Host: Jesse, it's great to have you back on the Bankless show. We just reviewed some recent data from Base, and there are a few data points that are fresh in our minds. Base is now ranked third among Layer2 solutions in terms of total asset value, with a TVL of approximately US$5.2 billion. In terms of daily active users or weekly active users, it is approximately 1.3 million. Base's transaction fees are under 5 cents. If I remember correctly, Base was launched in August 2023. Give us a summary. How has it been so far, and how far have we progressed in our journey?
Yes, we are still in Day 1, and that is what I tell my team every day. We still have a lot of work to do to bring the entire world on-chain. That being said, now that it has been about eight and a half months, the team and I are really astounded by the progress we have made.
I think the past nine months can be divided into three phases. The first phase was Onchain Summer, when millions of people joined Base's chain and it was full of energy. I think this is a great way to promote the development of the network and economy and realize the culture we want to achieve. During that time, we saw a significant increase in many indicators and expected results.
After Onchain Summer and in the fall, the enthusiasm waned a bit, it kind of stagnated, like a bit of a melancholy trough. We had a big launch, it was very exciting, but now we're facing the reality that our team, frankly, is also very exhausted. We worked hard for a year to get this project out, worked hard in Onchain Summer, and then spent September, October, November to adjust and get our balance back. At the same time, we also have to think more broadly about where we are going in the next one to two years, how to establish our mission and strategy. I think we've done a lot of good work in this regard.
Phase 3 really started in the first quarter of this year. We were in the top 10 Layer 2 solutions by transaction activity and TVL at the beginning of the year. If you look at the data now, we are third by TVL, which is a very lagging indicator. Some projects have been building for three years, so it will take a long time for us to catch up, but if you look at daily active users, transaction volume, and number of developers, it seems that Base is now the largest Layer 2 solution in the world. Most of the time, we are competing with the largest chain after Ethereum, which I think is very remarkable.
In mid-March, we upgraded Ethereum to 4844, which reduced Layer 1 fees and other Layer 2 fees. Now we have a place to store data specifically designed for Rollup processing, which means that instead of having to pay a lot of fees for all the data stored on Layer 1, we pay less fees. This is a really amazing solution, and I think it will enable Layer 2 to scale as part of Ethereum's Rollup scaling strategy.
After this upgrade, we saw a significant drop in Base fees, and at the same time we saw a huge increase in demand. In a week and a half, our demand increased by about five times. The result of this is that despite very low fees on Layer 1, we are seeing fairly high fees on Layer 2 due to the increase in demand.
That's because just like Ethereum, the Base chain has a fee market that's defined based on two factors. The first is what's called the gas target, which is the target amount of gas that the Base network will be able to process per block or per second. If more transactions are processed than the target, fees go up. Same mechanism as Ethereum's 1559. Fees increase exponentially. If less gas is processed per block than the target, fees go down. It's an automatically recalibrated system where if demand on the network exceeds the capacity of the network, fees go up. If demand decreases, fees go down. So we're seeing demand that's exceeding our target capacity, which is causing our fees to go up significantly.
Now the gas target is a variable parameter, but if you change the target, there will be many other effects. And you can't change the target arbitrarily, because these effects may cause big problems, and you need to take a very principled approach to enable the network to scale healthily.
We think there are three main issues to addressing this. The first is that there needs to be more data availability as we increase the target to be able to process all transactions. More gas means more transactions, which means more storage needs to be placed on layer 1. So we need to continue to expand data availability on layer 1 through PureDAS and the entire Protodank or Dank sharding roadmap. This is an Ethereum layer 1 roadmap issue, but we will continue to invest in this area.
The second challenge is how much gas the actual layer-2 nodes can handle. That is, if we run a block every two seconds, and we want to process 10 million gas per second, can we process all the gas in these two seconds or less so that all nodes can continue to run. This involves a lot of EVM optimizations, such as can we do optimistic processing? Can we change the database format to improve performance?
The second aspect also involves the hardware aspect, can we increase the hardware requirements? And one of the great things about L2 is that they don't necessarily require the same hardware requirements as L1.
