Coinbase Announces Base🔵, an Ethereum L2 Network Powered by Optimism

Jesse Pollock, Senior Director of Engineering at Coinbase, joins us to unpack some of the hottest news in crypto since The Merge! Coinbase announces the launch of “Base,” their own L2 built on the OP Stack. Tune in to hear everything you need to know about Base! ------ 📣 MetaMask Learn | Learn Web3 with the Leading Web3 Wallet https://bankless.cc/ ------ 🚀 JOIN BANKLESS PREMIUM: https://newsletter.banklesshq.com/subscribe ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://bankless.cc/kraken 🦄UNISWAP | ON-CHAIN MARKETPLACE https://bankless.cc/uniswap ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum 👻 PHANTOM | #1 SOLANA WALLET https://bankless.cc/phantom-waitlist ------ Topics Covered 0:00 Intro 7:53 Coinbase’s New Chain? 8:45 What is Base? 9:36 How is Base Different? 11:16 How Open is Base? 13:05 Why Now? 17:00 ETH L2 Philosophy 20:00 2nd Mover Advantage & Success Metric 22:26 Total Coinbase Users 25:15 How Base Will be Used By Coinbase Users 29:35 $COIN 31:13 Could Base Canoblize Coinbase? 32:35 Regulation 35:30 Base Token?! 40:26 Validator Set 39:10 Sequencer Power 40:53 Timeline 42:55 Basechain Vision 48:55 Why OP Stack? 52:57 Jesse as a Badge Member 54:47 Gas-Free Percentage 56:22 Superchain Vision 58:46 KGZ Ceremony 1:00:41 What Does Successful Base Look Like? 1:06:13 Closing & Disclaimers ------ Resources: Jesse Pollak (jesse.xyz) https://twitter.com/jessepollak Coinbase https://twitter.com/coinbase ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://www.bankless.com/disclosures

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:04Ryan Sean Adams?

  Bankless Nation, we have a special breaking episode for you today. Wanted to get this out to the nation because the news is fresh as of this morning. Coinbase is launching an Layer 2 chain called Base. That is the news that just hit the headlines and we've got the scoop. David, who do we have on? What's the significance of this?

• 0:23David Hoffman?

  We're bringing on Jesse Pollak, who is the Protocol Specialist, Protocol Lead at Coinbase, who I've titled him as the guy who's responsible for growing Coinbase's DeFi mullet, which is getting a lot longer with this news. Coinbase launching its own specific Layer 2 for the Coinbase ecosystem. It is built on top of the OP stack and is going to be the place that Coinbase deposits its millions and millions of users into the world of on-chain activity without having to push them into the high gas fees, low latency speed of the Ethereum Layer 1. I think this is, Ryan, the biggest news I can think of since a long time. This is massive news. Coinbase is

• 1:04David Hoffman?

  building its own chain. Of course, Binance has Binance Smart Chain. Now Coinbase has Base. So what are the decision points that went into making this Base chain? What did Coinbase really consider when they decided to do this? How long has this been in production? Why did they choose to build on Optimism's OP stack? What is Base going to look like? Is it going to be permissioned? Is it going to be open? What are you going to be able to do there? There's so many questions and we ask Jesse all of these questions in this coming episode.

• 1:35Ryan Sean Adams?

  I want the Bankless Nation to realize the significance of this event because I feel like, David, for you and I, the reason it's so exciting is because it validates a lot of the core Bankless thesis. One, this uses Ethereum as the settlement layer, okay? And a Layer 2 means it settles to Ethereum. This is something that we predicted. This is definitely the DeFi mullet thesis. These crypto companies, even crypto exchanges, will start to build on DeFi protocols that are credibly neutral rather than custing everything themselves. This is also the way out of all of the 2022 traps that we Saw with exchanges running away with people's money, SBF and you know, the block FAS and the Celsius and all of these things.

• 2:17Ryan Sean Adams?

  This is a completely auditable, open, transparent chain. I could go on, David, but the protocol sync thesis didn't even mention that. It's all of the bankless thesis culminated. In fact, we explicitly called it. We explicitly made the call that a major exchange would launch a layer two at some point in time. Did we predict that to happen in 2022? Turns out we were just a few months late. It's happening in 2023. Great validation, really cool direction that this is going in. The first publicly traded US company to launch a major effort on a chain. All of this boom, boom, boom. A lot of check marks here, and this is why this is such exciting news today.

• 2:55David Hoffman?

  Yeah, so we won't hold anything back. Let's get right into this episode with Jesse. Before we get in there, though, we have to make a note that Ryan and I are advisors to the optimism project, which is extremely relevant to this story because base chain, like I said, base is built on the OP stack. And Jesse and the OP team have been working very closely with each other. So this is very relevant to the to the optimism team. We are talking with the optimism team on Friday at 10 AM Eastern time for an additional live stream to get their perspective as well, because that is the other half of the story. But first, we're talking to Jesse from Coinbase. We're going to get to Jesse from Coinbase to talk about all of this amazing news. Coinbase launching a layer two. Man, I can't say it. I could say this all for the rest of the day. Coinbase launched a layer two. That's pretty damn cool.

• 3:40David Hoffman?

  So we're going to get to that conversation with Jesse. But first, I want me to talk about some of these fantastic sponsors that make this show possible, especially Kraken, who is our strategic sponsor for 2023. If you don't have an account with them, you should get one started right now. So go there while you listen to the Kraken ad, which is going to start right now. Kraken has been a leader in the crypto industry for the last 12 years. Dedicated to accelerating the global adoption of crypto. Kraken puts an emphasis on security, transparency and client support, which is why over nine million clients have come to love Kraken's products. Whether you're a beginner or a pro, the Kraken UX is simple, intuitive and frictionless, making the Kraken app a great place for all to get involved and learn about crypto. For those with experience, The redesigned Kraken Pro app and web experience is completely customizable to your trading needs,

• 4:25David Hoffman?

  integrating key trading features into one seamless interface. Kraken has a 24/7 365 client support team that is globally recognized. Kraken support is available wherever, whenever you need them, by phone, chat, or email. And for all of you NFTers out there, the brand-new Kraken NFT beta platform gives you the best NFT trading experience possible. Rarity rankings, no gas fees, and the ability to buy an NFT straight with cash. Does your crypto exchange prioritize its customers the way that Kraken does? And if not, sign up with Kraken at kraken.com/bankless. Arbitrum One is pioneering the world of secure Ethereum scalability and is continuing to accelerate the Web3 landscape. Hundreds of projects have already deployed on Arbitrum One, producing flourishing DeFi and NFT ecosystems.

• 5:10David Hoffman?

  With the recent addition of Arbitrum Nova, gaming and social dApps like Reddit are also now calling Arbitrum home. Both Arbitrum One and Nova leverage the security and decentralization of Ethereum and provide a builder experience that's intuitive, familiar, and fully EVM-compatible. On Arbitrum, both builders and users will experience faster transaction speeds with significantly lower gas fees. With Arbitrum's recent migration to Arbitrum Nitro, it's also now 10 times faster than before. Visit arbitrum.io, where you can join the community, dive into the developer docs, bridge your assets, and start building your first app. With Arbitrum, experience Web3 development the way it was meant to be: secure, fast, cheap, and friction-free. Hey, Bankless Nation! If you're listening to this, it's because you're on the free Bankless RSS feed.

