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29 March 2024
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Brian Armstrong: “The industry is in the desperate phase;” Coinbase Unveils L2 Network


Coinbase is fighting the bear market, but company CEO Brian Armstrong says they are made for the long haul.

“The narrative in the crypto industry tends to flip every couple of years. It’s either irrational exuberance or despair. Neither is true at any given time, but right now we are in one of those desperate phases.”

Coinbase’s fourth quarter and full year 2022 balance sheet for shareholders shows the exchange lost $2.64 billion last year. In 2021, the company posted a net income of $3.62 billion.

Despite the negative numbers, Armstrong says the current environment could even be beneficial for companies like Coinbase. He says that beyond the negativity, good things are happening in the crypto space:

“The price of Bitcoin in January 2023 is up 80% compared to the average price in 2020. The number of software developers working with cryptocurrencies has doubled since 2020, and that’s a big sign, I think, of where the future is headed. it’s going.”

Coinbase is officially entering Layer 2

The exchange announced Base, a test version of its new Ethereum Layer 2 network, on ETHDenver. Modeled on the Goerli testnet, Base is designed to eventually connect to the Ethereum mainnet, according to Jesse Pollack, senior director of engineering at Coinbase.

“Our goal with Base is to launch a platform that makes it easy for developers to build apps that users really want to use, and then plug them into the Coinbase suite of products to make those apps really easy to use,” said Pollack. Base, however, will not have its own token.

Base is built on top of the open source OP Stack, a blueprint for blockchain compatible layer 2 networks that was created by Optimism, layer 2 network on Ethereum. Coinbase will also be joining Optimism as a core developer for the OP Stack.

In addition, Base will also bundle the company’s consumer products such as Coinbase and the Coinbase Wallet, and thus “give developers access to the more than 100 million users in the Coinbase ecosystem” and “enable the scale of developers who are used to building web2 applications are used to this new web3 economy,” said Pollack.

“We expect there to be a lot of these Layer 2s, which is why we’re building on top of OpenStack, which is open source anyone can use to run one of these L2s or roll-ups,” Pollack said, adding, “and then we can work to drive interoperability between all of them to work together more and more, almost like that original vision of Ethereum in the execution layer, but in this new world of Layer 2.”

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