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Coinbase has no plans to launch a token for its layer-2 network Base, according to the crypto exchange’s CEO Brian Armstrong.
“We’re not planning to make any token for Base,” Armstrong told Decrypt during an exclusive interview.
He appeared to contradict an earlier statement by Coinbase Chief Legal Officer Paul Grewal, who told Decrypt in September that, “I think a token could be viable at some point in the future,” adding that, “It’s not something we’ve ruled out entirely.”
A Coinbase spokesperson confirmed that the exchange has "no plans" to issue a Base network token.
Armstrong said that the exchange is “very happy” with how Base has progressed since its launch in August, noting that within a couple of months of launching it had become the third-biggest layer-2 in terms of total value locked (TVL). “It has about $500 million in TVL, which is really good,” he said, adding that on launch it had around a million wallets interacting with the chain.
“Now, we’re doing the hard work to go integrate it with various applications,” Armstrong said, adding that developers have been “super excited” to get to grips with the layer-2.
A layer-2 is a type of cryptocurrency network built on top of existing networks, such as Ethereum. As secondary layers, these scaling networks are able to handle transactions at a much quicker pace, and at a much cheaper rate, than the base layer. There are a number of such networks, some with their own native tokens, competing for market share in the crypto space—and Base has quickly become a favorite among users in just a few short months.
Armstrong said the company is keen to “not make [Base] a Coinbase thing, but something that’s much broader,” pointing to the fact that Base is built on top of the Optimism stack on Ethereum. “We’re trying to do it in a way that’s interoperable with the rest of the crypto community,” he said, while stressing that “It’ll have the full backing of Coinbase, which hopefully gives it some sense of stability and trust.”
One second, one cent
Armstrong told Decrypt that Base and other layer-2 solutions form part of an “ambitious” internal stretch goal to make the average transaction on Coinbase “under one second and one cent.”
That will require improvements to Base, he said, but will also mean making layer-2 “the default on our platform, not something that people do occasionally, where they bridge to layer-2 and do something.”
“That’s not just with Base,” he added. “That’s things like integrating the Lightning Network on Bitcoin, it’s integrating other layer-1s that are very fast, like Solana.” Noting that about 7% of transactions through Coinbase use layer-2, he explained that Coinbase has set itself internal goals to “get that number way up” as part of a “multi-year effort.”
“We need to get it where probably 99% of transactions are happening on layer-2 to get those performance goals of under one cent and one second,” he said.
Likening the shift to layer-2 as being akin to "the internet moving from dialup to broadband," Armstrong said that "in terms of bringing new applications online I think it's incredibly important."
Armstrong added that he’s “pleasantly surprised” to see other crypto exchanges following suit and launching their own layer-2 networks, while suggesting that the industry should consolidate around one or two layer-2 networks.
In early November, CoinDesk reported that the San Francisco-based Kraken, a Coinbase rival, was exploring launching its own layer-2 network, potentially in collaboration with Polygon. A week later, crypto exchange OKX announced X1, a zero-knowledge layer-2 built on Polygon tech.
"It would be probably a mistake if every application had their own L2, so I question a little bit whether it's necessary," Armstrong told Decrypt. “I welcome that other people are exploring it, and generally we need to get every app on some sort of layer-2, probably.”