• 5:55David Hoffman?

  Did you know that there's an ad-free version of Bankless that comes with a Bankless Premium subscription? No ads, just straight to the content. But that's just one of many things that a Premium subscription gets you. There's also the Token Report, a monthly bullish, bearish, neutral report on the hottest tokens of the month. And the regular updates from the Token Report go into the Token Bible, your first-stop shop for every token worth investigating in crypto. Bankless Premium also gets you a 30% discount to the Permissionless Conference, which means it basically just pays for itself. There's also the Airdrop Guide to make sure you don't miss a drop in 2023. But really... The best part about Bankless Premium is hanging out with me, Ryan, and the rest of the Bankless team in the Inner Circle Discord only for Premium members. Want the alpha?

• 6:38David Hoffman?

  Check out Ben the Analyst's DGEN pit, where you can ask him questions about the token report. Got a question? I've got my own Q&A room for any questions that you might have. At Bankless, we have huge things planned for 2023, including a new website with login with your Ethereum address capabilities, and we're super excited to ship what we are calling Bankless 2.0 soon TM. So if you want extra help exploring the frontier, subscribe to Bankless Premium. It's under 50 cents a day and provides a wealth of knowledge and support on your journey west. I'll see you in the Discord. Bankless Nation, I want to introduce you to Jesse Pollak, who is the Head of Protocols and Lead of Base at Coinbase. Jesse is leading Coinbase's efforts to build, support, and integrate protocols into Coinbase's products.

• 7:23David Hoffman?

  So basically, if you put this into Bankless speak, Ryan, it's Jesse's job to grow Coinbase's DeFi mullet. And he's got some exciting new developments on this front of Coinbase's DeFi mullet. Jesse, welcome to Bankless.

• 7:37Speaker 02

  Thanks, thanks for having me, y'all. Super excited to be here. Hello, Bankless community.

• 7:42David Hoffman?

  Are you, are you, do you have a mullet right now? I can't see the back of your head.

• 7:46Speaker 02

  You know, it's.

• 7:47David Hoffman?

  No, not at all. Okay. It's growing. It's coming in, though.

• 7:50Speaker 02

  It's coming in. It's coming in. We can shape it.

• 7:53David Hoffman?

  So there is some massive news out of Coinbase this morning. Thursday morning, 9:00 AM, the news just drops that Coinbase has Base, which is a layer two on Ethereum. Jesse, what is this? Coinbase has its own chain? Is that what's going on?

• 8:09Speaker 02

  Yeah, you're exactly right. You know, our mission is to create the global crypto economy. We believe that crypto economy is on-chain. And over the last many years, we've been trying to figure out how do we bring more of our business on-chain? And how do we enable more developers to build useful applications? And that's what Base is. Base is a platform that we, we hope is gonna make it really easy for developers to build dApps, make it really easy for those dApps to reach massive scale through the 108 million verified users and 80-plus billion dollars of assets in the ecosystem, and shepherd in the next era of the crypto economy that gets us to billions of users using crypto every day.

• 8:47David Hoffman?

  Well, we love all of those words, but I really want to dive into like, what is Base? So it's just like a new layer two that's joining the ranks of Optimism, Arbitrum, Polygon. How is Base similar? How is it different? Like, help us get the lay of the land here.

• 9:03Speaker 02

  Yeah, so Base is an Ethereum layer two. There's no token. We're using ETH as the native gas token. And we're actually building Base on the OP stack, which is an open source toolkit for building chains built by Optimism. We've been working really closely with Optimism on this for the last while. We're actually joining as the second core developer of the OP stack. And we're going to help make that platform freely available, open source, and as scalable, secure, and decentralized as possible in the years ahead.

• 9:34David Hoffman?

  So this is a huge win for the OP stack. I've always been bullish of the OP stack's design philosophy, which is to do exactly this, which is to allow teams easier times to fork the OP stack codebase and build up their own layer two. So it sounds like Coinbase is taking that possibility and running with it. But how is Base going to be different? So like, when we're spinning up a new generalized layer two, like, how is it going to be different from Optimism and Arbitrum? And what will people find on Base that they won't be able to find anywhere else?

• 10:07Speaker 02

  Yeah, I think our thesis is that one of the things that Coinbase really uniquely has is we have this whole suite of products, both on the developer side and on the consumer side. Coinbase Wallet, Coinbase and the DApp Wallet there, a bunch of developer infrastructure. And I think we believe that if we bring those things together with Base kind of at the center of it, it's going to make it easier for two things. One is it's going to make it easier so that when developers build applications, they can actually then connect those applications to mainstream audiences. And that's kind of the base offering for developers. And then on the user side, I think we've seen that it's still too hard to actually use crypto. And we're going to be able to integrate Base into our products. We're going to be able to make it work by default

• 10:51Speaker 02

  so that users are increasingly less nervous about, am I picking the right chain? Am I paying the right gas fees? And instead, they're just able to access the applications that they actually want. And I think that, like, next phase where instead of us being very, very chain-centric, we start to be more application-centric and users start to say, hey, am I getting the actual value that I want? Am I finding useful things? That's the kind of next era that we want to be shepherding in.

• 11:16Ryan Sean Adams?

  This is kind of cool because this is somewhat of Coinbase's legacy, making crypto easy and bringing it to mainstream. And there was a time when buying a Bitcoin was an incredibly difficult experience. And I recall very distinctly Coinbase helping to make that process a little bit easier. One question I have about this base layer two. So it's an EVM, so is EVM compatible? How open is it? So is it open in the same way that an optimism or an Arbitrum are open in that any third party can come, develop an application on top of it? Or is there some kind of permission layer? Is Coinbase doing some gatekeeping around this? Is there like an Apple App Store type model?

• 12:01Ryan Sean Adams?

  Tell us about the openness of this ecosystem.

• 12:04Speaker 02

  Yeah, and we, you know, just kind of as a first principle, really believe in decentralization at Coinbase. We believe that that's the thing that enables the crypto economy to be open, accessible to everyone globally. And so we're continuing to uphold those values with base. The layer two will be permissionless. Anyone's going to be able to deploy on it. And then on top of that kind of permissionless platform, like on top of the permissionless platform of optimism or Ethereum, we're going to see Coinbase and others build infrastructure that makes it easier for developers to do things that they want to do. So for instance, a good example of this is identity. I could imagine us providing infrastructure so developers could more easily recognize who people are,

• 12:46Speaker 02

  recognize that they're humans, recognize that they live in a certain jurisdiction. But all of that's going to be kind of at this application layer. And the actual infrastructure layer, like Ethereum, like optimism, is going to remain open and built for this global economy that we're creating in the crypto economy.

• 13:04Ryan Sean Adams?

