Aug 10, 2023

Base, the new Ethereum layer 2 blockchain built on OP Stack by the U.S. crypto exchange Coinbase, went live on Wednesday.

Video transcript

The largest us crypto exchange says its Blockchain is the first to be launched by a publicly traded company and gives it a new revenue opportunity. Joining us now to discuss is Jesse Pollock who is the creator of base and coin base is head of protocols. Jesse, welcome to the show. Thanks for having me on. Excited to be here. Congratulations on the launch. All right, I got to ask you given everything that's going on with coin base. Of course, we all know that coin base is getting sued by the SEC. Was there ever a moment on your journey to this launch that you thought maybe this isn't gonna happen? Maybe we're gonna have to pause on this. You know, I think whenever you're doing something um challenging and innovative, uh there's always moments where you're wondering are we gonna be able to do this? But I think if you look at uh kind of the long term mission, the long term vision of coin base, we've been saying from the beginning, uh the most important thing is bringing the people into the crypto economy. And the way we do that is by creating real utility and I think we see base as a key enabler of that. And so we've kind of held that vision the whole time. Uh And we're so excited to be bringing base uh to the market and to open it up for everyone. So just, just following up on that before we get to the fun stuff. Um you know, are there any regulatory concerns? Just because, you know, as Jen mentioned, you have all the SCC drama coming up, were there any regulatory concerns associated with this launch specifically? Uh you know, I think we have um been building towards this for a while. Uh You know, everything we do at Coinbase is done in kind of a trusted way um where we're being really deliberate. Uh And so we kind of work through all of the standard um things uh details that make sure that we were kind of fully above board. Uh You know, we've been working with Ethereum and other decentralized blockchains for a long time and we see base as an extension of Ethereum. Uh We see it kind of growing and scaling Ethereum alongside all the other two and we're really excited to see all the innovation that that creates, right, Jessie, we are getting to the fun stuff. I very much promise you that. But on the topic of, of regulation, you know, are you concerned with any reputational risk? We saw um Bald Rug pull recently. What, what was it like seeing that happen. How are you concerned about the reputational risk? Has this happened before the public launch happened this week? Yeah. You know, like I said, we, we've tried to move really deliberately with space. Um We had a whole plan, it was kind of open for developers. Uh Wait a few weeks as people start building things that open for bridging to let folks start kind of safely moving in and then open for everyone. And you know, crypto is gonna be crypto. And so I woke up on a Sunday morning and the world said, hey, that's not the plan anymore, plans change. Um But I think generally the thing that we're most excited about with base is just encouraging creativity and innovation. And if you look at the launch yesterday, um you know, we had so many uh folks who are there on day one, more than 100. Um We had so many folks who are participating in on chain summer, bringing the world on chain. Um And I think most excitingly for me, we had so many new folks who were just kind of coming out of the woodwork and launching um games, our media, uh music community. Uh And so, you know, I think that creativity, that's what comes from an open uh permission less ecosystem. Uh And there's all kinds of creativity that people bring and we're excited to support all of it uh on base. Has there been any dialogue or any questions from any of the regulatory bo bodies over base. You know, we are in constant dialogue with about a lot of things we're doing coin based um base is no different. Um We want to make sure that we are putting our best foot forward. We wanna make sure we're explaining to folks what's going on, why is this important? Um why is decentralization important? And so we've been actively discussing um kind of uh internally, externally with the whole world about why we're doing this. Uh And we were excited that people have had such a positive response. Um So OK, now, let's get to the more fun stuff. Let's talk about revenue. Um What where, where do you, where do you guys see revenue coming from? And what are some of the revenue projections is mostly from DP or, or just how do you break that down? Yeah, I think if you look at the history of coin based, uh the way we have made revenue is by making it really easy for people to use crypto. Um We provide a trusted safe interface um that folks love using. Uh they have historically used that to be a limited things, right? They've traded, that was kind of where we started buying Bitcoin. Um And then over the years, we've added things like staking like saving. Um And I think, you know, our thesis is that what base is gonna enable is it's gonna enable a whole new host of things for people to do. Um We're gonna expand it from kind of 2 to 3 things uh that folks can do that are primarily financial, primarily speculative into hundreds thousands millions of really useful products that are being built on chain. And in that world coin base is gonna continue having the opportunity to provide that safe and trusted and easy to use interface. And uh we think that customers are gonna be willing to pay for that. And so we really see base and kind of the revenue base. Um not about base specifically. Um more about base enabling innovation, which then enables coin base to provide those interfaces, provide those trusted services and monetize through that. Jesse, tell me about your vision here, you know, with the announcement of base, it was