Cryptocurrency exchange Coinbase has launched a Layer 2 (L2) network, Base, on the Ethereum blockchain.
According to the company, the L2 network offers a secure, low-cost, and developer-friendly way to build decentralized apps (dapps) on-chain.
Coinbase L2 network
Coinbase said in a blog post on Feb 23. that Base will make it easy to build decentralized apps with access to their products, users, and tools.
The network will leverage the security of Ethereum and enable developers to onramp into Base from Coinbase, Ethereum Layer 1, and other compatible chains, including Solana.
Base is open source built on OP Stack in collaboration with Optimism. The company, however, does not plan on issuing a new token on the network. Their native gas token is ETH.
“We’re incubating Base inside of Coinbase, leveraging the last decade of our experience building crypto products and plan to progressively decentralize the chain over time.” said the company.
At first, Coinbase will have more control, but Base will become fully permissionless over time.
Developers can set up gasless transactions for their dapps and securely build multi-chain applications with easy-to-use bridges.
“Along with making Base interoperable with other chains, we will continue supporting as many chains as possible across Coinbase products,” said the company.
Coinbase also set up a Base Ecosystem Fund to invest in and support early-stage projects building on Base.
Purpose of Layer 2 networks
Layer-2 networks help make transactions faster and cheaper compared to the underlying blockchain, in this case, Ethereum.
L2 networks process batches of transactions on a separate chain and send receipts back to the mainnet.
Coinbase has joined the race of Ethereum L2 scaling projects, including Polygon, Optimism, Arbitrum, and others.
According to L2Beat, a website that tracks various Ethereum scaling networks, Arbitrum One and Optimism account for 53% and 31% of the L2 market share, respectively.
The launch of Base makes Coinbase the first publicly traded company to launch a layer-2 blockchain network on top of Ethereum. The company has traded on Nasdaq under the COIN ticket since April 2021.
The company might be late to the party but has over 100 million users, which others don’t. The users control $80 billion in assets across the Coinbase ecosystem, 12.5 times more than the entire L2 ecosystem.
Coinbase might quickly become a top contender if the company can get even a small percentage of its users onto Base.