  So Jesse, I remember over a year ago, it was October in 2021, we had Brian Armstrong on the podcast, the Bankless podcast. And we asked him the question of when is Coinbase going to launch its own chain? And so we brought up the, you know, the comparison of at the time, FTX was going down the Solana path. Now, FTX is no longer. Like there. So I mean, like, I guess that's gone. Binance was certainly going down its own chain path with what was called the Binance chain, now the BNB chain. We asked Brian, hey, when Coinbase chain, when is that going to happen? And he seemed to indicate to us at the time that the timing wasn't right, but that when Coinbase

• 13:47Ryan Sean Adams?

  does enter the market for a chain and and kind of throw their support behind some sort of a chain, the values of crypto would be very important, values like decentralization, values like openness, values like like permissionlessness.

• 14:03David Hoffman?

  Brian said like when the technology is ready.

• 14:05Ryan Sean Adams?

  Exactly.

• 14:06David Hoffman?

  And he didn't see a path forward that allowed Coinbase to have crypto values in a way that could also allow them to create their own chain.

• 14:15Ryan Sean Adams?

  So I imagine like Brian and the team over at Coinbase now saw that that day had come. What is different between, I guess, a year ago when we asked that question and now this big splash of Coinbase launching its own chain?

• 14:29Speaker 02

  Yeah. And we've actually looked at like very seriously at launching a chain twice before, once in 2020 and once in 2018. And I think both times, the the thing that we ultimately landed on of why we said no was that we felt like there was too much of a risk of it kind of siloing Coinbase off from the broader crypto economy, you know, in an alternative L1 or some alternate ecosystem that wouldn't be deeply plugged into all of the incredible building that was already happening in the community. And I think the thing that really gets us excited and that really unlocked the potential for us to be doing base is that for the first time, we felt like we could do this in a way that was integrated into

• 15:10Speaker 02

  the crypto economy and that upheld those values. And so that's as Ethereum layer two, we're deeply integrated into Ethereum, which is the largest crypto ecosystem in the world, the most value, most assets, the most developers, we're going to be plugged into that from day one. And then also from a technology perspective, we're building on the OP stack, which is open source, MIT licensed, freely available, and adhering to the values that we've seen kind of upheld. In the Ethereum software layer, where those kind of values are freely available in open source are super defended. And I think for us, the feeling was if we can both create a native home for us in this new on-chain economy and take our resources and put them into open source,

• 15:55Speaker 02

  decentralized tooling that everyone can benefit from, whether they want to build on base or they want to fork that code base and build somewhere else. And we can have that deeply interconnected into Ethereum and interoperable with all these other chains, whether it's Solana or Avalanche or Polygon. That's us living our values. That's us making Coinbase not the place, not an island, but a part of the crypto economy. And the internal value that we say over and over again about this is a bridge, not an island. We want base to be the way that we take users who are off-chain and bring them on-chain. And they might start on base, but if we want them to be so deeply interconnected into Ethereum L1 and to other L2s and the other L1s, that they can go anywhere. And our products

• 16:39Speaker 02

  are going to continue supporting every chain. We're going to continue investing in those bridges. And we're going to continue working to bring users into the crypto economy and let them go wherever they, you know, find the value that they're looking for.

• 16:51David Hoffman?

  Just yeah, I really, really like that answer. And I want to unpack that a little bit because I think there's a lot of layers to it. Layers to it. It's like that one. And so like this really is emblematic of the Ethereum layer two design philosophy and what I've personally enjoyed about the design strategy of the layer two roadmap, which is that if you decide to build a layer two on Ethereum, you are also synergistically plugged into all other layer twos on Ethereum as well. And so this is answering the problem. Ethereum's layer two roadmap is answering the problem of Coinbase would like a chain, but it doesn't want to create its own silo. It wants to be a part of the broader global crypto networks. And the layer two design philosophy

• 17:31David Hoffman?

  does that. But that's just one layer of this. It's also specifically the OP stack also does that. And so the replicability of the OP stack and the reproducibility of Optimism's OP stack allows for the base chain to have More synergies with other layer twos because you neither did you fork off and create your own layer one, but you also didn't fork off and create your own layer two. You also are building on optimism's OP stack, which makes you synergistic with the optimism network, network effects. And so like this synergy with the broader crypto landscape, at least with the Ethereum layer two landscape, I think is really, really strong. And so I just like to say, thank you,

• 18:12David Hoffman?

  and I'm proud of, I'm proud of Coinbase. And thank you for also seeing the same synergistic vision between chains that I see in Ethereum's layer two philosophy. Now, am I just expousing my own biases? Or is this also what you see, Jesse, and what Coinbase sees as well?

• 18:29Speaker 02

  No, you're spot on. I think that, you know, two and a half years ago, when the Ethereum community shifted the roadmap from being kind of this execution sharding at layer one into the rollup centric scaling roadmap, I think this is exactly the vision. It's that we're going to have many rollups that work together to scale Ethereum. And they're going to be open source, they're going to be freely available, and they're going to work really well together. And that's exactly what we want. And interestingly, you know, one of the ways we actually started building a relationship with optimism was we started working with them almost a little more than a year ago on EIP 4844, which is a part of this roadmap for scaling Ethereum. And I think

• 19:11Speaker 02

  what we found was that the, the, the context of working, and I guess before I go into this, EIP 4844 is also called proto dank sharding. It's going to create a new form of data availability on Ethereum that's going to lower cost of rollups like based and optimism and Arbitrum by 10x, and likely even more in the years ahead. And I think what we found in working on EIP 4844 with optimism, the other client teams, was that context of like, writing code and contributing to this platform was such a powerful context for building that trust, for building the vision, the shared alignment around what this future looks like, and for doubling down on those

• 19:51Speaker 02

  values of decentralization, open source, interoperability, and interconnection into the broader crypto economy.

• 20:00Ryan Sean Adams?

  So Jesse, Coinbase has really waited for the technology to get there. And the technology is here. So you guys are doing this. Now, you're not first to the party, though, when it comes to other exchange competitors. Let's say Binance has been doing this for a few years now. Do you think Coinbase has a second mover advantage here? Or is the BNB chain not even the right benchmark? What is the success metric? And can you catch up to some of these chains that have been in existence for a while? In particular, some of the exchange chains?

• 20:34Speaker 02

  Yeah, I think in the grand scheme of things, we're at day zero of the growth of the crypto economy. Even if you add up all of the transacting addresses on every chain in the world, it's still like less than 10 million transacting addresses, probably less than a few million real humans who are transacting on-chain every month. A few million every month. There are billions of people in the world. And over the next five to 10 years, we're going to get all of those billions of people transacting on-chain. That's the future we're headed towards. And so I think first and foremost, we just believe we're at day zero on this. And there's so much growth and so much opportunity for everyone to grow the pie and work together in growing that pie. In terms of Binance Smart Chain in particular,

• 21:18Speaker 02

  I think that Binance has done a really admirable job, like pushing the limits of what's possible on-chain. You look at the activity that's driven on that platform, there's probably more real user activity on-chain through Binance Smart Chain than any other environment in the world. And so I think as we look to that, there's a lot to like, there's a lot to admire. I also think that when we think about how we want Coinbase and Base to operate, it is this value of interconnection into the crypto economy, contribution back to the public goods that are supporting this work. That's why we're building as an Ethereum Layer 2, not as an alternative L1. That's why we're committing as a core contributor to the OP stack, not just taking the technology and doing our own thing with it.