The third important aspect is state growth, which is that if the chain runs very fast, you will get a very, very large chain. This is a lot of data that everyone needs to store, which will cause many downstream problems. Ethereum has started to think about these problems and solve them by using virkle trees, state expiration, or transferring state to other participants. This is the third open research problem we need to solve.
So to have the confidence to raise this target (which is really a variable behind the scenes), there are very, very, very difficult engineering challenges that need to be solved. When Base started to see these increased expenses, I felt that we needed to change our focus and narrative a little bit.
We've been focused on increasing data availability and reducing the cost of L1 transactions for the past two years. Now we need to make some changes in the team and the industry to say, "Okay, the rules have changed." Now we need to focus on both EVM scalability and state growth. So I came out and said, "Hey, we're going to start solving this problem. We're going to set a very aggressive goal of processing 1 billion gas per second."
This goal came from our conversations with the Paradigm team, with whom we have been working closely and for whom we have the utmost respect.
If we look back to our initial starting point of 2.5 million GAS per second, then 1 billion GAS is equivalent to 1,000 GAS per second, so our goal is to grow 400 times from the initial level.
Over the next two weeks, we achieved about 2x growth, from 2.5 million GAS per second to 5 million GAS per second. This quarter, we are working towards 10 million GAS per second. We feel that this goal is clear, and we will continue to work hard, doubling each time, until we reach the goal of 1 billion GAS per second.
In the process, we will solve or drive many very difficult challenges that are somewhat invisible but limit our ability to continue to scale the network. This is what it's like to work as a Base engineer. You have to face this environment and this goal.
I remember after 4844 was released, Vitalik published a blog post where he said that Ethereum's moment from zero to one has passed, and now it's more from one to ten. What he meant was that it would be achieved through a series of incremental steps, rather than a binary improvement like the introduction of 4844, which was like a binary improvement in Ethereum. Now everything is achieved by gradually multiplying incremental improvements in seven different directions. There is no one-size-fits-all solution here, but by making incremental improvements in five or six different directions, Base is involved because it is a network. But the beauty of this is that if Base solves any cutting-edge problems, this can actually be extended to the Layer2 space of Ethereum.
Host: You are not only building for yourselves, you are also building for the entire industry.
Yes, I think this is the most important point that we decided to build Base, and we also decided to build an open platform on the OP Stack. If you look at the current OP Stack core development process and results, the Base team just led the latest upgrade, and we will also lead the next upgrade, Fjord, which contains more extensions. We will reduce the cost of L1 by 10% to 20%, and there are some other very positive changes. All of these benefits will accumulate to any network running on the OP Stack.
Moderator: You just said that after the introduction of 4844, the consumption of Base has increased significantly.
This was to some extent expected. We had been predicting the demand that would be triggered prior to 4844, but it seems that the actual demand has exceeded our expectations.
Host: Do you know where this demand is coming from? Like, why are people doing more on Base? What's driving this demand?
Yeah, it's definitely more than we expected. If you look at it across the industry though, it's probably not true for everyone, just more for Base. There are certainly exceptions, but there's a reason why Base is processing more transactions right now than Arbitrum or other networks. I don't have a specific answer for that, I think it's more due to the developer marketing that we've been doing, the timing of the launch, and all of these factors came together perfectly at a certain point in time for people to attribute this 4844 thing to Base and think that this is where we can unlock more and better applications.
If you look at the developer metrics, you can see this. One of the metrics we focus on the most is "revenue generating deployers", which is how many people are deploying smart contracts on Base and other networks and those contracts are able to generate meaningful revenue, because this is a measure of substantial high-quality developers.
If you look at the chart, we were flat and then the predictor framework changed and we moved up a little bit and started growing. And then 4844 happened and we started to explode.
Today, Base has more revenue-generating deployers than other L2 networks (such as Polygon, POS), and I think the same is true for us in the entire Ethereum ecosystem.
I think a lot of this is due to a moment and a confluence of different factors that led to a lot of developers entering the Base chain for the first time, and a lot of developers refocusing their energy on deploying applications on Base.
I really like this metric of "revenue generating deployers." Think of it this way, small businesses that are entrepreneurs who decide to open businesses in this new space. We often talk about Ethereum in the context of Manhattan, busy, big, very expensive, and now with these layer 2 solutions coming out, we have new suburbs. When you talk about "revenue generating deployers," you're actually talking about emerging businesses. There are businesses, there are restaurants, there are movie theaters, there are lots of small businesses popping up, which is very cool.
