In a recent discussion with Decrypt, Brian Armstrong, the CEO of Coinbase, clarified that the company has no plans to issue a token for its Base layer-2 network. This contradicts earlier rumors and a comment by Coinbase’s Chief Legal Officer Paul Grewal. Armstrong’s declaration is crucial as it reveals Coinbase’s strategic direction in developing its layer-2 network and engaging with the wider cryptocurrency ecosystem.
Since its launch in August, Base has experienced significant growth, quickly becoming the third-largest layer-2 network by total value locked (TVL), with approximately $500 million in TVL and a million interacting wallets.
Layer-2 networks, which enhance existing blockchain systems like Ethereum by offering faster and cheaper transactions, address scalability challenges of the base layers. Base’s quick rise in this sector is significant, underscoring its potential influence on the crypto market.
Armstrong sees Base as more than just a Coinbase project, envisioning it as a community-focused endeavor that is interoperable with the larger crypto ecosystem. Base’s use of the Optimism stack on Ethereum is a strategic choice to ensure wide compatibility and community involvement. With Coinbase’s support, this strategy aims to build trust and stability in the network.
Armstrong has ambitious goals for Coinbase transactions, targeting an average time of under one second and a cost of one cent. Realizing these goals will require significant enhancements to Base and greater integration of layer-2 solutions on Coinbase’s platform.
Armstrong further states, “This isn’t limited to Base alone,” highlighting plans to integrate technologies like Bitcoin’s Lightning Network and other fast layer-1 systems such as Solana. Currently, around 7% of Coinbase transactions utilize layer-2, but there are internal objectives to significantly increase this figure as part of a long-term strategy.
He also acknowledges the growing trend of other exchanges, like Kraken and OKX, developing their layer-2 solutions, but warns against a fragmented ecosystem where each platform runs its own layer-2 network. Instead, he advocates for a consolidation around a few layer-2 networks to maximize efficiency and interoperability in the cryptocurrency domain.