• 22:03Speaker 02

  That's why we've been working over the last year to ship code in Ethereum, to scale Ethereum for everyone, not just Coinbase, but every L2 and everyone in the world. I mean, I think that prioritization on the decentralization, on the interoperability and on the open source foundation that we're building together is what's going to make Base really stand out as a contribution to the broader ecosystem.

• 22:28Ryan Sean Adams?

  That stat that you just pulled out that we probably have just a couple million, maybe a few million users who have ever gone on chain. That is a subset of the total amount of Coinbase users. So how many Coinbase users are there right now, like in total?

• 22:43Speaker 02

  Yeah, I think the number that we shared yesterday in our earnings is about 108 million verified users as of the end of last year. And so most of those users are using our custodial products where we have pooled wallets, where we're managing their crypto for them, whether it's Bitcoin or Ethereum or any of the other hundreds of assets that Coinbase supports. And we think that's a really great first step for people. You know, you have to start somewhere. And I think the thing that we've seen over the last few years, as we've built products like USDC and Coinbase Wallet and CBE, is there is so much opportunity for the emergence of really powerful applications that are on-chain native.

• 23:27Speaker 02

  And that's where we increasingly want to be bringing our customers with Coinbase not just serving as an exchange and a custodian, but really the gateway to Web3, where users are going to get access to these apps that give them like real world value every day.

• 23:40Ryan Sean Adams?

  So Jesse, I'm just kind of running the numbers. So just a few million people on-chain, right? And so like this is the population of like a reasonably sized US city. That's all that we have of people going bankless for this entire movement. We only have a few million right now. But Coinbase has 108 million, is that what you said? Registered users?

• 24:00Speaker 02

  100 million verified users. Those people have gone through the whole verification, you know, done their identity verification and worked through our platform.

• 24:08Ryan Sean Adams?

  We're just looking at like 1% to 2% that have converted to full on-chain users, right? And so I'm wondering if like success for Coinbase looks like, well, you get that to like 10%, you get that to 20%, you get that to 30%. Imagine if you had 30% conversion from a Coinbase verified user to an on-chain user going bankless. Well, I mean, that would massively, like, we're just talking about 10Xing the on-chain ecosystem. I'm not going to say overnight because that will take some time, but Coinbase has traditionally been a gateway to crypto and can become this gateway to layer two and to on-chain experience. Now that the bandwidth is ready, the transaction fees are cheap. Is that the idea here?

• 24:49Speaker 02

  100%. We believe that on-chain is the next online and that over the next five years, we're going to onboard billions of users into the crypto economy. And that is our goal. Onboard billions of users, help them obviously come onto Base, but also help them go to other Layer 2s, help them go to Ethereum, help them go to anywhere they want in the broader crypto economy to access the good services and products that they're looking to.

• 25:14David Hoffman?

  So when you first said that Base was going to be a fully open, fully permissionless new Layer 2 on the scene, my first reaction was like, well, how are they going to compete with all the other Layer 2s? Like Optimism, Arbitrum, Polygon already have like a flourishing app layer and Base is showing up like a year, year or two behind. Like, how are they going to compete? But then, but then like unpacking this is like, oh, Coinbase has all of the people. Like, it's got all of the users. And like, that's what like Arbitrum, Optimism, they'd love all of those users. And so my question to you, Jesse, is how is Coinbase users, how are they going to be presented with Base? Like, is this going to be, is Base going to be the, like, the first on-chain experience, you think, for many Coinbase

• 25:59David Hoffman?

  users? And Coinbase, maybe Base is like this safe playground before you venture out into the wild unknown of crypto world. First, just start with Base. And so Coinbase will funnel their users into Base first, and then perhaps you can go on to the Ethereum one. Overall, like, how will Coinbase receive Coinbase's users?

• 26:19Speaker 02

  Yeah. So I think, you know, like Ryan said, it's going to be a process. It's going to take time to integrate Base into all of our products and to bring all of our users on-chain. I think your head's going to exactly the right place. You know, what we're seeing is anytime you're helping a user come on-chain, you know, you have to present them with options or help them make decisions. For instance, I want to bring my first $5 of USDC on-chain. Where do I do that? And I think right now, a lot of the experiences are like, well, here's 10 places you can do that. And the users are like, okay, well, like... Where do I do that?

• 26:52David Hoffman?

  How do I think about this?

• 26:53Speaker 02

  Yeah. Like, how do I make those choices? And I think we want to continue making sure those choices are available. Like, that's so core to the ethos of crypto, that there's no lock-in, that's open. And for the 99% of users who are just looking to use the applications, whether it's payments, or borrowing, or lending, or trading, or games, or social, we want to take away the fear and uncertainty of, I have to pick between 10 different infrastructure providers, and make it so they have a default experience that works out of the box for them, puts them on-chain where they can go everywhere else. So I think that's, that's like, you know, the first big place that you'll see Coinbase starting to get integrated into Coinbase product suite. I think the second place, and this is like a broader thesis that I have and that we

• 27:35Speaker 02

  have, which is that I think over the last few years, as we've kind of seen the rise of tokens, we've seen what amounts to a lot of like very inefficient ad spend or user acquisition, where people are spending huge amounts on token airdrops to acquire user, a small amount of users, to use their products. And what that says to me is like, there's a lot of missing infrastructure for helping users figure out what the valuable products are that are going to help them, you know, live their lives better. And I think that's another thing that we're really excited about, is basically, how can we build tools, both from an organic perspective, but also from a paid or, you know, yeah, like paid perspective, to give developers access to those users, to put you on the

• 28:20Speaker 02

  front page that users are interacting with, and then help you find the users that need your product, and bring them to your application. And one mental model that I've really used for this is, if you look at pretty much any financial service that exists outside of crypto, whether it's a credit card, or a bank account, all of those things, users change primarily as a result of a financial incentive. You get a credit card bonus of points. You get a bank statement bonus. That's usually motivated for the vast majority of consumers by some financial incentive to change their behavior from bank one to bank two, from credit card one to credit card two. And right now, I think we're missing a lot of the infrastructure to do that in an efficient and user-friendly way.

• 29:03Speaker 02

  And so I think one of the things we're excited about is how do we help the industry build a lot of that infrastructure so that eventually we can go to all 108 million years and say, hey, here's an incentive to come on-chain. Because on-chain is actually the best financial experience you can have. And not only are you going to get the benefit of doing that from just being there, we're willing to pay you to move because it's going to be so much better for your day-to-day. And I think that connection of bringing in the incentives and helping users make that change is going to be really powerful.

• 29:36David Hoffman?

  I totally see that vision. I'm wondering about if we can take the perspective of a Coinbase shareholder. How does Base Chain impact the value of coin? Or just like, where is the value proposition here? Like, what's the value proposition for the Base Layer 2, for the value of Coinbase as a whole?

