On August 9, the second largest cryptocurrency exchange, Coinbase, opened public access to its new Base network. The development represents a second-level solution for the Ethereum network. As the creators of Base themselves report, the goal of their new project is to create an open financial system that should increase economic freedom throughout the world.
Coinbase CEO Brian Armstrong spoke about this back in 2016 – he published the “master plan” of the company, which is now being actively implemented. This crypto project didn’t go unnoticed by the crypto industry. Coinbase became the first company to take the risk of launching its own open blockchain. What does this mean for the global crypto community and why did Coinbase need its own public blockchain?
What is Base?
Base is a new platform for cryptocurrency application developers. There you can:
- develop financial and trading applications;
- trade on decentralized exchanges;
- issue crypto loans;
- issue your own NFT and tokens.
Base is built on the Optimism blockchain, an open source project from the OP Stack. The choice of Optimism is justified by the fact that it and Base have the same views on how Ethereum (ETH) can be scaled while maintaining the basic principles of decentralization. The developers claim that they have created an inexpensive, convenient and secure way for anyone to create decentralized applications on the network from anywhere in the world.
An open ecosystem assumes that all Base participants will have equal rights and participate in system management on equal terms. The developers plan to launch their own native token in the future.
Predictions and criticism
The Base project amazed many cryptanalysts with its ambition. It is worth recalling that the Coinbase crypto exchange reported losses for 6 quarters in a row: over the past quarter, trading prices significantly decreased, and about 20% of clients left the exchange. And yet, the developers boldly put forward a new project aimed at expanding the business model and attracting new investments to the company.
Another moment in the history of Base that fuels the critics around the project is the incident with its launch. Before the official release, an anonymous user created a BALD token on the network and proposed converting Ethereum into it.
Rather quickly BALD’s capitalization jumped from 0 to $50 million. After just two days, the creator of BALD withdrew 7 thousand ETH and 142 million BALD tokens, thereby destroying most of the liquidity. According to experts, the anonymous person made a profit of more than $1 million, and traders were left with devalued tokens in their hands and great disappointment in Base.
Popularity of Base
No matter what, the Crypto World seems to like the new network. The project has only been open for a few months, and it is too early to make any statements about its global reach. However, according to the Base Daily Transactions Chart, users had already completed more than 21 million transactions. Analytical service Dune Analytics reports the transfer of assets with a total value of more than $431 million through a network bridge.
Project risks
Even though Coinbase has considerable influence in the world of crypto business, it cannot be assumed that the implementation of Base will take place on a risk-free basis. The main “danger points” include the following factors:
- Regulation
The Coinbase exchange now has the status of a public company and any of its activities will be strictly regulated by US law. Such circumstances call into question Base’s release of its own utility token, which would attract more liquidity into the ecosystem.
- Censorship
The SEC's policy regarding Coinbase makes it clear that the US authorities might want to censor transactions within the network.
- Coinbase controlling everything
Some network participants fear that Coinbase's control over Base's activities will interfere with the free development of the ecosystem and the introduction of innovation. Some users even think that the new project is just another L2 solution.
Conclusion
Despite all the criticism and doubts, experts and analysts are unanimous in their opinion – the launch of a new blockchain will have a positive impact on the entire crypto industry. Now one of Coinbase’s goals is to stimulate the transition of as many investors and entrepreneurs as possible to decentralized applications, which will increase the liquidity of the DeFi sector.
What do you think about the Base network? Share your thoughts in the comments!
If you want to learn more interesting facts about crypto then check out our blog! You might like our articles “The Ethereum Merge” and “Ethereum 2.0”.
