After Coinbase, the leading US exchange, launched the L2 solution Base this week, it caused extensive discussions in the encryption community, and both support and opposition have their own reasons. This article sorts out the reasons why the well-known encrypted media Bankless is optimistic, and also supplements the regulatory issues that the legal counsel of the investment research company Delphi Labs worries about.
Top 10 Reasons Bankless Founder Supports Base
Bankless founder Ryan Sean Adams made it clear on his Twitter that he values Coinbase's L2 solution Base . Here are his ten reasons:
1. They chose Ethereum instead of developing an L2 by themselves, expressing strong trust in Ethereum.
2. This precedent will allow other crypto companies to follow, then fintech companies, and then banks. Eventually, the world will use Ethereum as a settlement and property rights system.
3. This is the most decentralized way for an exchange to start a chain. There are no tokens, a non-closed platform, and it is completely open source. Contribute to the value of the crypto industry, more DeFi, less CeFi.
4. If Coinbase can divert its existing 110 million verified users into Layer 2 users, this number will be 10 times that of the current native encryption users.
5. This will be the answer to regulators asking the crypto industry question, "How do you protect retail investors without our control?" The answer is regulated by code, a trustless currency system.
6. For the demand of Ethereum block space, it is a very bullish thing.
7. This encourages Coinbase to build public infrastructure like EIP-4844 , which will accelerate the progress of the industry.
8. Coinbase's current progress through their legal and compliance teams in the United States is bullish because the current regulatory regime in the United States is the most stressful moment I have ever seen. If they want to be against decentralization, they have to be against their people.
9. This will enhance L2 infrastructure, tools and development.
10. This demonstrates reliable neutral technology that no one can control or tamper with.
The Coinbase thing is a big deal.
Ten reasons why:
— RYAN SΞAN ADAMS – ETH 🏴🦇🔊 (@RyanSAdams) February 23, 2023
Delphi Labs Legal Counsel: It Will Cause Regulatory Trouble
Although many people are optimistic about the new progress of Coinbase, Gabriel Shapiro, the legal counsel of the investment research company Delphi Labs, raised legal doubts about Base.
Gabriel Shapiro said that according to Coinbase's introduction to Base's development plan , the document indicates that Base is in phase 0 of optimistic Rollup. At this stage, Base is still a centralized blockchain, essentially more like a beautified enterprise blockchain, and it is "possible" to move toward decentralization in the future.
Although Base will not issue tokens but use ETH to provide some regulatory security, Gabriel Shapiro believes that this is not enough. Because Coinbase is the only important company registered with the SEC in the encryption field, the SEC, which is currently quite strict on encryption companies, will pay attention to every move of Coinbase and try to find loopholes.
"A centralized L2 that trades a large amount of any number of tokens may be regarded as a security, and a large number of DeFi transactions may also be considered to be regulated for reasons such as Security Swap. This will open up new regulations for the SEC." secondary market for alleged claims," said Gabriel Shapiro.
In addition, many L2s are partially centralized, and those teams running the core infrastructure will have a hard time defending themselves when the SEC accuses them of being securities brokers or agents.
Therefore, Gabriel Shapiro believes that if Coinbase decides to launch Coinbase because of regulatory factors, it is not a good decision, and it may affect others, and it should wait until all infrastructure can be decentralized.
Many people seeing some kind of regulatory strategy in Coinbase's L2
no idea if that is Coinbase's primary motivation or not, but, if so, imo it is a massive miscalculation
let me explain:
— _gabrielShapir0 (@lex_node) February 23, 2023