• 29:57Speaker 02

  Yeah. I think what we've seen over the last 10 years is that the key thing that Coinbase offers consumers is being an easy and trusted interface to access crypto. And I think what we've also seen is that for the last 10 years, mostly what users are using that interface to do is to speculate or to trade. And that has been valuable for Coinbase because we provide an easy trusted interface to trade, and then we generate revenue on that from taking fees. I think our thesis is that over the next five years, there are going to be many, many more things that need an easy trusted interface. And if Coinbase can continue to provide that easy trusted interface, there are going

• 30:40Speaker 02

  to be many, many more ways for Coinbase to generate revenue from making it easy and trusted for users to do those things. And the problem that we've seen is basically there just aren't enough useful things to do in crypto yet. And so our bet with Base is if we create a platform that makes it really easy for developers to build the next generation of applications that make crypto super frickin' useful, then that's going to create the opportunity for Coinbase to create all those interfaces to those applications, and that's going to create a huge amount of new business for our bottom line.

• 31:13Ryan Sean Adams?

  So Jesse, you guys aren't worried about Base cannibalizing your business. Maybe you're pushing more traffic into this kind of DeFi ecosystem and maybe that somehow harms the core business of Coinbase. Has that been a consideration?

• 31:26Speaker 02

  You know, I think that we've been pretty consistent over the last two years, even if maybe Wall Street won't listen to us. Coinbase is not an exchange. Like, there's an exchange that is a part of our business, but Coinbase is really the gateway to Web 3, gateway to the crypto economy. You know, Brian wrote the Coinbase's secret master plan in 2016, which we can maybe talk about, because I think it's a good one to talk about. Like, he wasn't like, "We're going to be an exchange for the rest of our lives." He was like, "Exchange is step two, and there's four steps." And I think we're getting to those later steps, and those later steps are about building an entirely new economy on-chain, the crypto economy. And Coinbase's role in that is going to be the gateway to that crypto economy.

• 32:09Speaker 02

  And we think ultimately that that's going to be a massive business that we're super excited to grow. And not only is it going to be a good business, it's going to be good for the world, because it's going to increase economic freedom globally, and it's going to be basically a rising tide that lifts all boats and puts everyone on a level playing field, where they're all operating in the same economy that gives them stability, surety, and access to financial products that make their lives better.

• 32:34Ryan Sean Adams?

  I'm really not surprised Wall Street hasn't caught up on this idea. They're a little bit slow to crypto, Jesse, I'm afraid, but that's why we can front-run the opportunity, of course. So like, yeah, the question that David asked is basically a question of, "How'd your business guys let you do this?" Another question is, "How'd your legal guys let you do this? How did you get this by compliance?" Right? I mean, we are entering 2023, and this is like, things are getting a little hot in the US. I don't know if you've noticed. And I know Coinbase has always played things by the book, and maybe this is outside of the scope of the conversation here, but like, you guys are launching a decentralized chain, right, as a publicly traded US-based company. How does that work? Is this like, good from

• 33:17Ryan Sean Adams?

  a legal compliance perspective? I imagine it would have to be, or else Coinbase wouldn't have rolled it out. Do you have any takes on this?

• 33:25Speaker 02

  Yeah, and I thought Brian actually had a pretty good tweet on this a few weeks ago, maybe a week ago. He said something like, "When everyone is nervous about comms, it's the best time to build." And that's kind of how we feel about this. It's like there's so much noise in the industry right now about regulation. Of course, that's important. We, Brian and Paul, are up there, working with regulators to get a common sense framework for crypto in place in the United States and beyond. And we're not going to let that distract us from our mission, which is creating the global crypto economy. And in order to do that, we need to invest in the underlying infrastructure that powers that crypto economy.

• 34:07Speaker 02

  In terms of Base in particular, I think we have staunchly defended as a business the ability for folks to participate in Ethereum staking, for folks to run validators. And I think we see this as an extension of that. Base is a scaling solution on top of Ethereum. It is offering people the ability to bundle transactions and publish them on Ethereum in a permissionless and decentralized way. And it is contributing to the underlying infrastructure that's going to power this global crypto economy that we have to be working to protect and preserve the sanctity of. And so, has this been a complex legal and regulatory and compliance challenge? Absolutely. Like you said, this is in many

• 34:50Speaker 02

  ways unprecedented. No other large public company has launched a Layer 2 blockchain. And I think we're lucky to have probably the best legal, compliance, privacy, finance teams in the world working on crypto right now. And I'm lucky to get to partner with them on a day-to-day basis. And we're lucky to get to work with other partners like Optimism and the whole list of partners that were bringing this to market, and to find a path where we can do this in a decentralized way, in a way that works within the confines of the law, and that brings the best of crypto to our developer customers, our user customers in the world.

• 35:30David Hoffman?

  So, in line with the questions about regulatory risks, will there be a Base token?

• 35:37Speaker 02

  There will not be a base token, no plans for a base token. I think our thesis on token A is that having Ethereum as native gas token is super important. This is a layer two, we're paying the actual costs for publishing transaction batches in Ethereum. And so we're going to take those fees in Ethereum. I think that there's a lot we can do with account abstraction over the next year, which is another thing Coinbase is investing in to make it so users will be able to pay in whatever token they want and you can have kind of a paymaster manage that exchange. But Ethereum as a native gas token, that was never a question for us. More broadly on tokens, I think one of the feelings that we have is that

• 36:20Speaker 02

  one of the things that can happen in crypto is because there's this new financial incentive, it can almost at times obscure the product market fit that platforms or products have in the market. And I think one of the things I'm excited about is I think we're going to have real product market fit with this product. I think we are going to have probably the first chain that has access to large scale consumer distribution that is embedded in Ethereum, that runs EVM, that's decentralized, that's integrated into a broader crypto economy. And I think that is going to have product market fit. And then we're going to drive down fees, we're going to build better infrastructure, we're going to build better wallets, and it's going to work. And I think that to me is way, way, way more important than using a financial incentive

• 37:05Speaker 02

  to gain metrics or drive activity, and that's our plan for base.

• 37:10Ryan Sean Adams?

  So you don't need a coin to juice the growth. You're doing this old fashioned way, you're just building apps that people want to use, huh?

• 37:15Speaker 02

  We're just doing it the old fashioned way, building apps that people want to use. And not just us, I think that's the important thing. Like this is not base building apps that people want to use and Coinbase building apps that people want to use. Yes, of course, we'll have first party products that we want to offer, but for us, it's all about how do we enable everyone to build apps that people want to use? And how do we make sure that we're creating the infrastructure of the platform, that we're driving down the fees, that we're increasing the decentralization so that it's actually possible to build those applications that billions of users want to use?

• 37:45Ryan Sean Adams?

  What about the validator set? Is this going to be only Coinbase doing the validation of the chain? Or like, who gets to run this network?

• 37:54Speaker 02

  Yeah, so we're going to be running the sequencer to start. And then over the next year or so, we're going to be working to decentralize that sequencer. That's one of the reasons why we're really excited about partnering so closely with someone like Optimism. We're basically running a joint roadmap with them now, where we're putting our resources behind accelerating some of these really critical engineering challenges. And sequencing is one of the big ones. For the time when Coinbase is running the sequencer, we won't be doing anything with MEV. It's just going to be kind of, transactions are just going to be ordered based on the time they enter the mempool and the priority fee that they set. That's really important to us. We want to make sure that, you know, there's no perception or reality of Coinbase trading against our customers.

