By
Godfrey Benjamin
April 26th, 2024
This shift of USDC stablecoin to Base will provide faster settlement times and reduced transaction fees for Coinbase.com users.
In the latest development, crypto exchange Coinbase announced that it would be moving the USDC stablecoins belonging to its customer and corporate accounts, to its Ethereum Layer 2 platform Base. this comes as part of Coinbase’s commitment to leveraging blockchain technology for seamless financial transactions.
Launched seven months ago, Coinbase’s Ethereum Layer-2 Platform Base has witnessed strong growth amid high demand. As reported last week, the Base network has witnessed a strong surge in trading volume and total value locked by its DeFi applications. This also makes Base the sixth-largest Layer-2 scaling solution on the Ethereum blockchain. The Coinbase Base platform leverages optimistic rollups to streamline off-chain transaction processing while ensuring smooth integration with Ethereum’s base layer.
On Monday, March 26, Coinbase Vice President Max Branzburg announced the exchange’s bold strategy on social media platform X. He called this a substantial advancement that seeks to provide faster settlement times and reduced transaction fees for Coinbase.com users. Note that this transition only impacts the Coinbase.com account users. On the other hand, the Coinbase Wallet users remain unaffected since they have direct control over their private keys.
1/ Going forward, Coinbase is going to be storing more corporate and customer USDC balances on Base. This enables us to manage and secure customer funds with lower fees and faster settlement times, with no impact to the Coinbase user experience.
We are excited to continue to…
— Max Branzburg 🛡 (@maxbranzburg) March 26, 2024
Coinbase Won’t Compromise on Security
Traditionally, Coinbase has always employed a sophisticated multiparty computation system in order to safeguard user tokens. Thus this ensures robust security for digital assets stored on Coinbase.com. Branzburg further emphasized that despite transitioning to an on-chain framework, Coinase remains committed to its foundational policy of 1:1 asset holding. This makes sure that customer assets are fully backed and not subject to lending without explicit authorization from the asset owner.
In addition to the technical upgrade, this move represents a strategic development towards a future where financial systems operate primarily on blockchain technology. David Hoffman and Ryan Sean Adams, co-hosts of the Ethereum-centric show Bankless, also lauded Coinbase’s initiative as groundbreaking. They called this a trailblazing step that could inspire other cryptocurrency exchanges and financial institutions to explore similar blockchain integrations. Hoffman and Adams envision a future where every asset and bank operates on blockchain platforms.
Coinbase is carving the path towards a future onchain financial system
Eventually, all financial institutions will move their operations onchain
and they will be better for it https://t.co/dVoAfms0dv
— DavidHoffman.eth/acc🦇🔊 (@TrustlessState) March 26, 2024
Despite the enthusiasm, some members of the community have voiced concerns over the centralization of Base, with Coinbase currently serving as the sole sequencer. Critics argue that this could undermine the decentralized principles inherent in blockchain technology. However, Coinbase has outlined a long-term vision to gradually decentralize Base, aiming to address these concerns by making Base a more open and participatory network.
