As development in the crypto-sphere continues, Coinbase has announced the introduction of Base, an Ethereum Layer 2 (L2) chain. Base is the first blockchain launched by a publicly trading company. It aims to provide a secure and affordable platform for on-chain development. It’s constructed on the OP Stack in partnership with Optimism and is being nurtured within Coinbase. Read on to find out more about Base!
Understanding Layer 2 Blockchains
A layer-2 network functions above the core blockchain protocol (Ethereum), handling transactions away from the Ethereum mainnet (Layer 1). This approach offers several advantages for both developers and users like enhanced scalability and efficiency, accelerated transaction processing and lower gas fees.
Categories of Layer 2 Solutions
Layer 2 solutions can be categorized into several types:
- State Channels: State channels facilitate two-way communication between a blockchain and off-chain transactional channels, enhancing transaction speed and capacity. They don’t require validation from Layer-1 network nodes but are secured through multi-signature or smart contract mechanisms. Final states and transitions in a state channel are recorded on the underlying blockchain. Examples include the Liquid Network, Celer, Bitcoin Lightning, and Ethereum’s Raiden Network. However, state channels trade some decentralization for scalability in the Blockchain Trilemma.
- Sidechains: Sidechains are separate transactional chains closely connected to the main blockchain, often used for bulk transactions. They operate with their independent consensus mechanisms, optimizing for performance and scalability. The main chain’s role is to maintain overall security, validate batched transactions, and resolve disputes. Sidechain transactions are public, unlike state channels, and vulnerabilities in sidechains do not affect the main chain or other sidechains. Setting up a sidechain can be a complex process as it usually involves building infrastructure from scratch.
- Optimistic Rollups: These Layer 2 solutions for Ethereum enable users to execute smart contracts off-chain without broadcasting every transaction to the network. This improves Ethereum’s scalability and reduces transaction fees. Optimistic Rollups rely on Ethereum Layer 1 for ultimate security, as all transactions eventually settle on the Ethereum main chain. They “optimistically” assume transactions are valid and impose a seven-day verification period before funds can be withdrawn from the Ethereum main chain.
- Zero-Knowledge Rollups: Zero-Knowledge Rollups use Zero Knowledge Proofs (ZK-proofs) to verify the validity of numerous transactions in a batch before posting minimal summary data to the main blockchain. ZK-proofs allow one party to prove the truth of a statement to another party without revealing sensitive information. This technology enhances privacy on a blockchain by enabling transaction verification without disclosing confidential transaction data. Zero-Knowledge Proof technology holds promise for enterprise applications, enabling users to share only necessary information while securely transmitting sensitive data.
What is Base?
Base is an Ethereum Layer 2 (L2) platform that provides a safe, affordable, and user-friendly environment for individuals worldwide to create decentralized applications on the blockchain. Base aims to transform the blockchain into the next frontier of online activity and introduce one billion users to the cryptocurrency economy. To achieve this vision, Base will function as both a hub for Coinbase’s blockchain products.
How Base Works
Base is constructed to deliver the necessary security and scalability for your decentralized applications. It capitalizes on Ethereum’s inherent security and incorporates Coinbase’s best practices, ensuring a reliable onramp experience whether you’re transitioning from Coinbase, Ethereum Layer 1, or other interoperable chains.
Moreover, it simplifies decentralized app development by granting access to Coinbase’s products, user base, and toolset. Seamless integration with Coinbase’s products, easy fiat onramps, and robust user acquisition tools empower developers to tap into a user base of 110 million verified users and assets exceeding $80 billion within the Coinbase ecosystem.
Use Cases of Base
Base is dedicated to alleviating security concerns for builders, particularly those from the Web 2.0 realm who may be uncertain about transitioning to onchain development. Base is used for payment apps, token swaps, liquidity provision, bridging, and launching DAOs.
All in all, Base’s impressive achievements include a wide user base and total value locked. It also holds the potential to shape the future of Web3. Let’s see now, how it turns out for the future.