said that you want to bring on the next million builders, the next billion users. How are you thinking about bringing mainstream users to defy especially what's going on? Um I guess from a regulatory perspective in North America, how are you bringing people on who have maybe never interacted with crypto? Never interacted with any kind of D I ecosystem over the base? Yeah. Yeah, absolutely. And you know, it, it feels like I've been building this for a decade. I started working in crypto in 2013. Uh when I think we were all like we're gonna get everyone in crypto next year. Uh It took a little bit longer that for 10 years. Uh But it feels like for the first time, um, the infrastructure is finally ready. You know, we have low cost layer twos like base. That means that instead of spending dollars, $10 on transaction, you can spend cents. Um, we finally have really great wallets, uh, like coin based wall coin based, like all the other walls that are supporting based, that make it really easy to use all these products. And I think we're really starting to see the next wave of use cases come online. Uh And a lot of those are financial use cases, things like stable coins, things like trading, things like borrowing and lending D I as you mentioned. But I think we're also really excited about the non-financial use cases. You know, if you look at um kind of everyone who's participating in unchain summer. Um uh We have media, we have unchain community, we have on chain food and restaurants, we have unchain games. And so I think for us, what we're really focused on is basically trying to figure out how do we provide a bunch of different things that people can do on chain? How do we show folks that um on chain is not just this kind of technical financial speculative thing, but instead that it's the next generation of the internet. Uh and like the internet kind of transformed the world in the early two thousands. This is going to transform the world again in the 20 twenties and that like the internet, there's gonna be something for everyone. Uh And so this summer really kind of our message is get on chain. Uh, give it a try every day. We're gonna be bringing one thing we think is really cool and fun. Um, uh, you know, that's gonna be a starting point and then all the folks who are building on base are already starting to launch a bunch of other things. And so we want to encourage folks to get a crypto wallet, um get some Ethereum, get some funds in that crypto wallet and get on chain to try something new. Do you have a sense like of who kind of the early users are? You know, like who, who, who, who's the first wave that, that's, that's kind of embracing this. You know, I think it's uh a mix of kind of the, the folks who are always at the front lines of crypto, just the explorers, the builders, the, the curious ones who are kind of always pushing the limits trying to figure out what's there. Um You know, when we look at the launch yesterday, like I mentioned, we had uh 100 apps, um more than 100 apps. Uh We also saw a ton of folks who kind of organically just launched. Um All of those are builders. Uh And so I think that that was really important to us. We wanted to have that kind of builder energy there and the builder culture from the beginning. Uh I also think that we're seeing a lot of mainstream users start to come in. Um This is one of the benefits of uh kind of having base be incubated inside of coin base is we have this opportunity to have base, be this incredibly open uh permission less creative zone. And then we have the opportunity for coin based to be kind of the trusted easy to use interface for that. And so that combination and the ability to provide users access to all their creativity while also giving them the the guard rails that allow them to interact safely, confidently uh in a really easy in in a really easy to use interface. Um I think that's gonna bring in the next wave of kind of everyday folks who are gonna get to experience the the power of the on chain economy. Yeah, it's kind of interesting because like coin base obviously is a centralized entity. It's known for that. It's known as like a centralized exchange. I mean, it is a centralized exchange, you know, that that is kind of like a gateway to the main stream. So it's kind of interesting that, you know, you've launched this product that's meant to be, you know, decentralized in a kind of a different come, it seems like people are reacting pretty positively. Like I I I'm not, are you getting any pushback or any skepticism, skepticism or any, just kind of like this isn't really decentralized or, you know, any of the, the typical thing that happens when a centralized exchange ventures into this space. I think we've been blown away by the positivity and the engagement from the broader community. Um And I think a lot of that is a reflection of the fact that this isn't the first time Coinbase has kind of pushed in this direction if you look at the last five years. Um you know, Coinbase was obviously involved in, in launching us DC. Uh that was a a unchain product that we did. Uh Coinbase wallet, I think has been leading the way on kind of building on chain wallets and decentralized wallet. Um And then I think our approach with uh base has been really deliberate to prioritize decentralization, prioritize open source from the beginning. Um You know, that started with us in early 2020 really starting to take a leadership role in contributing to Ether and scaling Ethereum. Uh And then I think has kind of expanded to us um bringing the world along on our journey of building base. Um And talking folks through how we have worked with optimism to make sure that we are contributing back. Um how we've joined as the second co developer of the op stack, which means that all of the work that we do on base and the underlying technology is freely available to anyone else in the world. To, you