gm readers and welcome back to another edition of Decrypting DeFi.Â
Founded in 2012, Coinbase used to just be a simple market to buy and sell Bitcoin. A lot has changed since, and the decade-old firm is working to keep up with the times.
Last month, for example, Coinbase announced the launch of its native layer-2 scaling solution called Base. Itâs built using the OP Stack, which is to say the new product iss using a lot of Optimismâs technology.Â
Itâs an interesting play, especially for a highly-centralized, highly-regulated public company in the United States.Â
After all, the OP Stack is an open-source set of tools that lets anyoneâbe it a fully-decentarlized crypto project or a company that trades on the Nasdaqâspin up their very own rollup chain.Â
Rollups, by the way, are one of many scaling solutions. They batch transactions on a separate network then compress them into a single transaction before executing it on the Ethereum mainnet. This keeps the mainnet low-cost and fast for other projects.Â
Whatâs more, the OP Stack is modular and fully-customizable, and may remind you of the buzz-y term âappchain,â where everything from the consensus mechanism and data layer can be fully adjusted depending on the projectâs needs.Â
In Coinbaseâs arrangement, the firm will also be the sole âsequencerâ for this layer-2. A sequencer is a node, or set of nodes, that help execute those batched transactions on the mainnet.Â
Optimismâs sequencer is also a huge revenue generator for the Optimism foundation. For every transaction on Optimism and every execution on the mainnet, Optimism gets a slice.Â
Thus, the incentive is clear: Get as much activity occurring on this roll-up as possible.
It looks like Coinbase is going the same route.Â
Coinbase goes crypto-native
Itâs all part of a greater plan, Coinbaseâs protocols lead Jesse Pollak toldDecrypt at ETH Denver last week.Â
âCoinbase, recently, with things like USDC, Coinbase Wallet, cbETH, and our dApp Wallet, has started to build what we call âon-chain native products,ââ said Pollak. âItâs still a very small percentage of our overall portfolio.â Naturally, Base is also included in that small, but fast-growing, toolbox.Â
The cbETH asset is another interesting example of Coinbase going on-chain. Itâs a staked version of Ethereum, also called liquid staking derivative or LSD. So, whenever users stake their Ethereum using Coinbase they get cbETH in return, whichâlike other LSDsâcan be reused in the wild world of DeFi. Thereâs already more than $29.5 million in cbETH earning interest on Aave.
On Wednesday, they also rolled out a white-label wallet solution for brands looking to spin up a crypto wallet. The projectâs lead also hinted at some âhousehold namesâ joining in on the action.Â
With all this in mind, the Coinbase-native layer-2 solution and a suite of on-chain products makes the play pretty clear.Â
By generating new, on-chain things for Coinbase users to do, theyâre prepping a mass audience to move their activity off of the exchangeâbut not necessarily out of the companyâs pockets.Â
New asset transfers and activities occurring on Base may soon become a huge money generator for the company thanks to that sole sequencer. Itâll also bring a ton of value to Ethereum. Surely Wall Street is taking notes on this.
Largest NFT Collectors Joined Undeads Metaverse NFT Drop in First Public Mint
Among the noteworthy participants are n0b0dy.eth, a prominent and esteemed major collector who owns NFTs valued at $18 million, @CliveAlderman, whose NFTs are worth $2 million, and an anonymous holder of BAYC.
Neal Stephenson coined the term âmetaverseâ in his seminal 1992 sci-fi hit novel âSnow Crash.â Now heâs helming a metaverse blockchain company called Lamina1 and advocating for one free and open metaverse. He spoke to Dan Roberts and Stephen Graves at length about what he got right and wrong in âSnow Crash,â goggles and flat screens, Big Tech, NFTs and digital ownership, and more. Watch and make sure to subscribe to the gm podcast on Apple or Spotify.
