Coinbase Launches Tokenless Ethereum Layer 2 Network

Coinbase, one of the largest cryptocurrency exchanges in the world, has unveiled its new Ethereum Layer 2 network called Base at ETHDenver. This testnet version is designed to be connected to the main Ethereum network in the future, according to Jesse Pollack, Coinbase’s senior director of engineering. The platform aims to make it easy for developers to build apps that users want to use and plug them into the Coinbase product suite.

 

Developer Tools

Base is built on the open-source OP Stack, which is a blueprint for compatible blockchain Layer 2 networks created by Ethereum Layer 2 network Optimism. Coinbase will also be joining Optimism as a core developer for the OP Stack. Coinbase’s existing suite of developer tools will be integrated with Base, making it easy for developers to use those tools.

Pollack also confirmed that Base won’t have its own dedicated token. He stated that these networks don’t need tokens to be successful, and in some cases, native tokens may obscure whether the networks are finding a product market fit with customers, users, and developers alike.

To spur development on Base, Coinbase and its venture arm, Coinbase Ventures, will launch the Base Ecosystem Fund to make investments at the pre-seed stage in companies and organizations that are building on Base. The platform will also mesh with Coinbase’s consumer products, such as Coinbase and Coinbase Wallet, to give developers access to the 100 million plus users in the Coinbase ecosystem, 100 billion plus assets, and enable the scale that developers who are building web2 apps are used to in this new web3 economy.

 

Proto-dank Sharding

For the last year, Coinbase has been working on proto-dank sharding, an upgrade to Ethereum that will reduce fees on Layer 2 networks between 10-100 times current levels. Layer 2 networks reduce the computation strain on Ethereum but require a certain amount of data availability to publish data to the main Ethereum chain. Proto-dank sharding will scale data availability at Layer 1 and scale execution at Layer 2 in the rollups.

“We expect there’s going to be many of these Layer 2s, and that’s why we’re building based on the OpenStack, that’s open source that anyone can use to run one of these L2s or roll-ups,” said Pollack. “And then we can work to drive interoperability between all of them so that they increasingly work together, almost like that original Ethereum sharding at the execution layer vision, but in this new Layer 2 world.” The announcement of Base indicates that Coinbase is officially jumping into the Layer 2 game and could have far-reaching implications for the future of cryptocurrency regulation.