Coinbase, one of the largest cryptocurrency exchanges in the world, has recently launched its own blockchain network called Base. Base is a proof-of-stake network that aims to provide fast, secure and scalable transactions for Coinbase users and developers. In this blog post, we will review some of the features and challenges of Base, and how it compares to other existing networks.
Base uses a consensus algorithm called Tendermint, which is also used by networks like Cosmos and Binance Chain. Tendermint allows for high throughput, low latency and finality in seconds.
One of the key metrics to measure the success of a blockchain project is the total value locked (TVL) of its base network. TVL is the amount of assets that are staked, deposited, or locked in smart contracts on a blockchain platform. It reflects the level of trust, activity, and adoption that the platform has among its users and developers.
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As of August 25, 2023, the TVL of Coinbase’s base network is $12.4 billion, according to DeFi Pulse. This ranks it as the fourth-largest layer 1 platform by TVL, behind Ethereum, Solana and Binance Smart Chain. The TVL of Coinbase’s base network has grown by 240% since the beginning of the year, driven by the launch of new features, such as NFT marketplace, decentralized exchange and lending platform.
TVL can be influenced by various factors, such as the number and quality of decentralized applications (dApps) built on the platform, the incentives and rewards for validators and delegators, the security and scalability of the network, and the market conditions and trends. A high TVL indicates that the platform is attractive, competitive, and valuable in the blockchain space.
In the future Base might issue a native token, which may be used for staking, governance and paying fees. Through this, BASE holders can delegate their tokens to validators, who are responsible for validating transactions and producing blocks. Validators earn rewards for their service, but also face slashing penalties for misbehavior or downtime.
Base supports smart contracts and decentralized applications (DApps) through the Ethereum Virtual Machine (EVM) compatibility layer. This means that developers can use existing tools and frameworks to build and deploy DApps on Base, as well as interact with other Ethereum-based networks.
Base also supports interoperability with other blockchains through the Inter-Blockchain Communication (IBC) protocol. IBC enables cross-chain transfers of tokens and data, as well as cross-chain contract calls. This allows Base to connect with other networks in the Cosmos ecosystem, as well as other IBC-compatible chains.
Base is still a relatively new network, and it faces some technical and operational challenges. For instance, Base has experienced some network instability and performance issues in the past few weeks, leading to delayed transactions and failed contract executions. Coinbase has acknowledged these issues and is working on improving the network reliability and scalability.
Base also faces some regulatory and legal challenges, as it operates in a complex and evolving environment. For example, Base has to comply with various anti-money laundering (AML) and know-your-customer (KYC) requirements in different jurisdictions, as well as deal with potential tax implications for BASE holders and validators. Coinbase has stated that it is committed to following the highest standards of compliance and transparency, but it also acknowledges that there may be some uncertainty and risk involved.
Base also faces some competitive challenges, as it enters a crowded and dynamic market. There are many other blockchain networks that offer similar or better features than Base, such as Ethereum 2.0, Solana, Avalanche, Polygon and others. These networks have larger user bases, more developer activity, more network effects and more innovation potential. Base will have to differentiate itself from these competitors and prove its value proposition to attract and retain users and developers.
Base is an ambitious project that aims to leverage Coinbase’s brand recognition, user base and expertise to create a leading blockchain network. Base offers some attractive features such as high speed, low cost, smart contract compatibility and cross-chain interoperability. However, Base also faces some significant challenges such as network stability, regulatory compliance, legal uncertainty and market competition. It remains to be seen how Base will overcome these challenges and achieve its vision of becoming a global platform for the crypto economy.