Coinbase Enters Phase 3.5 of ‘Secret Master Plan’ With L2 Launch
Coinbase’s vision is to eventually make it possible to sequence several chains at once, an exchange executive told Blockworks
Primakov/Shutterstock.com modified by Blockworks
Coinbase is launching the testnet of its Ethereum layer-2 network, Base.
Base will be incubated inside Coinbase but has plans to later be completely decentralized. It will be powered through Optimism’s OP stack, joining as the stack’s second core contributor.
Its code will be completely open-source, enabling it to preserve the critical, global, permissionless nature of cryptocurrencies, Jesse Pollak, protocol lead at Coinbase, told Blockworks.
“We’re working with Optimism because we believe this must be decentralized and open to everyone,” Pollak said in an interview. “Doing that in collaboration with others is going to be the path to making that actually happen.”
Considering there are no plans to issue a token, Base will use ether as its native asset, meaning users will be paying for gas fees in ETH. There are plans, though, to eventually bring USDC onto the network, according to Pollak.
“One of the things we’re excited about as well is what’s called account abstraction — which is the ongoing effort to make it easier for users to have more powerful wallets,” Pollak said. “[This] will allow users to pay for gas in any currency they want, even if the underlying cost is in Ethereum.”
Account abstraction, according to Pollak, is “something really powerful that will start to emerge in the year ahead.”
Vision to build next super-chain
Coinbase plans to run its own sequencer for Base in its initial launch, with plans to later decentralize the sequencer and make it possible to sequence multiple chains at the same time.
A sequencer is similar to a validator. They are responsible for ordering and executing transactions and submitting them to the layer-1 chain, which in this case will be Ethereum.
The long-term vision though, Pollak said, is to have powerful interoperability between chains.
“Rather than having one chain that’s monolithic and requires everyone to be in the same place, we can actually have many chains that work together to scale Ethereum,” he said.
For Base’s initial launch, Coinbase will partner with a handful of multichain bridge providers to allow interoperability with Ethereum layer-1 and other layer-2s — as well as layer-1 ecosystems including Solana.
Ben Jones, the co-founder of Optimism, told Blockworks that as technology continues to evolve, capital efficiency will improve alongside it.
“When you’re using the internet right now, you’re not thinking about what tier two ISP you’re connected to at worst you’re yelling at Spectrum, but once you’re on [the internet] you’re not worried about what grade your packets are being routed and all of that…and so we can get to a future like that as well,” Jones said.
Added Jones: “That’s why we have this word super chain, which is a little cheeky, but it’s trying to say that it’s not about having a multi-chain, but rather building one cohesive, unified network.”
The modular solution
One key goal of the initiative is to create technology that can be easily upgraded.
That goal is one of the main reasons why Coinbase chose Optimism as a partner for its latest release of Base, Pollak said, attributing it to the fact that the OP stack is built to be modular.
Although zero-knowledge (zk) technology has been gaining momentum, Pollak said the difference in technology doesn’t define the product. He described it as more of an implementation detail.
“We believe that in the future, we will likely have roll-ups that have both zk components and optimistic components,” he said. “What’s important today is building the technology stack in a way that allows it to be easily upgraded.”
Jones said that the “reality is you need to build infrastructure that makes it good to run chains, period.”
“When you architect that the right way, you open up the door for things like the proof to be modules that we can slot in and upgrade over time,” Jones said.
Modularity is not a limitation of the software, according to Jones — but rather a particular derivation pipeline that enables data layers to be swapped.
“It will eventually allow us to do that with the right proof systems in a way that makes fewer sacrifices,” he said.
Similar to other layer-2s, data availability on Base — the guarantee that all transaction data for a block is available to different network participants — will be on Ethereum.
“We’ve been working with Optimism for the last year on something called EIP 4844 — or proto danksharding — which is creating a new form of data availability on Ethereum,” Pollak said. “That is going to make it 10 to 100 times cheaper for rollups like Optimism and Base to be running, which will make it cheaper for users.”
The shipping of EIP 4844 is targeted for this summer, Pollak said.
Entering phase 3.5 of Coinbase’s “Secret Master Plan”
Coinbase’s end goal is to make it easier for developers to build useful decentralized applications (dapps) and distribute them broadly.
CEO Brian Armstrong has said as much.
In 2016, Armstrong in “The Coinbase Secret Master Plan” said that effort would be divided into four different phases: Develop the protocol; build a digital currency exchange; build a mass market interface for digital currency apps; then finally build the apps that power an open financial system.
“For the last while, we’ve been stuck between [phases] three and four, we’ve had consumer interfaces, but we haven’t had the useful dApps. Base is our bet that we can build a better platform that makes it easier for developers to build applications that are actually useful, and can bring a billion users into the crypto economy,” Pollak said.
Pollak deems Coinbase as well-positioned to do so. It currently serves over 108 million verified users — and has access to over $100 billion worth of assets in its ecosystem, he said.
“We couldn’t be more excited to build what we consider phase 3.5 of the secret master plan,” Pollak said.
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