Moderator: I want to ask some stupid questions from a user's perspective that may be obvious to you, but you're talking about this from a system perspective. I want to look at this from a user's perspective. The fee to transfer ETH on Base right now is about 1 cent. For a user, the fee for a transaction is this much. What was this before EIP-4844?
I think our median fee has dropped by about 80% to 90%, with high gas cost operations being more affected and other small operations having little impact. I think before EIP-4844, the cost of performing small operations was roughly between 10 and 30 cents.
Host: So what would you like the fee to be, or is that an impossible question to answer?
We want fees to be as low as possible, and we all have a common goal within Coinbase, which is one cent per second. We want the average and median transaction fee to be under one second, under one cent, and for transactions to be completed in under one second. This is like the on-chain bandwidth moment for us, which is that if transactions are cheap enough and fast enough, everything on the chain is possible. We want to scale about 10,000 times in terms of the number of users, while keeping costs and speeds at sub-second, sub-cent levels.
Host: Of this cent, what proportion does the first cost, that is, the cost of Ethereum Layer 1, account for?
Most of the cost today is not due to Ethereum L1, but to the usage of the L1 gas market. Because we are not using all the block space, it means that the block fee is very cheap, almost free. But I think this will change in the next few months, because we will start using block space and have a market-based fee, which will bring it back to 5% to 30% of the L1 fee.
And then there are fees based on the L2 market, which can be high or low depending on the goals and the demand. That will make up the rest of the fees. We describe EIP-4844 as another lane that's opened up, like a high-occupancy lane. It's cheap now because it's not full, right? But that could change in the future. Let's say if things change, the high-occupancy lane becomes expensive. So, Ethereum's block space is full and all the Layer2 solutions are competing for it. Would you consider using non-Ethereum decentralized application solutions? Because there are some of those solutions coming out now, and that could also be a way to lower Base fees.
Yeah, I mean, we're always looking at different scaling options from a scaling perspective. I think our view right now is that the roadmap for scaling data availability on Ethereum is pretty clear, it just needs to be executed. Milestones like PureDAS will increase our data availability potential by 10x. So our first priority is to execute on that milestone, just like we previously executed EIP-4844. We think that will be enough to meet the data availability needs for at least the next phase of Base's growth.
When we think about the mission, vision, and strategy of Base, we really want to build a global on-chain economy that increases innovation, creativity, and freedom. I think one of the things you need to build a global economy is trust, security, and certainty. When I think about the trust, security, and certainty of relying on Ethereum for data availability, settlement, and all of the L1 logic, that's a much higher level of trust than starting to split these things and introduce new trust systems in the technology stack.
Base Layer 3
Moderator: Jesse, if Layer 1 is expensive and Layer 2 is cheaper, why don't we use a large third layer on Base to scale?
I think there will be a lot of third layers on top of Base. My thinking on this has shifted a bit over the past year as I've started to build a better mental model of how these components work.
The third layer can be likened to servers, they are just more closely connected to the servers running on the chain, and can more easily bring on-chain assets into a dedicated computing environment. There are a lot of people who want to run servers, and they run a variety of servers with different trust characteristics, different stacks, different languages and tools, and I think the third layer on Base will have the same diversity.
We are currently tracking six or seven third layers actively running on Base, and we expect that number to grow to potentially hundreds or more this year. I think this will be a very creative area because the costs are lower and users have an easier on-ramp.
The third layer on Base is just another chain, deployed on top of Base's Layer 2. Therefore, settlement is done on Base's Layer 2, and data availability is done on Base's Layer 2 or elsewhere.
Moderator: What do you think about the second and third issues you mentioned - high transaction fees and another solution to Gigagas, namely parallelization?
I would classify this as EVM optimization, which is the work needed for the second increase target. There are a lot of parallel optimizations that can be done in the EVM, using optimistic parallelization and so on, without breaking EVM compatibility. While you can't get the full benefits, there is still a lot of work that can be done in this area.
Again, we've been working closely with the Paradigm team, and they've thought deeply about this issue, and we're excited to continue working with them.