know, experiment with fork uh build their own chain with. Um And I think also how we are making commitments towards the centralization going forward. Um We've worked with optimism and created this open neutrality framework called the law of chains, that's gonna kind of ensure sure that base remains open and permission list. We're making really heavy technical investments in decentralization with our own engineering teams. And then we've set up kind of a sustainable funding model where as uh base has more transaction activity, we're actually going to be contributing back to the underlying infrastructure uh with financial resources to make sure that it remains funded. And so I think all of those kind of investments and those commitments to decentralization have shown world that we're not, we're not messing around. Um We're not just another centralized company trying to build another centralized thing. Um We are the leader in crypto. Uh We are the first kind of public company to be pushing this forward. I think our belief is that if we can do this in a good way and we can show the world that this is possible, then we can help bring everyone else along and help bring everyone into the offer chain economy, get those million builders, those billion users and, and change the world. OK, Jessie very quickly. Lastly, just because we're talking about uh coin base being the centralized attend uh entity that's playing in D I. Now there was a Senate bill recently that said, um, the Senate is looking at possibly regulating D I as banks because there is this real, like centralized point that can be targeted by regulators? Have you taken pause? How are you thinking about this? How would you respond to um, regulation at this point when it comes to D I in the US? Yeah. You know, I think if you, if you listen to Paul Gruel or the or Brian, they'll say the same thing, which is that if you look at the current regulatory environment in the United States and, and in countries around the world, um it's stifling innovation. Uh you know, I work with a lot of entrepreneurs on a daily basis who are building on base. And what I hear pretty consistently is that they're spending um more money on lawyers and trying to figure out what's what in this regulatory environment, then they're actually able to spend on hiring engineers and building their company and building their product. And so our belief is that we need clear regulatory frameworks um that we need clearer policy guidance. Um And we've been working on that for, you know, a decade at this point. And I think we're really encouraged by the progress that seems to be uh kind of starting to be made both in the legislature. We obviously had two bills go out of committee. Um There's a lot more room for improvement, but we're really excited about that progress. And we've also seen, I think positive responses in the judicial system where we're seeing folks really critically engage with what is crypto, how should it be regulated? Um, who should have a voice in kind of saying what's what? Um And so in general, our, our feeling is we're going to keep advocating for what's right. We're gonna keep standing with crypto. Um We're gonna keep working in a positive way with policymakers and with regulators and we're optimistic that over the next, you know, months and years, we're going to get to a great outcome that supports innovation in the United States and beyond and continues to protect consumers uh and give them safe, trusted, easy news experiences like coin has been doing for the last decade, you know, you just, just quickly because we got to wrap, but I just said something that made me think of something, you know, you talked about how kind of all this, the, the problems with regulation or stifling innovation in the United States. And, you know, I would agree that a lot of these lawsuits and a lot of this drama is very distracting, right? It's distracting companies and it's costing millions of dollars and you guys are kind of the perfect example of that, right? So I'm just wondering like, I mean, isn't this, see, like while you're sort of building out this thing, right? Like, is all this going on? Is it distracting? I mean, is it, is it a problem? Right? I mean, you, you, you Coinbase is dealing with a massive lawsuit, um, at the same time that you're kind of rolling out, you know, a new product. I mean, it's kind of an interesting case study, right? Like, is it, is it, is it, is it in fact distracting or you guys just sort of like trying to pretend it's not, not going on, you know? Uh, absolutely, an interesting case study. Um It's a thing that we, we definitely talk about internally, but I think our mantra is um we're just gonna put our heads down and build like the future is not gonna create itself, the world's not gonna bring itself on chain. Um And if we can't uh kind of muster that willpower to still innovate uh and to still do this important work even amidst uh that regulatory uncertainty that no one else can. And so we want to be an example for the industry. We, we want to show the world that even as a large publicly traded company, even as a large publicly traded company, you know, in uh you know, a lawsuit in a regulatory uh uncertain environment, we're gonna keep innovating and we're gonna keep advocating for good clear crypto policy. Uh And we're gonna keep working every day to bring the world on Shane because at the end of the day, our mission is to increase economic freedom globally. And the way we do that is by bringing everyone into these new systems that are going to upgrade our old systems and give people better lives, happier families, better businesses uh and make the world a better place. Jesse, thanks so much for joining the show this morning and congratulations on the lunch. Thank you. That was Coin Base head of protocols and base creator, Jesse Pollock.

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