Aug 3, 2023

Coinbase (COIN) announced that its layer-2 blockchain named Base will be open to the public next week.

Video transcript

We're gonna talk about coin base which is moving forward with base. It's a layer two proposal built on top of the optimism op stack base is a new way to build on chain. Coin base is pushing forward with this idea of on chain some or bringing in huge brands like Coca Cola Atari and other groups like open C. In order to build more applications on chain. They first launched this in July for developers and opening up to the public. This month, we've already seen a few different things happening with base, notably the bald token, a meme coin meme coin which took off just last week and developed into $100 million market cap token in short order and then quickly fell apart. A lot of development for this story. I gonna throw it to you. First of all, talk about bald base and a lot of things happening with the optimism stack. Wow, there's so much to so much to go on here. First of all. Yeah, optimism uh looking pretty good in terms of the scaling solutions out there racking up some key wins of which base is a good one. Bald. We talked about yesterday and the potential um Alameda linked shenanigans um that some breadcrumbs on chain suggest uh could be at play. And yeah, on chain summer, man, I mean, that's a bit aspiration for sure. But I think L two s and roll ups are very much part of the conversation right now in the broader crypto space, right? How do we make um you know, mainstream throughput possible? You can't do it on the base layer, you can't do it on the Ethereum main net. You gotta do it on these roll ups, right? Whether that's the optimism stack, whether that's something like ZK sync or whether that's something like Arbi, we've seen a lot of momentum around these faster cheaper alternatives to Ethereum main net. And I think um coin base in choosing the Optimism stack, sort of put a big stamp of approval that I think others in the space are sort of uh following. So yeah, ops stack uh is definitely uh looking pretty good out there at the moment. But yeah, we'll see, I mean, we'll see if this will be the thing that ultimately tics more people on chain. I think it's always worth stating that the numbers of crypto users who are, who are interacting with on chain applications is still pretty ridiculously low. So if this can move the needle through a big brand name, coin base, that's fantastic. Uh But still, uh we, we're far off from any type of on chain season. Uh But hopefully this is something that gets us closer to those on chain ideals rather than interacting with the coin bases. Uh On the centralized exchange side, David curious for your thoughts on this one. There's a lot to go on. OK, Zach, I'm going to kind of not exactly push back, but I have a different take, which is that I want to exactly do all this stuff through my Coinbase account, which I publicly admitted to having for the first time a couple of months ago. And what I want to be able to do is take my Ethereum on Coinbase and put it into a liquidity pool on Unisa through base. And I think that if they can make that happen somehow and like, you know, regulators, who knows? But you know, that I think is the play here that makes this incredibly insanely powerful for coin base is like, if they can on board somebody onto an L two through a coin base account somehow in a way that's reputable and trustworthy, then like this is a, this is potentially a huge L two and just to clarify for people who might not be familiar with some of this terminology. You know, this is built on top of Ethereum, just like optimism just like arbitrary. And I don't, I don't know a lot about the capabilities, but it has that basic security model of sharing it the security. So I think there's a lot of potential here and it is really, you know, it is a bridge of a certain sort, a kind of, I don't know, spiritual bridge where you have coin base itself telling people, you know, it's great to go do things on chain on these layer twos and, and I think it's, I think it's a big deal and I think it has real potential. I mean, regulators are going to do what they're going to do. So we'll see, but I'm pretty bullish on this one. Danny. What do you think? Yeah, I'll, I'll take it from. Yeah, I'll, I'll jump in here. Uh I'm interested to see how coin base handles the public announcement of the launch of its uh this layer too because they've already missed the opportunity to seize the narrative from the outset as that you guys talked about on the show yesterday. This uh meme Coin Bald took all of the energy out of this announcement, I think because people already aware that to a certain extent, you can already use base. You can get tokens in through what's currently a one way bridge on August 9th. I think they're going to open up so that you can take the tokens out. But there's always this risk in creating permission list systems that you don't know what's going to happen on top of them. Right? So I'm Coin base. I want to be seen as a buttoned up a company that we could take seriously. It's kind of hard to accomplish that when the very first headlines that are coming out of your layer too are this meme coin that, that gets rug pulled because of just all the liquidity, get all of the liquidity getting withdrawn. So I'm really curious to see how Coinbase handles and tries to reframe and retake the narrative here, Zach, I'll talk to you. Yeah, we've seen this with the Binance Smart Chain. Now the B and B chain, right? Sort of like a uh at times cesspool of permission less crap that got a lot of people into a lot of trouble in terms of uh getting rugged and getting otherwise exploited by various nefarious actors. So again, I think you're right, Danny to, to uh to hone in on that point, right? To have the Coinbase brand name so closely associated with a permission list system could ultimately backfire, right? I think the pro side is, hey, Coinbase has long said we need to push people into more on chain applications. That is sort of the true power of crypto. You don't need us, you can just interact with the chain and that's a beautiful thing. But the flip side of that coin is anyone can interact with that chain and that includes disastrous blow ups that we've seen on B and B chain and other chains across the world. So I think there is that potential brand risk that coin base could face I want to know what David about that because I think the Super app, right? I mean, I don't know the super app, I'll leave that to one side. But the idea of the the brand risk involved in a decentralized platform, I think that what I hope for here is that things will go badly, you know, that like there will be bad stuff to happen because I don't hope for it. I just think it's an classic classic David. He would. But the point is that you have to change the way that people perceive this and coin based, being involved in this is going to do that, right? Where Coinbase is going to be out there telling the story that like, no, we genuinely don't control this and that's why things are possible to happen and there are other ways to treat this than like blaming it on us. We built a platform, but we're not the ones in charge and that's real and that's why the bad things are happening. So like it kind of makes a good point in a certain roundabout way. I think two bits of context for us before we go on to the next story, I want to throw in there one, Brian Armstrong, the CEO of coin base did make an announcement yesterday on Twitter, that coin base is going to actively integrate the lightning network into its stack for a long time. Bitcoin have derided coin base, not only for listing tons of tokens on this exchange but also for failure, failure to integrate lightning into the stack. Another story I think is important here is of course the ongoing deal with SEC in coin base in court that sparked off earlier in the spring and is ongoing Coinbase decision to move forward with layer two stack and move forward with listing other tokens. Sort of shows you what they think about the entire case with the SEC. I'm sure the SEC has its own opinion on something like bald token launching on coin base's own product.

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