Today the Coinbase cryptocurrency exchange launched the testnet for Base, an Ethereum layer 2 blockchain network. Its stated goal is to create a low cost, developer friendly environment. It believes that making it easier to create decentralized apps will encourage greater user adoption of blockchain, doubtless in a similar way to app stores making smartphones more appealing.
Base will also be the home of the crypto exchange’s onchain products. The Uniswap decentralized exchange (DEX) frequently has higher daily trading volumes than Coinbase. By creating a DeFi ecosystem, Coinbase can earn revenues from its dApps and a proportion of network fees on the Base chain.
No Coinbase token
Coinbase was keen to emphasize the low fees of its platform and that it does not intend to release a token for the network. The lack of a token means Coinbase is less likely to attract regulatory interest on the topic. The collapse in the price of FTX’s crypto token FTT, triggered the downfall of the cryptocurrency exchange, exposing its alleged misuse of customer funds.
The largest crypto exchange Binance operates a layer 1 Ethereum compatible blockchain. Its token has a market capitalization of $49 billion. Another exchange, Crypto.com also has a token worth more than $2 billion.
Meanwhile, Coinbase intends Base to be a bridge between other Ethereum layer 2 networks as well as other blockchains. Base will use the Optimism rollup as its underlying technology.
While the network will initially be centralized, the intention is to become decentralized over time.