by Zain Jaffer
In early August 2023, US crypto trading giant Coinbase released their Layer 2 scaling solution for Ethereum called Base. A Layer 2 scaling solution basically allows users to transact their NFTs, crypto swaps, and other Web 3 applications on a different chain which is faster and cheaper from the users perspective than a Layer 1 like Ethereum. It still utilizes Ethereum for the final data settlement layer, meaning the transaction is eventually stored in Ethereum’s more than half a million servers globally forever.
It is important to note that Coinbase stated publicly that Base would not have a token like other L2s, and so the distributed applications (dapps) developers who develop on Base can take more of the revenue cut. This is also attractive to many regular users who do not want to fiddle with too many tokens just to do the transaction they want.
Previously, direct users of Ethereum had to pay expensive gas or transaction fees to use the network. During peak times in a bull market the Ethereum gas fees could reach an expensive amount, but in lean periods users pay a few dollars to use it.With Base and other L2s, that fee gets cut down to cents and it is faster from the users perspective. The settlement on Ethereum still takes a while depending on how busy the network is. The Base L2 was licensed by Coinbase from the popular Optimism rollup L2 tech stack.
There are many L2s that have come out to scale Ethereum. These include Polygon, Arbitrum, Optimism, zkSync, Starknet, zkEVM, even unreleased ones such as Scroll and Taiko. This list of L2s is not complete. Right now even blockchains like Celo and Fantom are thinking of just becoming Ethereum L2s instead of trying to build their own independent ecosystem.
Still this situation where there are too many players and choices does not really bode well for attracting traditional Web 2 users who are not yet used to fiddling with seed phrases, hexadecimal wallet addresses, and gas fees. Hopefully in the future, like when the Internet developed, that they will not need to do some of these steps. If you remember the days before Windows, you needed to type commands on MS-DOS to get things done. Something like that.
Gas fees on Ethereum, aside from the slow speed, has been one of the major complaints of users. Gas can sometimes reach a significant number of dollars during peak hours. With L2s like Base, the speed is fast and you just end up paying cents for the gas transaction.
Although there is talk of finding ways to remove the need to pay gas on transactions, some other party will need to find a way to finance that because gas fees have been the traditional way to pay for a network whose ownership is decentralized and spread out among many server operators.
Because Base is backed by Coinbase, a very popular US company these days with the right marketing muscle to pull it off, this L2 can perhaps achieve a dominance in the market instead of a fragmented L2 market which may just confuse newbies.
In August 2023 during its launch, Coinbase started releasing different types of NFTs on Base which included some artworks from Coca Cola and other popular companies. By framing their Base L2 scaling solution as easy to use without the need for much jargon and tech talk, and with popular dapps like Uniswap, Sushiswap, and its own native dapps, ordinary users might be convinced to finally take the plunge into Web3.
The Base layer 2 by Coinbase is definitely worth watching out for, especially if it can capture the hearts and minds of Web 2 users who are turned off by some of the geekiness of Web 3, especially since it comes from a widely recognized name in the US crypto sector.
SOURCES
- www.base.org the main website for the Base L2 network