Centralized Base L2 Goes Live On Mainnet

US crypto exchange giant Coinbase has officially launched Base, its L2 scaling solution for Ethereum. While Base is currently reliant on Coinbase, the stated aim is to decentralize it over time, putting it on the same footing as other popular L2 networks such as Optimism and Arbitrum.

Today is an important day for accelerating a global, decentralized financial system and increasing economic freedom in the world:@BuildOnBase is now live and available for everyone https://t.co/LXa6qdFzhU
— Brian Armstrong 🛡️ (@brian_armstrong) August 9, 2023

The Expanding L2 Landscape

Coinbase joins a number of prominent Web3 companies to launch their own chains, including Binance (BSC) and MetaMask (Linea). Like these other giants of the DeFi space, Coinbase is in a strong position to leverage their user base, with almost 90 million customers.

The rollout of Base has not been free of hitches, with delays in the development process and, more recently, the BALD P&D rug pull reminding users that the crypto world can still be the Wild West—even when managed by a centralized organization.

Coinbase states that Base operates as an open and permissionless system, and that anyone can build and deploy contracts on the chain. However, the company runs the only sequencer (which validates and executes transactions), making it a single point of failure. It's also a target for regulators, especially since Coinbase is still battling the SEC in the courts.

Official Bridge

Despite these regulatory and practical challenges, and the optics they create for users, Base has already proven extremely popular. In its pre-launch days, when there was no official bridge, users nonetheless found ways to move tens of millions of dollars to the chain.

With Coinbase's bridge now up and running, figures show that around $130 million has been deposited on the Base chain.

Like many other L2s, transfers to the Base chain are fast, and finalize in just a few minutes. However, withdrawals take around 7 days.

Base bridge screenshot — The Base bridge currently supports ETH, cbETH, DAI, and USDC

Coinbase's launch of the Base public mainnet is a major milestone in the DeFi space, providing another scaling solution for the Ethereum network.

However, Base is another example of large, centralized corporations driving the adoption of decentralized technologies (BlackRock and PayPal being two other recent examples). The community will need to weigh the pros and cons of this, and whether the advantages outweigh the potential risks and downsides.

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