Base

Introduction

Recently, Coinbase, the biggest crypto centralized exchange in North America, announced the launch of a groundbreaking technology - the BASE Chain. This innovative feature is a layer-2 (L2) chain built on the Optimism tech stack, heralding the crypto exchange's transition from a centralized entity to a Web3 gateway.

A Technological Marvel

The BASE chain is a unique layer-two chain, spearheaded by Coinbase and built on the foundations of Optimism. As a layer-two scaling solution for Ethereum, Optimism has risen to be the second-largest L2 ecosystem, only behind Arbitrum. This technology strives to resolve the blockchain trilemma by ensuring interoperability and composability for participating rollups, including Base.

Coinbase, in partnership with Optimism, has been diligently working on EIP-4844, also known as proto-danksharding. This upcoming Ethereum upgrade holds the potential to significantly decrease L2 transaction fees, which could lead to a bullish dynamic for Optimism and all projects associated with it.

As an optimistic rollup chain built on open-sourced technology, Base is being launched with Coinbase as its sole operator. This move enables Coinbase to collect fees, thereby adding a potential revenue stream.

Key Features of the BASE Chain:

• Built on the Optimism tech stack
• Solves the blockchain trilemma
• Decreases L2 transaction fees
• Provides a potential revenue stream for Coinbase

What Sets It Apart

The technology behind Base leverages the concept of the "superchain," where Optimism provides the tech stack for other potentially permissioned blockchains to be built and secured. The synergies from EIP-4844 promise to drastically lower transaction fees between L2 chains. This strategy reduces friction and facilitates the onboarding of Coinbase's vast user base, particularly first-time crypto users, into the world of decentralized finance (DeFi).

Opportunities and Challenges

With the launch of Base, Coinbase is showcasing a firm commitment to Web3 and L2 adoption, hoping to secure a slice of the future revenue pie. However, the operation of Base in its early stages will involve certain costs. Despite these initial expenses, Base's launch is expected to have a significant positive impact on Coinbase's finances, offering a scalable additional revenue stream.

Nevertheless, regulatory concerns pose a significant challenge. The uncertain regulatory climate makes the launch of a Base token unlikely at this point. Coinbase is likely to avoid anything that could later be labeled a security. Notably, Base could be a permissioned rollup, requiring users to be KYC-ed on Coinbase before onboarding to Base to prevent sanctioned entities from using it.

Looking Forward

Coinbase's move with Base is not about directly competing with other exchanges like Binance. Instead, the focus is on embracing decentralized technology and further adoption of Ethereum through its scaling solutions. The introduction of Base could substantially enhance the utility of the DeFi space, encouraging DeFi protocols to create applications that appeal to Coinbase's more conservative and beginner user base, ultimately driving mass adoption.

Conclusion

The BASE chain reflects Coinbase's strategic move towards decentralized technology, with the potential to make significant contributions to the DeFi space. It's a bold step forward, one that underscores Coinbase's commitment to foster mass adoption of crypto, despite the challenges that lie ahead. As this fascinating technology evolves, it will be intriguing to see the impact and changes it brings to the crypto world.