I also think there are a few things that could break some compatibility. For example, if access lists were required, developers would have to explicitly specify what they would be accessing in that contract or call, which would be able to perform operations better. This would be a breaking change because all the old contracts deployed would not have these access lists defined, and we would need to make changes for newly deployed contracts.
This has some value in terms of thinking broadly in the L2 space and how to evolve the EVM on L2. There is a project called RIP (Rollup Improvement Proposal) where Ethereum core developers are working with L2 to jointly advance the development of the L2 EVM, and I think we will see a lot of progress and impact as a result of these experiments.
Moderator: Jesse, crypto native users are used to paying fees for transactions, right? So when you transitioned from Ethereum to Base, you were like, "Oh my god, this is so much cheaper, great!" Right? But the average user, the mainstream user, the billions of users you're talking about attracting to the chain, they are simply not used to paying transaction fees for various operations in Web 2.0. What do you think about this? Why is this the case? If someone came to you externally and said, "Jesse, a penny is good, but what's better than a penny is zero fees." Why can't you do that?
I completely agree with that, but as the cost of Layer 2 and other computing environments decreases, developers will internalize the costs more into their business models and structures. Currently, users have been paying these fees because the fees have been high and the technology has not been well supported. But I think we will gradually move towards a world where developers bear all the computing costs, and then make money in some way through their own business and use that revenue to pay the fees.
This isn't some crazy new idea, this is how online business has always worked, right? You don't pay AWS to use Google Chrome, Riverside, or TikTok, that would be weird. Instead, TikTok or other companies pay for these costs, and they pay for them through their profits.
I used to think this wasn't realistic, but now with lower fees and tools like Paymasters in smart wallets and 4337 we're seeing more and more developers doing this.
We are providing gas subsidies to all developers on Base, and if you go to Coinbase Cloud, Coinbase Developer Platform, Alchemy, Byconomy, StackUp, Pimlico, or choose your favorite account abstraction tool, you can get gas subsidies from Base to provide free transactions for your users. This also provides you with an opportunity to experiment and learn about how to evolve your business model and product so that you can continue to provide a gas-free experience while generating revenue that can be used to pay for gas fees.
Moderator: This will be a very innovative area that will greatly improve the user experience, and it's not something that you actively participate in as part of the Base protocol, but rather you push that responsibility onto application layer developers and provide them with the support and tools to enable them to realize the vision of no gas fees.
Yes, we think building infrastructure on-chain is the best option. There always needs to be pricing in some way to form an effective market, and people pay the corresponding value. If there is no such mechanism, there will be many other challenges.
If you talk to the Solana team, you’ll find that they’re actually having some issues right now, because there’s currently no economic model for priority fees on Solana, which leads to people trying to manipulate the system by submitting thousands of transactions, which leads to network instability.
Economic mechanisms are very valuable for designing highly available, highly decentralized, and highly resilient blockchain systems and computations, so I think they must exist. And we can accomplish a lot by building a series of infrastructure on top that allows us to have a seamless experience on top.
I've tweeted some thoughts on this before, and I think we're missing a really important piece of infrastructure right now, which is better infrastructure for hedging L1 gas prices and L2 gas prices. Ideally, a market could be created on Base that would efficiently price future gas costs and gas markets so that we could provide a more stable experience for developers, where they could say, "Oh, we're going to spend 10 million gas in the next three months to run our app, let's buy it upfront and know the known cost, and then smooth the process through the market so that other people are taking the risk and are willing to trade." I'm talking to a lot of teams doing this work, and I think this will be the next important piece of infrastructure to unlock more design space.
The relationship between Coinbase and Base
Moderator: Next, I would like to discuss the relationship between Coinbase and Base. I would like to quote a tweet from Max Bransberg, who said, "In the future, Coinbase will store more corporate and customer USDC balances on Base, allowing us to manage and protect customer funds with lower fees and faster settlement times without any impact on the Coinbase user experience. We are excited to continue to move our business to the chain and hope that other companies will follow our example." Since this tweet was released, the supply of USDC on Base has shown an absolute exponential growth. I can only imagine that this is because Coinbase is truly using Base as their own backend as they said. Can you talk about this decision?
Yes, I guess this will probably start with USDC in consumer and business accounts, but it could expand.
