Coinbase is set to transfer its customer and corporate holdings of the USD Coin (USDC) stablecoin to Base, its Ethereum layer-2 blockchain platform launched around seven months ago.
Max Branzburg, Vice President of Coinbase, announced the move on March 26, stating that this transition aims to enable the crypto exchange to handle and safeguard customer funds more efficiently, with reduced fees and quicker settlement times.
It’s important to note that this shift will affect only Coinbase.com accounts, as users of Coinbase Wallet manage their private keys independently.
Presently, tokens held by Coinbase.com users are secured by multiparty computation within Coinbase’s custodial wallet.
Branzburg emphasised Coinbase’s commitment to maintaining a 1:1 ratio of customer assets and clarified that the exchange does not lend out funds without explicit instructions.
David Hoffman, a co-host of the Ethereum-centric show Bankless, described Coinbase’s move to the blockchain as a step towards establishing a future financial system based on decentralised protocols, echoing similar sentiments shared by Ryan Sean Adams, another Bankless co-host, who sees it as setting a precedent for both cryptocurrency exchanges and traditional banks.
However, not everyone is enthusiastic about the transition. Some users, such as “callmeKappa.algo,” have raised concerns about the current level of centralisation within Base, noting that Coinbase serves as its sole sequencer, effectively maintaining control over the chain.
Coinbase, however, has expressed its intention to gradually decentralise Base over time.
Base, launched as an Ethereum scaling solution in August 2023, utilises optimistic rollups to handle transaction data off-chain before submitting it to Ethereum’s base layer.
Coinbase took steps to enhance transparency and accountability by open-sourcing Base’s code in October, inviting public contributions to the project.
As of writing, Base stands as the fourth largest Ethereum layer 2 platform by total value locked, with $2.63 billion secured, trailing behind Arbitrum, Optimism, and Blast, according to L2BEAT data.
Base reached a milestone of 2 million daily transactions on March 16, while the influx of new daily users continues to rise steadily.
