Everyone, meet Base from Coinbase 💰
Hey W3FTC readers! We’ll be taking a break from our newsletter next week as we travel for Spring Break. We’ll be back and better with another newsletter on March 14th, 2023. Stay tuned and enjoy this week’s newsletter!
Will Web3 really impact that much of your average person’s life?
Why should I care about this space?
Is crypto even real?
As two Web3 enthusiasts, these are the types of questions we get all the time from our friends and family. Even with our positive outlook in the space, sometimes it’s hard to convince people to believe in something that is still so early in its development. If you think about what it was like (or would have been like) to grow up when electricity or the internet first emerged, there was a healthy amount of skepticism because they were both deemed to have the potential to drastically transform our way of life. But over time, they both became vital parts of how we operate as a society.
We put Web3 in this same category – something that is slightly slept on right now, but has the potential to really change the game with advances from the builders in the space. Enter Coinbase!
Over this past week, Coinbase made a huge announcement that they’re launching a layer-2 blockchain, Base, with the expectation that it will help attract and onboard millions of people into crypto. For this post, we’re diving into the details and what this could mean looking forward.
First things first… let’s level set
Before we dive even further into Coinbase and it’s newest product, let’s breakdown a few key concepts and players!
First off, Coinbase: This is a name you probably hear a lot when people talk crypto, or maybe you caught their Super Bowl ad last year. Coinbase is an online crypto currency exchange (yes, like FTX and Kraken which we went over in our recent newsletter). As a platform, users can buy, sell, transfer, and store crypto currencies. Like FTX, Coinbase is big, actually bigger. It has over 110M users, 150+ cryptocurrencies, $145B is traded every quarter, and $80B is managed on the platform. You can also buy stock in Coinbase because it’s a publicly traded company (NASDAQ: COIN).
Next, Layer 1 and Layer 2: In the world of Web3, Layer 1 and Layer 2 refer to the blockchain. Layer 1 can be thought of as the base blockchain protocol (e.g., Bitcoin or Ethereum). And as a refresher, a protocol is the underlying technology that allows for the web to be decentralized. Now Layer 2 is what you’d think it is - the layer on top of Layer 1. This is where a third party builds protocols that have integrated functionality with the base layer blockchain.
The last term of the day - dApps: DApps is short for Decentralized Applications. These are similar to the apps you have on your phone but instead they work autonomously, using smart contracts that run on a distributed ledger like decentralized computing or blockchain.
So far so good? Awesome! We’ll see these terms again in a second.
So, what is Base and why is it such a hot topic right now?
"Base" is a Layer-2 solution for Ethereum that was recently released by Coinbase. It's a scaling solution that’s designed to help Ethereum handle more transactions per second (TPS) by moving some of the transaction processing off of the main Ethereum blockchain and onto a secondary network that can handle more transactions with lower fees and faster confirmation times.
It’s built on top of the Optimistic Rollup technology, which is a type of Layer 2 scaling solution that basically bundles multiple transactions into a single batch and then processes them together. What does this mean? Well, it allows for much faster transaction confirmations and lower fees, while still maintaining the security and decentralization of the Ethereum blockchain.
Base is meant to be used primarily by developers who are building decentralized applications (dApps) on Ethereum because it can help them reduce the cost and complexity of deploying and operating their applications. Word on the street is that it may also be of interest to cryptocurrency traders and investors who use the Ethereum network because it can potentially reduce the costs and delays associated with sending and receiving Ethereum transactions.
Base for all, and all for Base!
Jesse Pollak, the leader behind Base and head of protocols at Coinbase, said “Our goal is to bring about phase 4 of Coinbase’s master plan: to bring a billion users into the crypto economy.” Building an application for a mobile phone may have gotten simpler over time, but building a dApp is no easy task. Base was designed to change that: make it easier for developers to build dApps and equally as easy for users to access them.
Given how popular Coinbase is already (whether you like them or hate them - all press is good press!), Base is just another catalyst to not only more people using Coinbase but more people getting onboard with Web3! And that’s exciting! Unfortunately, Base had a bit of a rocky start on day one, but even LeBron lost his first-ever NBA game. We’re optimistic that once the wrinkles are ironed out, we’ll be seeing a lot more dApps because of it.
Exciting times ahead in Web3!
The Base experiment will be interesting to watch