Coinbase Joins Ethereum’s Layer 2 Race: Can It Grow?

Coinbase Joins the Ethereum Layer 2 Rat Race

• U.S. exchange Coinbase is launching a layer 2 network in collaboration with Optimism on its Massachusetts Institute of Technology (MIT)-licensed OP Stack.
• The project, Base, aims to reduce ETH transaction fees to 1 cent and integrate with other blockchains like Solana, Avalanche and Polygon.
• Coinbase intends to “decentralize” the protocol over time which could become a moneymaker for the company that has long looked to diversify its balance sheet.

Background Information

Coinbase’s most recent quarterly report showed a company in transition, with its core revenue stream of transaction volumes drying up amid the crypto winter. At the same time, it’s seeing growth in other potentially profitable business lines such as staking and service fees.

Coinbase Master Plan

Base is part of Coinbase’s „Master Plan“ to bring 1 billion people into crypto by „buying, building or investing“ projects in the „open financial system.“ It is intended to serve as a springboard for this plan by reducing ETH transaction fees and integrating with other blockchains like Solana, Avalanche and Polygon.

Features of Base Protocol

The Base protocol will initially charge fees in the 10-50 cent range depending on usage levels but aims to eventually reduce those costs even further while also leveraging Optimism’s congestion reduction technology. This means that users who opt into using Base will be able to send transactions quickly without having to wait for them to be confirmed by miners on Ethereum’s main chain.


By launching Base, Coinbase hopes not only to grow their own customer base but also help contribute towards an industry trend of pushing down transaction costs across different networks through interoperability solutions like layer 2 scaling networks and low-fee sidechains. With increasing competition from large tech companies like Facebook entering into the space, it remains yet seen if how successful these efforts will be but it is clear that Coinbase is taking steps towards positioning itself as leader in blockchain infrastructure development within the space going forward.

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