A Quick Look At The New Ethereum L2 Base Network Launched By Coinbase

Key Points:

• The goal of Coinbase and Base Network is to attract the next billion users into the crypto economy.
• Base Network has no plans to issue a network token, but developers can already explore building on Base at base.org.
• Base also joins OP Stack’s research team and says that part of the Base transaction fee.

On February 23, Coinbase announced the launch of the Base testnet, an Ethereum Layer 2 network designed to provide a secure, low-cost, and developer-friendly way to build on-chain decentralized applications. The goal of Coinbase and Base Network is to attract the next billion users into the crypto economy. In order to achieve this goal, Base Network will serve as the home of products on the Coinbase chain and an open ecosystem that anyone can build.

Currently, Coinbase is incubating Base Network internally, leveraging experience building crypto products over the past decade, with plans to gradually decentralize the blockchain over time. At this stage, Base Network has no plans to issue network tokens, but developers can already explore building on Base Network at base.org.

What is Base Network?

Coinbase hopes to build its Base Network into one of the best places for developers to build products and services on the blockchain. It mainly has the following four characteristics:

• Ethereum-based security: Base has the security and scalability required to support decentralized applications, leveraging Ethereum’s underlying security and Coinbase’s best practices, allowing users to confidently deploy from Coinbase, Ethereum L1, and other interoperable blockchains into Base Network.
• Coinbase Powered: With access to Coinbase’s products, users, and tools, Base Network makes it easy to build decentralized applications, seamlessly integrates with Coinbase products, and has access to powerful fiat currency on-ramps and acquisition tools, enabling developers to contribute to more than 110 million verified users to provide services and also have access to $80 billion worth of assets on the Coinbase ecosystem platform.
• Powerful, affordable: Base provides full EVM equivalence at a very low cost and is committed to advancing the development of developer platforms. Use a simple developer API to set up gas transactions for decentralized applications for account abstraction, and use easy-to-use bridges to securely build multi-chain applications.
• Open source: With the support of Optimism, Base aims to build a decentralized, license-free “Superchain” that provides standard, modular, and Rollup support. Base Network will join Optimism as a core developer of the open-source OP Stack and will work to create a thriving community of other developers.

At this stage, Base developers can already use the Coinbase RPC testnet endpoint to build on Base or choose QuickNode, Infura, and Blockdaemon, node providers.

Why establish Base Network?

To bring billions of users into the crypto economy, decentralized applications need to be easier, cheaper, and more secure to interact with. To do this, developers need to build these applications more easily. When building Base Network, Coinbase clearly adhered to some core principles, as follows:

A bridge, not an island

Base Network can provide simple and secure access to Ethereum L1, other L2 blockchains, and other L1 ecosystems (such as Solana). Coinbase also encourages others to build from Base, which will serve as a “bridge” for users into the crypto-economy. Accessing other on-chain products on Base provides an easy-to-use default on-chain experience. As Base Network interoperates with other blockchains, Coinbase products will support as many blockchains as possible in the future.

Open source

In fact, any underlying software that supports the global crypto economy should be completely open source and freely available. Base Network will work with Optimism to build on top of the MIT-licensed OP Stack. Base Network will join the OP Stack as a second core development team to ensure it becomes a public product available to all.

For Coinbase, Base will be seen as an open platform where anyone can contribute, fork, and extend to help the crypto economy scale. If you want to learn more about how Base works with Optimism, you can follow this link.

Decentralized

Decentralization is critical if the crypto economy is to remain open and global, and accessible to all. While Coinbase has started incubating Base internally, it is firmly committed to full decentralization in the coming years. As Coinbase brings more resources to OP Stack, Base is expected to upgrade from Rollup Phase 0 to Phase 1 in 2023 and complete Phase 2 in 2024. If you would like to learn more about Base’s approach to decentralization, you can follow this link.

Open ecosystem

Base’s vision is to become an open ecosystem based on Coinbase products, users, and assets and cooperate with a wider community to make the blockchain ecosystem more viable. Coinbase is excited to have an incredible community that will help make Base a strong ecosystem and make positive contributions.

Base ecosystem fund

Coinbase also announced the launch of the Base ecosystem fund, which invests in and supports early-stage projects based on Base Network that meet Coinbase’s investment criteria.

No currency will be issued, and part of the service fee will flow into OP collective

At present, the official has made it clear that Base Network will not issue coins and will use ETH as the network fee gas; in addition, part of the Base transaction fee (maybe 20%) will flow into OP Collective in the future to further promote the development of OP Stack.

The relationship between Base and Coinbase, ecosystem projects, ecosystem funds

Base Network is Coinbase’s native blockchain network that will run all of Coinbase’s on-chain products, built by Coinbase and serving Coinbase users. Coinbase will encourage platform users to transfer assets to the Base chain. Of course, this is also an open ecosystem where anyone can build on top of it. This is very attractive to developers. After all, Coinbase has 100 million+ Potential users and an asset scale of hundreds of billions of dollars.

At present, Coinbase has also announced the first batch of partners of Base, and there are many projects we are already familiar with, such as Chainlink, QuikNode, Axelar, LayerZero, Gelato, Ribbon Finance, and nearly 50 projects. In addition, the official establishment of the Base ecosystem fund will invest in and support early projects based on Base that meet the requirements.

Why choose OP stack?

Since the second half of 2022, Coinbase and OP Labs have jointly started research on EIP-4844, namely proto-dank sharding, which can effectively reduce the transaction fee of the L2 network by 10 to 100 times. Coinbase\Base Network also joined the research team of OP Stack and said that part of Base transaction fees (maybe 20%) would flow into OP Collective in the future to continue to promote the development of OP Stack.

Base’s attitude towards decentralization?

At present, Coinbase will be the only sorter on the Base L2 network, but eventually, it will move towards a permission-free set of sorters. Decentralization has always been the pursuit of OP Stack. The current unique sorter is only a temporary trade-off. Base and OP Labs will promote the decentralization process in a decentralized manner.

Account abstraction? Smart contract wallet?

In the official document description of Base Network, it is mentioned that it will have the function of account abstraction and smart contract wallet. Gnosis Safe also tweeted that it will cooperate with Base to realize the function of account abstraction to achieve mass adoption by users.

After understanding the above key points, what we need to clarify the most is the special significance of such an L2 network Base incubated by Coinbase:

• Combined with technologies such as Coinbase Wallet and account abstraction smart wallet, the current user base of Coinbase is expected to be diverted to Base, which greatly reduces the threshold for users to understand and can promote the large-scale adoption of Web3; you must know that Coinbase currently has a base of 100 million+ certified users and With an asset scale of nearly 100 billion U.S. dollars, Base also stated that it positions itself as a “bridge” for users to enter the encrypted economy.
• The user group of Coinbase has been authenticated by real name. In the past, Base will be associated with the mission account, similar to Binance’s previous soul-bound token BAB. Is it possible to expect more on-chain assets to be derived, such as RAW and on-chain credit?
• As the pioneer of the OP Stack technology stack, it is expected to promote the narrative of the Rollup application chain and erode the narrative of the Cosmos application chain.

What’s next?

At this stage, Base Network is focused on ensuring the testnet is running successfully, after which, in the next few weeks, we will share the mainnet roadmap and provide more resources for developers building on Base.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your research before investing.

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Harold

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