• 38:38Speaker 02

  And so we're going to basically offer that as a neutral mempool that anyone can execute in.

• 38:43Ryan Sean Adams?

  And Jesse, remind people of the god powers of the sequencer, right? So it's different than being a validator. David used the term validator, but that's kind of, maybe it's similar. But that's more of an Ethereum validator where you have like lots of god mode ability. But with a sequencer, it's primarily you have god mode over ordering the blocks. You can't actually, can you halt the chain with this ability? What are the powers that a sequencer would have and Coinbase would have before it goes fully decentralized?

• 39:15Speaker 02

  Yeah, so the sequencer, you're exactly right. It orders transactions. There is the ability, you know, for the sequencer to halt. But the control of the sequencer, i.e. what is sequencing, is actually defined in the L1 contracts. And there's a mechanism in the L1 contracts that allows people to do what's called a forced inclusion, which basically allows them to include a transaction outside of the path of going through the sequencer. And that's really the thing that gives L2s their kind of decentralization characteristics. It's that you have the rules of the system defined in L1, in the smart contracts in L1. And then those rules are enforced. Forced on the sequencer in the network that's running on L2.

• 39:58Speaker 02

  And so is there going to be centralization at the beginning? Yes, there's going to be some centralization at the beginning. And we're going to be working over the next year and beyond to remove that centralization as quickly as possible. And make it so that this is, you know, as decentralized as Ethereum as a platform.

• 40:17Ryan Sean Adams?

  And I think most importantly of all, there's nothing in having the sequencer ability, even when it's kind of centralized and only Coinbase is doing it. Nothing that would allow you to go all SBF and go, you know, take the funds and, you know, rug retail here.

• 40:31Speaker 02

  Exactly.

• 40:31Ryan Sean Adams?

  That power the sequencer has.

• 40:34Speaker 02

  Yep, that's exactly right. The sequencer is ordering transactions. You can still submit at the L1. And your funds, if you were to kind of bridge over, you could kind of still submit and pull them out of the chain.

• 40:47David Hoffman?

  As bankless as possible for a network. These are the properties that we love to hear about. Jesse, what's the timeline on this? So this is an announcement of a future chain. The chain is not live today. What's the timeline on this thing?

• 41:01Speaker 02

  The testnet's live today. So if you want to build and you're a developer, go to base.org and you can start building on the testnet. The testnet's actually been live for a little more than three weeks. So we did Genesis on February 1st of this year. And we've been working with kind of builders who are early to kind of be pressure testing that chain. But yeah, if you're a developer, build it, build it. You can start building at base.org. There's documentation, there's RPCs, we have node providers, we have block explorers, everything's ready to go. We also have a bounty at ETH Denver next week. All we're giving a workshop at ETH Denver for builders. We have a couple of panels. We have a hacker house at ETH Denver.

• 41:46Speaker 02

  And so if you're interested in building and you're interested in building on base, please come find me, come find us, we'll be pretty obvious. In terms of mainnet, our goal is to bring mainnet in the next few months. One of the things we're benefiting from here is that we're not building a chain from scratch. We are running the OP stack. And contributing to OP stack. We've been running the OP stack for months now internally and contributing to the OP stack code base for months as well. And that's going to let us progress a little more quickly from test net to main net than if we were going out and saying, hey, we've built this whole new L1 system. We need to get it all pressure tested, battle tested. Optimism has done an incredible job

• 42:26Speaker 02

  building the OP stack, auditing the OP stack, running bug bounties on the OP stack. We're actually extending Coinbase's, I think, market-leading bug bounty program with a million and a half dollars of coverage to include the OP stack and base alongside the existing bounties that optimism has. And our goal is to work with them to make this the, you know, secure, decentralized, open source, freely available, forkable platform that anyone can use to run a chain.

• 42:55David Hoffman?

  Okay, I have been holding my breath this entire time talking about the OP stack because I will take every single opportunity to talk about the OP stack. Jesse, you've said the word OP stack like 10 times. And so we're eventually going to have to get into these subjects. But one last question before we cut for a break and then get into all things optimism and OP stack and the OP collective and all the synergies between the Coinbase and the optimism optimism team. One last question. The the vision for base is to be a be a fully decentralized layer two eventually.

• 43:25David Hoffman?

  Right. And it's like, the idea is eventually it'll be a permissionless validator set. It'll launch fully centralized with a centralized sequencer, which only, again, like, like we talked about, only has some certain powers. But it'll still be a Coinbase validated sequenced chain. But the vision, correct me if I'm wrong, is for base chain to be a fully permissionless validator.

• 43:46Speaker 02

  100%. Yeah. And, you know, Vitalik has the classification that we've been working through and has been helping refine kind of a stage zero, stage one, stage two roll up with stage wheel having like, stage zero having most or all training wheels and stage two having no training wheels. And our expectation is that when we hit main net, we'll still be a stage zero roll up, but we'll progress very quickly to a stage one roll up. Definitely by the end of the year. And then we're actually going to be able to become a stage two roll up in 2024. So that's kind of our North Star. It's like zero to one this year and then one to two next year. And when we get to two, we'll be kind of inheriting the full decentralization characteristics of Ethereum. And again, I don't think that there's a way that Coinbase could have done that alone.

• 44:31Speaker 02

  Like, there's just no way if we had started working on this six to nine months ago, and we said, "We're going to build a rollup and we're going to decentralize it in, you know, six to 12 months," there's just not a path. And that's why we're so excited about both, obviously, working on the technology with optimism, but we also see the collaboration almost as an act of decentralization. Like, doing the work to set up a core contributor group, to have all core dev calls, to think about how do we manage the multi-sigs that are managing these things? How do we actually bring these together over time to increase interoperability? That is decentralization. And I think by putting ourselves, like, our first step into the on-chain world,

• 45:12Speaker 02

  from a chain perspective, being done in a collaborative way, I think is a real act of decentralization.

• 45:17David Hoffman?

  Okay, so we have to get into the subject matters of the OP stack, because there's so much to talk about here. Coinbase is joining OP Labs as the second official core development team of the OP stack after OP Labs. I want to talk about how that relationship got started. But there's also strong ties between the base chain and the OP collective. So a percentage of base chain transaction fees are going to the OP collective. So we're going to talk about that. Jesse, you are joining the Retroactive Public Goods Funding as a RPGF badge holder, and you're going to start and be a member of that and start to participate in optimism, in the governance of the optimism collective.

• 45:59David Hoffman?

  There are so many things to talk about, and like, there's a grand world in the optimism vision for the world. I want to get your take on it. But first, a moment to talk about some of these fantastic sponsors that make the show possible. Uniswap is the largest on-chain marketplace for self-custody digital assets. Uniswap is, of course, a decentralized exchange. But you know this because you've been listening to Bankless. But did you know that the Uniswap web app has a shiny new fiat on-ramp? Now you could go directly from fiat in your bank to tokens in DeFi inside of Uniswap. Not only that, but Polygon, Arbitrum, and Optimism Layer 2s are supported right out of the gate. But that's just DeFi. Uniswap is also an NFT aggregator, letting you find more listings. For the best prices across the NFT world.

