American cryptocurrency exchange Coinbase is best known as a centralized powerhouse. However, with the launch of Coinbase in 2023, this story began to change. BaseThe company’s Ethereum layer-2 network.
Base’s debut did more than anything to establish Coinbase not only as an enabler of cryptocurrency trading, but also as a foundational layer for decentralized commerce and activity on par with the world’s largest blockchain networks. Its launch not only redefined one of the largest cryptocurrency exchanges in the world; It has also redefined what a cryptocurrency exchange means to the industry, which is why it is Project of the Year.
build on top Ethereum scaling solution optimismBase serves as an on-chain ecosystem for Coinbase’s own products as well as millions of other people’s decentralized apps that are not owned by Coinbase and are free to build wherever you want.
“In the first few months after going live, Base already “It’s much broader than Coinbase.” bass builder Jesse Pollak said. Decrypt. “There are hundreds of apps that people use regularly that aren’t built by Coinbase. (And) many of our millions of users are interacting with Base through non-Coinbase products.”
Avichal Garg, co-founder of the cryptocurrency venture firm, says this diversity and Coinbase’s support makes Base particularly attractive to third-party developers. electric capital.
“Most people don’t realize this, but Coinbase is both a consumer company and a developer tools company,” Garg said. decryption. “They have a lot of expertise in how to work with developers and partners and build ecosystems between custody, wallets, and Coinbase Cloud.”
At the time of writing, Base’s total fixed value (TVL) stands at $419 million. DeFi Currency—Included in the top 10 blockchain networks by size.
Within a few weeks from Base Released in Augustchain made from balloons The amount of daily activity seen on Optimism, the network on which Base itself is built, has nearly doubled. In just 11 days, the network reached 1 million addresses. Fastest Layer-2 You should never do that.
Until September, base Overtaken Solana at TVL (a significant achievement that was ultimately undone by Solana’s efforts). recent resurgence). At various points in August, September, and October, there was more daily activity at the Base. Even better than Ethereum.
Much of that initial momentum was Friend Tech, a financialized social networking concept built on Base. That traffic source disappeared in October, as the hype surrounding Friend.tech all but collapsed. However, the chain has continued to expand its appeal since then by attracting prominent DeFi projects, including decentralized exchange aggregators. 1 inchBlockchain Oracle Platform chain linkand lending infrastructure providers. Maple Finance.
Base quickly established itself as a decentralized finance (DeFi) hub, generating enthusiastic response. Meme Coin ActivityAnd even controversial solid token Inspired by Coinbase CEO Brian Armstrong’s bald head Analyst Connected to Sam Bankman-Fried, who was arrested at his home at the time.
Activity on Base earned about $5.8 million worth of revenue from Coinbase, with a profit margin of nearly 49%. This is almost double the profit margins of Arbitrum (26%) and Optimism (28%) and significantly higher than zkSync (37%). sand analysis.
For what it’s worth, Base is built on: OP Stack was created in collaboration with Optimism. This means a few things for Coinbase. “Super chain independent of roll-up” Stack, which already had a large community of Web3 developers, has now become a core Optimism developer.
This helped Base quickly solidify its reputation as a hub for decentralized finance and applications themselves, rather than just a cool efficiency tool for Coinbase customers. Base offers much cheaper and faster on-chain transactions than Ethereum. Layer-2It runs securely on top of the latter network.
In an exclusive interview decryption Earlier this month, Coinbase CEO Armstrong said his goal was “not to make (Base) just Coinbase, but to make it something much broader.”
“We’re trying to do this in a way that is interoperable with the rest of the cryptocurrency community,” Armstrong said. “We hope that having the full support of Coinbase will give us some stability and trust.”
The goal appears to be to leverage Coinbase’s mainstream reputation to attract millions of new on-chain users while also putting Coinbase at the center of seismic change.
Base creator Pollak said Base’s ultimate goal is to have 1 billion users. He believes that to attract this audience, the network must not only provide financial services, but become home to the entire creative economy.
“It’s important that we increase the number of things people can do so people have more opportunities to use Coinbase,” Pollak said. decryption In July. “It’s not just speculation and trading, but also art, music, games and other consumer products.”
In fact, Base has already attracted a following of household brands: Coca-Cola, Showtime, AtariAnd rich in features arts initiative and cultural project In addition to DeFi protocols.
Serving users who have less experience with technology but are interested in such brands and projects is a key element of Base’s broader culture-focused strategy.
“Our North Star is making it so that someone who has never used cryptocurrency can go from holding a wallet to deploying a contract in less than 60 seconds,” Pollak said.
The chain’s backers also appear intent on avoiding cryptocurrency norms that could threaten its position with regulators and its ability to target retail consumers. Armstrong recently said decryption Coinbase has no plans to launch the potentially lucrative Base token, which could easily run afoul of U.S. regulators like the Securities and Exchange Commission (SEC).
Overall, Base appears to have found a winning recipe for a cryptocurrency exchange looking to find a steady path after last year’s upheaval and expand its significance at the dawn of the era of mass on-chain adoption (fingers crossed).
Other cryptocurrency exchanges appear to have taken note: Last month, Coinbase rival Kraken and great Both have revealed plans for their own layer-2 networks.
But first-mover advantage is everything, and this year Coinbase was able to gain a significant lead in a competition that could soon develop into a major competition.
“It makes sense for exchanges to try to build ecosystems like this,” said Electric Capital’s Garg. “But since only a few exchanges can control a sustainable ecosystem, some kind of consolidation or bundling may occur.”
Editors: Andrew Hayward and Stacy Elliott
