Base Chain: How Coinbase Built the Fastest Growing L2

Coinbase's Secret Weapon in the L2 Wars

When Coinbase announced Base, many dismissed it as just another corporate L2. A year later, Base has more daily transactions than most L1 blockchains and a TVL exceeding $8 billion. I've been using Base extensively, and I want to share why it's succeeding and what concerns me.

Why Base Is Winning

Base has one advantage no other L2 has: Coinbase's 110+ million verified users. While other L2s struggle with user acquisition, Base has a built-in funnel from the largest US exchange. You can bridge to Base directly from Coinbase with zero fees.

Other factors driving Base's growth:

• Ultra-low fees: Sub-cent transactions make it accessible for small users
• Farcaster integration: The decentralized social network thriving on Base created a social layer
• Memecoin culture: Love it or hate it, memecoins drive user engagement and activity
• Developer grants: Coinbase has invested heavily in Base ecosystem development

What's Being Built on Base

Base's ecosystem has grown rapidly:

• Aerodrome: The dominant DEX on Base, generating significant fee revenue
• Friend.tech: Social trading that went viral (though sustainability is questionable)
• Farcaster apps: A suite of decentralized social applications
• On-chain gaming: Several games leveraging Base's low fees

The Centralization Problem

Here's where I need to be critical. Base is the most centralized major L2:

• Single sequencer: Coinbase runs the only sequencer — they order every transaction
• No Base token: Without a token, there's no decentralized governance
• Coinbase can censor: As a regulated US company, Coinbase must comply with government requests
• Revenue extraction: Coinbase earns sequencer revenue from every Base transaction

This is fundamentally different from the crypto ethos of decentralization. Base is closer to a Coinbase-operated payment rail than a decentralized blockchain.

Will Base Decentralize?

Coinbase has committed to decentralizing Base over time through the OP Stack's shared sequencer plans. But commitments and execution are different things. As long as Coinbase runs the sequencer and earns revenue from it, the incentive to truly decentralize is weak.

The Bitcoin Take

Base is a useful product but a concerning precedent. It shows that centralized entities can build "blockchain" products that users love while maintaining full control. This is the opposite of what crypto was supposed to be.

Bitcoin's Lightning Network achieves fast, cheap payments without any single entity controlling the infrastructure. Every Lightning node operator is independent. There's no "Lightning sequencer" run by a corporation. That's the difference between decentralization in practice and decentralization in marketing.

Understand true decentralization at our learning resources.