Host: Talk about what this means and where it might be headed in the future.
If you look back at Coinbase’s mission, vision, and strategy, we’ve had a four-phase plan to build the on-chain economy over the past eight years, as described in a blog post Brian wrote in 2016. He said, first we’ll build the protocol, then we’ll build the exchange, then we’ll build the consumer interface, and then we’ll have millions of applications used by billions of people.
I think we are somewhere between phase 3 and phase 4, where we have the beginnings of these interfaces, Coinbase, Coinbase Wallet and other browser plugin wallets. We are also starting to see the beginnings of these applications, and many applications are being developed on-chain, on Base and other browser wallets. But we are still a long way from having millions of applications used by billions of people.
We started in 2012 as just a web company that allowed you to buy Bitcoin, and 12 years later, in many ways we are still an offline custodial centralized business that contains cryptocurrency. We allow people to use cryptocurrency in web products, but they do it in offline web products. I think we see an opportunity to see what it would look like if we moved these users, assets, and products to chain.
First, it’s much cheaper to use on-chain technology, you can build the same product at 10x the cost of offline technology. I think Uniswap is a good example, it only took two engineers to build the first version of Uniswap, while building a centralized exchange might take dozens or even hundreds of engineers.
The second benefit is that it is globally available from the start. If you build a product on-chain, it is available to everyone by default. If you build a product in an offline environment, there are more challenges, and you need to think about how to get people to use it and the different types of participation required to unlock it in different places.
The third benefit is composability. If you build something on-chain, it's automatically compatible with things on other chains. The individual components can plug into each other, and people can build on top of it and leverage it. Whereas if you build in an offline environment, then everyone needs to integrate with you through traditional APIs. So from a business perspective, from a Coinbase perspective, when people like Max who run our consumer business see this, they think we need to do this because it's good for our business.
But also because if we do that, we're going to build a bunch of tools and play and knowledge that helps other people make that transition, and I think that's what his announcement about USDC is indicative of, we're trying to find steps that we can take to move more parts of our business onto chain.
One thing I'm really excited about is that if you imagine Coinbase right now, it's like a glacier, it's a huge company with a lot of things going on. And today, most of the on-chain stuff is underwater, like it hasn't happened yet, and people are only seeing the tip of the iceberg, "Oh, USDC balances are starting to come to the chain, great, Coinbase is starting to let people do things on the chain, great." But I think over the next year, the entire iceberg will rise above the water, "Oh no, every part of Coinbase can move to the chain!"
Putting USDC on-chain is definitely the most straightforward thing, that’s the first step, and I think one of the things that will enable us to do that is the new smart wallet that we’ve talked about a lot. My view on this smart wallet is that first we have to build Base, which is a developer platform that you can build applications on top of. But even on this developer platform, developers still face a lot of very difficult problems. Like how to integrate the entry point, how to make sure the wallet experience is very good for users…
Smart Wallet is the next platform we are building that will sit on top of Base, enabling both users and developers to have an extremely simple, unified experience that allows them to use all of these applications.
Today, every developer needs to worry about how to let users bridge from L1 or other chains, how to let users enter, how to provide gas subsidies, etc., but in this new smart world, you don’t have to worry about these. Bridging is already built in, gas subsidies are already built in, you don’t have to worry about multi-chain balances, you don’t have to worry about custom gas operations, you just need to use the payment interface and focus on building your application.
Likewise, on the user side you don’t have to worry about transferring funds from Coinbase to your wallet because you can just use your Coinbase balance and it will work, and you don’t have to sit down and explain to them every time you onboard a friend that if they screw up they can lose all their money because these wallets will have controls built in so that users can’t lose all their money, just like we have existing financial tools.
Moderator: When I read that tweet, one thing that came to my mind was probably just me speculating in my own imagination and desire. So Jesse you either confirm my point or bring me back to reality. Read that sentence again, "This allows us to manage and safeguard customer funds with lower fees and faster settlement times," when I saw that tweet, I thought of centralized companies like Coinbase with the front end in the front and the back end being the foundation, like the user accounts in the back. To me, this has always been one of the visions of going on-chain in the first place, or why blockchain was invented, if we had had transparency like Coinbase in 2008, using customer funds on-chain, we wouldn't have had the crazy disasters with the mess of credit default swaps that didn't have any accountability. It's also why the courts had to get involved, because we don't know what happened, we don't know who settled what contract, who owns what. So when I see a financial institution say, hey, we're going to use this blockchain to manage customer funds, and it's completely public and open, and users can audit it, I'm seeing insurance in 2008, there will be a layer of protection against any of the things that motivated the creation of this space.
