory standards.

However, there are also risks, ranging from bugs in the OP stack to regulatory consequences that could deny Base’s openness, thereby significantly altering the project’s goals. Furthermore, it is questionable how decentralized the network really is when Coinbase ultimately has to hold the reins in order to meet all the requirements of the regulators. Additionally, Base’s success depends to a large extent on the growth of Ethereum. If Ethereum fails, Base fails too.