• 46:43David Hoffman?

  With Uniswap, you can sweep floors on multiple NFTs. And Uniswap's universal router will optimize your gas fees for you. Uniswap is making it as easy as possible to go from bank account to bankless assets across Ethereum. And we couldn't be more thankful for having them as a sponsor. So go to app.uniswap.org today to buy, sell, or swap tokens and NFTs.

• 47:07David Hoffman?

  The Phantom Wallet is coming to Ethereum. The number one wallet on Solana is bringing its millions of users and beloved UX to Ethereum and Polygon. If you haven't used Phantom before, you've been missing out. Phantom was one of the first wallets to pioneer Solana staking inside the wallet and will be offering similar staking features for Ethereum and Polygon. But that's just staking. Phantom is also the best home for your NFTs. Phantom has a complete set of features to optimize your NFT experience. Pin your favorites, hide your uglies, burn the spam, and also manage your NFT sale listings from inside the wallet. Phantom is, of course, a multi-chain wallet, but it makes chain management easy, displaying your transactions in a human-readable format with automatic warnings for malicious transactions or phishing websites. Phantom has already saved over 20,000 users from getting scammed or hacked.

• 47:52David Hoffman?

  So get on the Phantom waitlist and be one of the first to access the multi-chain beta. There's a link in the show notes, or you can go to phantom.app/waitlist to get access in late February. How many total airdrops have you gotten? This last bull market had a ton of them. Did you get them all? Maybe you missed one. So here's what you should do. Go to Earnify and plug in your Ethereum wallet, and Earnify will tell you if you have any unclaimed airdrops that you can get. And it also does PoApps and mintable NFTs. Any kind of money that your wallet can claim, Earnify will tell you about it. And you should probably do it now because some airdrops expire. And if you sign up for Earnify, they'll email you anytime one of your wallets has a new airdrop for it to make sure that you never lose an airdrop ever again. You can also upgrade to Earnify Premium to unlock access to airdrops that are beyond the basics

• 48:36David Hoffman?

  and are able to set reminders for more wallets. And for just under $21 a month, it probably pays for itself with just one airdrop. So plug in your wallets at Earnify and see what you get. That's E-A-R-N-I dot F-I. And make sure you never lose another airdrop. And Vegas Nation, we are back with Jesse all about the base chain out of Coinbase, but we're going to get into the tech stack that base is built upon. And Jesse's been talking about it a lot and it's been getting me really excited. And so Jesse, can we just start back at the very beginning? Why did Coinbase elect to choose to build base on the OP stack? How did that relationship start? Like, what was the thought process going behind this? Can you lead us into this conversation?

• 49:16Speaker 02

  Yeah, absolutely. So we started working really closely with the optimism team, actually not related to the OP stack in L2 a little more than a year ago on EIP 4844. We talked about that earlier, but it's all about scaling Ethereum. Optima, OP Labs and Coinbase basically came together and said, hey, we want to make this happen sooner than sometime in the future. We're now on track to ship EIP 4844 sometime this summer. It's been a huge collaboration across the all of the Ethereum client teams.

• 49:44David Hoffman?

  A lot of people don't know that Coinbase was involved in that. So Coinbase as a core dev is kind of a different mental model as well, giving back public goods to the community. Yes?

• 49:55Speaker 02

  Yeah, I, you know, I, I feel I never want to claim the title of core dev. You know, the teams that have been building those clients for the last many years, they have just done such an incredible service. And I feel like over the last year Coinbase has started to contribute to the core development process. And the, the approach that we've taken is like, let's just put our, our money and time and effort where our mouth is by showing up and writing code. And it's been a super awesome process. People have been incredibly welcoming. They've been excited for us to be there. And I think we've had a big impact, you know, like when we started working on 4844 at the beginning of 2022, the timeline was like sometime in the future, maybe 2024.

• 50:40Speaker 02

  And now, you know, we have a commitment to ship this as a fast follow to the Shanghai Chapella upgrade that's happening in late March, early April. And we have four dev nets done, including the last one that we all spent a week on at Interop, working on together, where we have now all clients participate. Participating in it, we're working towards the fifth dev net. And the spec is basically done and implementations are basically done. And so I, I think we're trending towards a, you know, summer release, which will have a huge impact on not just base, not just optimism, but every L2. And that's, that's kind of the ethos. So anyways, going back to optimism, we started working on that with optimism.

• 51:23Speaker 02

  Beginning 2022, started working on Ethereum with them. And that actually came after, in the beginning, first half of last year, Coinbase basically ran a process because we saw a lot of teams internally struggling with the question of like, how do we build on-chain products? Like literally, what smart contract language do we use? Do we use EVM? Do we use Rust and Solana? Do we use Cosmos App Chain? And we basically decided, hey, people are already defaulting to EVM. Coinbase products all support EVM. EVM has the largest developer community in the world. Like, let's make that the paved road internally. And once we made that decision, then it was like, okay, now we gotta go scale Ethereum because this is where we're going to be deploying our applications. And so that's why we started working on 4044.

• 52:05Speaker 02

  And then in the second half of last year, we spent a lot of time basically thinking about like, what's the technology stack that we'd want to build on with layer two? That's when we started to believe that there wasn't just going to be one layer two, but there were actually many layer twos that worked in collaboration. This vision of the super chain that we've been working on with optimism. And I think that's when we built a lot of conviction in the optimism team from a technical perspective, the optimism OP stack codebase from a technical perspective and a modular perspective. And the optimism ethos around having the code be open source, MIT licensed, freely available, freely forkable, and having this whole infrastructure that they've built around funding through retroactive public goods funding, all of the, the public goods that support the crypto economy.

• 52:50Speaker 02

  And so I think those three things really combined to make this

• 52:55Speaker 02

  an exciting choice for Coinbase and one that we're really excited to be pushing forward.

• 52:58David Hoffman?

  So I want to ask about your involvement with the OP Collective. So you are now a card holding member of, of the Collective. Can you talk about what you're going to be doing there over there?

• 53:08Speaker 02

  Yeah, so I'm, I guess, just to clarify, I'm a badge holder for the latest retroactive public goods funding round, which is basically a moment where optimism is taking some of the revenues that are generated by optimism mainnet and returning that to builders in the community who have contributed to the broader crypto ecosystem. And so this can be all the way from, you know, things like Geth, which is the execution client that's powering optimism, to Block Explorers, to applications. And badge holders are basically responsible for looking through the, I think it's around 200 applications for funding, based on retroactive contributions, and saying, hey, which of these are, you know,

• 53:51Speaker 02

  really had a positive impact? And how do we elect kind of which ones to give funding to? And so I'm really excited to participate in that process. I think it's one of the most novel, kind of cutting-edge experiments happening in on-chain governance right now. And it's one that has a really, like, amazing and powerful purpose, which is funding this public goods work that makes our entire industry possible. So that's how I'm involved in optimism. One thing that I always do like to clarify, though, as I'm going through these conversations, is I have no OP holdings. I have no investments in optimism companies. I never have. The only OP holdings that I have are the ones that I earned in the airdrop,

• 54:32Speaker 02

  totally unaffiliated to optimism from using Ethereum. And I think that's, you know, an important disclaimer. This was really a decision that was driven by the technology, the team, and the ethos around decentralization that Coinbase is really excited to contribute to.