Yeah, I think that's definitely the way we think about it, we're going to move everything on-chain, and that's the open global economy that we want, an on-chain global economy that increases innovation, creativity, and freedom, it's transparent, it's decentralized, it has all the features that everyone expects, but we're building it on this new platform. I don't think most people really understand what this shift means specifically, or how transformative it will be.
Maybe just to further emphasize that, sometimes people ask, why are you doing this at Coinbase? Isn't Coinbase a crypto company? I say, yes, Coinbase is a crypto company, Coinbase was founded in 2012, and we are the largest crypto company in the world, and we are the most crypto-forward-looking public institution in the world, and it still takes time, it still takes convincing, it still takes a lot of understanding and infrastructure to get to this cosmic mindset that we're going to move everything on-chain. It's still happening internally, it's still a process that we're working through, but I think we're moving faster every day.
Host: Jesse, some people think that Coinbase is a centralized exchange and a public company. They have these views on Base. They say that Base is centralized, and whether it conforms to the decentralized concept of cryptocurrency. What do you think about this?
Yes, that's a great question. One of our values from the beginning has been decentralization and open source, and everything we do moves in that direction. I think there's a level of thoughtfulness that we need to bring to creating a trustworthy place for people to develop their economy, and that thoughtfulness also means that we have to move with moderation, and when appropriate, we have to move slowly.
So there are two aspects to consider for Base decentralization, one is the decentralization of governance, and the other is the decentralization of technology. When we built the network on the first day of the mainnet, there were some requirements to achieve the level of decentralization that we thought was sufficient to allow us to keep Base open, permissionless, and global, that is, there could be no single point of failure or single point of control that could arbitrarily change anything in the network.
Because if that existed, there would be a whole series of ripple effects in terms of how regulators view this network and how we can really position it and talk about what we’re building. So from day one of Base, that didn’t exist. There was no point of control where Coinbase had decision-making power as a single decision-maker, but there were still components of the network that were more centralized than decentralized.
For example, when we first launched the network, the way the contracts were upgraded required two 2-of-2 multisigs, which actually became two larger multisigs, one managed by the Optimism Foundation and one managed by the Basecore team inside Coinbase. These two large multisigs need to be combined to make changes, which means that Coinbase can't change arbitrarily, and the Optimism Foundation can't change arbitrarily, and we both need to make changes together. But it's still only two institutions, so what we're working on now is to expand the size of the security committee to make it geographically distributed and cover more parties. This is built in partnership with Optimism and is being rolled out. This will eliminate a major point of failure, and we will further eliminate control of the security committee, achieve decentralization, etc.
The second point is that in the first version of the network, there are only two people on-chain who have the ability to validate the chain and react if the sequencer (run by Coinbase) behaves maliciously. Those two people are the Optimism Foundation and Coinbase. With just one of them, we can challenge the sequencer for bad behavior. We are now working on rolling out proofs of failure, which will enable anyone to challenge. This is currently available on the testnet, and we have just completed all the audits and are about to launch the mainnet.
So from a technical decentralization perspective, these two important technical changes are our main focus going forward, and according to Vitalik's framework, they will get us from phase zero to phase one, and then over the next year, we have a fairly clear path to transition from phase one to phase two. By the way, this is Vitalik's framework, and it's also the framework on L2BEAT, which provides some methodology for what Layer2 decentralization means.
Moderator: This refers to the pie chart on L2BEAT that currently has five different parts. Base has two green parts, and the other three are red. What you mean by reaching stage one is to turn them all yellow and green, right?
Yes, we're making very good progress on that, which is the path to technical decentralization. The second path to decentralization that I think about is more about governance decentralization, which involves that technical system, the rollout of layer 2 scaling. In that technical system, there are some governance decision points, such as who plays the role of the participants in the multi-signature? Or who sets the gas target? These are all governance decentralization issues.
