One of the world’s leading cryptocurrency exchanges, Coinbase, revealed in February 2023 new product called “Base” —a new layer 2 solution testnet for Ethereum, built on OP Stack, a development kit used by layer-2 Optimism.
Base was announced during the ETHDenver, a community-led event in which various crypto companies, startups and leading figures in the space announce new products, support projects and technological innovation, and discuss the crypto landscape and share ideas on Web3.
Building With Base
Base offers a decentralised, cost-efficient, secure and developer-friendly space to invite crypto developers and teams to build decentralised apps on-chain and therefore onboard the next generation of Web3 users.
Base will reportedly charge initial fees between $0.10 to $0.20, close to those of Arbitrum or Optimism, the two leading Ethereum layer-2 solutions. According to the team, fees could drop as low as $0.01 in the future.
Further, Base will allow developers to directly integrate their products with Base and provide fiat onramps. This way, Base will allow Coinbase’s over 110 million users to interact with DApps on the layer-2.
Base will serve as an experimental battleground for developers and crypto companies looking to put their products and projects to the test. To further support the L2 ecosystem, Coinbase launched the Base Ecosystem Fund which supports early-stage projects building on the ecosystem that meet the Fund’s investment criteria.
Coinbase’s Decentralization Plan With Base
According to the Coinbase team, Base is part of a decentralization plan that will come to fruition over time. The team will continue to work with Op Labs and the Optimism Collective to build an integrated, open-source system that will include Base as a bridge and a beginner-friendly network for new crypto users.
More technically, Coinbase, OP Labs, and the Optimism collective will use the OP Stack to build a “superchain” of interconnected chains. “Stage 0,” the company calls the current version of Optimism. By the end of 2023, Coinbase would in theory advance Base to “Stage 1”:
“We’re excited to collaborate with OP Labs and the Optimism Collective to build on our shared vision for scaling Ethereum via a robust, interoperable web3 ecosystem that can onboard the next billion users into web3.” Reads the announcement.
What are Layer-2 Solutions?
Layer-2 solutions refer to chains connected to a layer-1, also called the blockchain, mainnet, or mainchain. These solutions work by moving some of the transaction processing and storage off the main blockchain, onto a secondary layer or network. This allows for faster and more efficient processing of transactions, while still maintaining the security and integrity of the underlying blockchain.
Throughout the years, software engineers and developers have thought of ways to scale Ethereum. Everything from layer-2’s like ZK-rollups to Optimistic rollups, to sidechains and state and payment channels have been designed to accomplish this objective, and so far L2-s have become the most popular method.
Overall, layer-2 blockchains provide a promising avenue for improving the scalability and usability of blockchain technology, making it more accessible to a wider range of users and applications.