Last week, Coinbase announced Base, their Ethereum Layer 2 network. We spoke to their Head of Business Development in Europe, Asia, and the Middle East about the future.
Last week, Coinbase announced the testnet launch of Base, a new Ethereum Layer 2 (L2) network designed to provide a secure, low-cost, developer-friendly platform for building decentralized apps or “dapps” on-chain.
Peter Stilwell, their Head of Business Operations & Strategy for the EMEA region, thinks that Base will be the most exciting product for the next couple of financial years. “I think Base is going to be the big one. I think we are going to see a lot of interesting companies working on that.”
The goal of Base is to serve as a home for Coinbase’s on-chain products while also being an open ecosystem for anyone to build. The project is incubated within Coinbase and will progressively decentralize over time. It is part of the company’s plan to onboard one billion people into crypto.
Since the announcement, the company has seen modest increases in its share price.
Base is secured by Ethereum and offers gasless transactions and bridges for multichain applications. Base is also open source and designed to be interoperable with other chains, with a focus on being decentralized and freely available. Coinbase has also launched the Base Ecosystem Fund to support early-stage projects building on Base.
According to Stilwell, Coinbase wants to create a chain with the same “ease of use” brand that the exchange has. “We don’t believe that’s going to be one Layer-2 that will rule them all,” says Stilwell. “But we were looking to create something easy to use, that’s fast, and that comes with the security of Ethereum, and that comes with the trusted name of Coinbase.”
Coinbase Has Been the Normie Exchange. Can Base Be the Normie Chain?
Coinbase, one of the world’s largest cryptocurrency exchanges, has emerged as a go-to platform for novice users entering the crypto world. The exchange has been lauded for its user-friendly interface and straightforward onboarding process, making buying and selling cryptocurrencies accessible and approachable for beginners.
A survey by The Block Research in 2021 found that Coinbase was the preferred exchange for US retail investors, with 43% of respondents using the platform. The survey also revealed that Coinbase was the most recognizable brand among retail investors, indicating the exchange’s efforts to establish a trusted brand have paid off.
However, despite a recent bump following the Base announcement, the stock price is down approximately 83% since its peak in November 2021. It’s a bounce that is much needed. Earlier this year, the company announced it would be slashing its workforce by about 20% in an effort to reduce overall operating expenses by 25%.
According to CryptoCompare, Coinbase’s market share fell from 5.9% in November to 4.1% in February. Binance, the world’s largest crypto exchange, gained market share in February, reaching nearly 60%.
Coinbase Turns to Europe
Last year, Coinbase expanded into markets in France, Spain, Italy, The Netherlands, and Switzerland. Currently, the UK is its largest international market.
How important is Europe to Coinbase’s medium-term strategy? “Super important,” says Stilwell. “Europe is our biggest region. So that’s why we’re going off and getting these registrations in various European markets. That’s why we are localizing our product to European customers, and that’s why we’re looking for partnerships in Europe as well. We’ve obviously got an office in Ireland and an office in Germany. With MiCA coming down the pipeline, it’s gonna be an amazing opportunity for Europe as a forefront of crypto regulation.”
MiCA (Market in Crypto Assets Regulation) is a new law for crypto-assets in the European Union. It will make rules to protect people who use crypto-assets and is designed to ensure stability across 27 countries. The law covers three types of crypto-assets and regulates how they are made and traded. However, the landmark legislation has been delayed until April due to translation issues. (All legal acts must be available in the EU’s 24 official languages.)
“Generally Positive” About Upcoming EU Regulation
MiCa, which will impose stricter rules on the EU crypto economy, presents an opportunity for Coinbase, which already bills itself as the “most regulated” exchange. What’s their take on it? “Generally positive,” he says. “There’s a lot there — there’s a little bit that’s not there as well — but I think it’s a step in the right direction. Hopefully, it will continue to evolve as the industry evolves and will add pieces to it around things like stablecoins, DeFi, and self-custodial wallets. I think that will be important.”
“So far, I have been pretty impressed with the EU’s approach to regulation. I like their willingness to collaborate, listen, and work on making something that protects customers but doesn’t stifle innovation.”.
When pressed, Stilwell declined to say whether he preferred the UK or EU approach to regulation. But acknowledged they were “taking a little longer.” On the post-FTX climate, Stilwell maintained that Coinbase’s close and productive relationship with regulators meant very little had changed in that regard.
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