Today, these governance decisions are made by the Basecore team at Coinbase, and over time we hope to expand the range of people who participate in these governance decisions. One of the things I'm most excited about Base is that because we don't have a token and the kind of single governance decision-making structure that would exist in a token, we're starting to see a pretty incredible bottom-up cultural institutions, organizations, and movements emerge within Base that are starting to have real cultural influence. These include communities like Base Management, Yellow Collective, or Base God, which people now look to as the banner of Base.
One thing I'm really excited about is exploring and experimenting with governance decision-making models, using those systems and cultural institutions to build meta-governance, to bring their perspectives together to achieve good outcomes. We just finished allocating funds in the form of grants that a lot of people are responsible for, and most people do it by building a process for people to apply for grants and building evaluation systems. It's very expensive and takes a lot of time to build these systems.
In the last few weeks, we just launched a project called Base Builds, where you can post what you did this week from Friday to Sunday every week, and then say what you did. Every week we allocate two weeks of funds, and if you post in it, we define a group of participants in the background who can like and forward, and when they like and forward, they will vote for you and allocate ETH to you in proportion, which means that a self-sustaining system is established, and developers share their construction results on the chain in a social form, and there are many people who spontaneously like and participate in it. This forms a feedback loop that allows us to understand the most valuable things that people are building. Then we just need to invest funds to fund these people.
Another interesting thing is that we are leveraging the positive cycle of infrastructure provided by Coinbase and third parties like Farcaster to promote growth and development, that grant program is not actually run by us, it's run by a team called Rounds, who grew out of the nouns ecosystem. They originally built Prop House, which is the second version of their product. They have been running it as an experiment and have shown incredible results.
We had hundreds of applications in the first week of our launch, and if you go to their Rounds page right now and look at the top 100, 200 projects, every single one of them is of very high quality, without exception, and their diversity is outstanding. Our team doesn't have to manually review them one by one, it leverages our ecosystem to do that, which gives us excellent results.
Host: That’s incredible. I know it’s always a good time to build on Base, but I think this coming summer might be an especially good season to build on Base. Jesse, can you tell us about the second round of Onchain Summer?
Yes, last summer we did Onchain Summer, and we think that this event is more important than Base itself, it's our time to tell the world the story of Onchain. We saw a really amazing response, people were so motivated to build. I think that led us to make a decision that Onchain Summer will become a regular event every year. From now on, until the world is fully on the Onchain era, we will always help, support and promote Onchain Summer. Every summer is a time for Onchain, of course every season is a time for Onchain, but I think there is a unique charm to the energy of summer, just like you know, the kids are on summer vacation, let them be free to build, let all of us have fun on the Internet and have fun with Onchain.
From the beginning of June to the end of August, if you're in the northern hemisphere, and if you're in the southern hemisphere, that's Onchain Winter, and we're going to be doing some fun things with that. We have a fund of about 600 to 700 ETH that's going to be used to fund builders, which is over $2 million worth. We're also going to be hosting a month-long global hackathon in June, and we've got a lot of incredible partners who are going to help us organize that. We're going to be promoting everything that people build to as many people as possible. Imagine having millions of people using the application that you build, and there's going to be a lot of really cool brands, communities, and products launching new things this summer.
Coinbase will have a lot of really cool brands, communities, and products coming out this summer, and we will be promoting them as widely as possible. Overall, we will be working hard to bring the world into the Onchain era.
Moderator: The last question I would like to ask is, will Base one day separate from Coinbase as an independent organization?
Yes, I think when we talk about decentralization of governance and decentralization of technology, we are considering all options. We have said from the beginning that Base was incubated by Coinbase and we are gradually decentralizing, so we are not sure yet what exactly that will look like. But what I can say is that today the Base team operates independently within Coinbase, I report to Brian, have my own budget and P&L. I am like the CEO of the Base Labs team, we will execute on what we think is most important to grow the Base ecosystem, and then work closely with other parts of the business.
I think that independence, trust, support, and autonomy, and the sense that we feel like we were incubated by Coinbase, is what allows Base to be Base. So I think the best version of these things will be the decentralized version. We can't build an open global onchain economy without decentralization. I expect that over the next few years, we will continue to work in this direction.
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