Base

Base is an Ethereum Layer 2 blockchain launched by Coinbase in August 2023, built on Optimism's OP Stack rollup technology. It functions as Coinbase's infrastructure play for scaling Ethereum applications while maintaining tight integration with Coinbase's exchange, custody, and payment products.

Technical Architecture

Optimistic Rollup: Base batches transactions off-chain and posts compressed data to Ethereum mainnet, inheriting Ethereum's security while achieving transaction fees under $0.01 and ~2-second block times. Uses fraud proofs to ensure state validity.

Sequencer Control: Coinbase currently operates Base's sole sequencer - the node responsible for bundling and ordering transactions before posting to Ethereum. This creates centralization concerns: Coinbase can theoretically censor transactions, reorder them for MEV extraction, or discriminate in processing.

EVM Compatibility: Fully compatible with Ethereum Virtual Machine, allowing developers to deploy Solidity smart contracts without modification. Supports standard Ethereum tooling (Hardhat, Foundry, Web3.js).

Strategic Positioning

x402 Settlement Layer: Base serves as the primary settlement network for Coinbase's x402 protocol, enabling AI-to-AI autonomous payments with near-instant finality and negligible fees. USDC transfers on Base power machine commerce infrastructure.

Coinbase Ecosystem Lock-In: Native integration with Coinbase Wallet, on-ramps, and custody solutions creates switching costs. Coinbase earns sequencer revenue from all Base transactions while controlling transaction ordering - a role historically reserved for decentralized consensus mechanisms.

Decentralization Roadmap: Coinbase has committed to eventually decentralizing Base's sequencer through shared governance with the Optimism Collective, though specific timelines remain undefined.

Centralization Concerns

Critics note that Coinbase's sequencer control creates a single point of failure, potential censorship vector, and discretionary authority over a network processing billions in value. While technically superior to traditional payment rails in speed and cost, Base represents infrastructure centralization disguised as decentralized finance.

Related Concepts

• Layer 2: Scaling solutions built atop Ethereum
• Ethereum: Base's underlying settlement and security layer
• USDC: Primary stablecoin on Base for payments
• x402 Protocol: Payment standard using Base for settlement