• 54:47David Hoffman?

  Well, Ron and I will have said this in the intro to this episode, but I'll say it again here. Ron and I are advisors to optimism, and a large part of that comes from, we share the same vision that optimism has about retroactive public goods and creating this, like, Star Trek sci-fi future of incentive and coordination alignment, and the ability to freely fork and grow the codebase. And so it starts, we're seeing, what we see in optimism, it seems to be that Coinbase is also seeing the same thing in optimism. And just to really, just to clarify this last point, you said, there are, of the base chain, the base layer two, some percentage of fees, transaction fees, like gas fees, if you call them, are going to the OP collective. What percentage is that?

• 55:30Speaker 02

  We're not sharing the percentage right now, but we're actually going to be doing that whole... Process on-chain. That was really important to us. We want to make it so everything's on-chain. So it's transparent, so it's visible to the community, and that's something we're going to be working through in the months ahead. But yeah, we're really excited to be contributing back to retroactive public goods funding through the Optimism Collective. And that felt really important to us, that we didn't want to just fork this thing and go our own way. We wanted to become a part of something bigger than us, that we felt could create a real decentralized foundation for the crypto economy alongside Ethereum. And that's, that's what we're doing hand in hand with Optimism.

• 56:10David Hoffman?

  There's that proverb, "If you want to go fast, go alone, but if you want to go far, go together." And that is really just the OP stack instantiated, at least from, from my perspective. And, and so I really want to ask you, Jesse, so you are not building on top of the OP mainnet. You are forking the OP codebase to build a new Layer 2 called Base, using the same codebase as the Optimism mainnet, but it's still not on top of the Optimism mainnet. And so, which brings us to a word that we've used before, the superchain, which is the optimism vision. It sounds like you're, you're also privy and believe, a believer in this. And so, the idea here is that everything, every chain that's built on the OP stack, the boundaries between these things start to blur.

• 56:54David Hoffman?

  And so, you know more is there going to be like network switching. It's like, "Oh, I'm on Polygon, now I'm going, got to go change my, my MetaMask down to Arbitrum." The OP stack vision is that if we all use the same codebase, all of these chains start to meld. And so, even though Base is a separate chain from the Optimism mainnet, because of the common denominator of the OP stack, a lot of the complexities of being across different chains starts to become abstracted away. This is my vision for the OP stack. This is something that some of the OP team has shared with me. Is this also your vision? And can you articulate what you see in this future superchain world?

• 57:30Speaker 02

  Yeah, 100%. That's our vision. You know, I think what we've seen as we've been kind of building Base and thinking about this more broadly is, uh, application developers are going to have all sorts of needs. For instance, if I'm a, you know, DeFi product, it's really valuable for me to be on a like very interconnected hub chain like Base. Um, that's going to give me access to other DeFi products, that's going to give me access to users. Um, but that's probably a different use case or need than if I'm a game developer where like I need to be having a lot of transactions that are moving really quickly to run the whole game engine. And I think ideally, we'd be in a world where those applications could run in parallel and work really well with each other. And I think that's the vision behind the OP stack. It's let's build one codebase that

• 58:14Speaker 02

  can be configurable, um, and be used to support different developer needs and be structured in such a way that those, uh, instances can work really well together and be increasingly interoperable. So we, we have a long way to go to build that vision, you know, to get from here to there. To start, Base will be standing up alongside Optimism Mainnet, and then over the years ahead, we're going to be working together to, uh, converge them and to make them interoperate and to bring a bunch of other folks in to create this kind of broader superchain that scales Ethereum.

• 58:46David Hoffman?

  Uh, Jesse, doing a little side quest here, it was also your effort to bridge in the KZG ceremony in Ethereum into Coinbase users. Uh, and so, uh, I'm, I, Ryan has some reasons that he's going to also applaud you for, and I'm going to front run him and applaud you for that one, is it seems to be that Jesse is really taking in the best of what Ethereum has to offer and making that scalable and accessible to all of Coinbase users. And so, uh, just thank you for what you're doing with, uh, helping Coinbase lead the charge into what we see as the right direction for crypto.

• 59:18Speaker 02

  Appreciate that. Yeah, I mean, the KZG ceremony. That's just been such an incredible effort. Shout out to Trent and Carl and the whole team that built that. I think we just crossed 50,000 contributions. Coinbase had CTAs for it on Twitter. We sent email to our users. We put it on Coinbase.com. A huge number of people inside of Coinbase worked to make that possible. And it's all about contributing back to the public goods infrastructure that we're building on. You know, Coinbase could not do a lot of the things we're doing today without Ethereum. Coinbase could not exist today without Ethereum. And activating our users to contribute to securing Ethereum and scaling Ethereum feels like the least that we can do. It feels like an essential contribution that we need to be making to these platforms.

• 1:00:02Ryan Sean Adams?

  That's super cool. Jesse's our decentralization mole inside of the organization. And look, I know Coinbase and Brian really value these things and support these decentralized values too, but sometimes it takes a little bit of foresight, pushing against the grain and getting active in the community. And I appreciate you really kind of bringing that internally and leading that charge. I know it's not just you, Jesse, and you'll probably be the first to be like, there's a whole team around you. I'm saying this not just to Jesse, but everyone who is working on a project that is not taking shortcuts, taking the long path towards public goods and maximally decentralizing the thing. So Jesse, I want to ask you this as we kind of close. And this is for David and myself, this has been some of the most exciting news, I think,

• 1:00:46Ryan Sean Adams?

  that we've actually seen in crypto. Maybe for me personally, I don't know if David, you'd say the same thing since the Ethereum merge, for sure. And the reason is, this is a thesis that we've had for a very long time, a very, very long time. This idea of Ethereum as a settlement layer, this idea of publicly traded companies building their own chains that settle down to Ethereum. We've called, I know Coinbase probably wouldn't like this phraseology, but like, if you hold customer assets, you are sort of a bank. And we've talked about banks building on top of Ethereum. We've talked about credible neutrality wins, winning. We've talked about the DeFi mullet. We've said explicitly that a major exchange, this was a prediction last year, that I think I held that didn't come true in 2020.

• 1:01:31Ryan Sean Adams?

  2022, I guess we were distracted by other things. But in 2023 is coming true, which a major exchange would launch a layer two chain. And it's happening. This is like the bankless thesis playing out and it's so exciting to see.

• 1:01:43David Hoffman?

  So much of this announcement leans into so many different bankless theses that we have been pounding the drum for.

• 1:01:49Ryan Sean Adams?

  It's long game. It's long game. And I love that you're doing this, but so let me ask the question of if Base is maximally successful in like five years, what do you think it looks like? Users, apps, what are people doing? Do you have some sort of definition for the future state for this project that you've you've launched and undertaken?

• 1:02:10Speaker 02

  Yeah. And before I talk about the future, and I appreciate all the credit, I do obviously huge credit to the entire internal team at Coinbase that's been pushing this forward. I think we have 100 plus contributors that have helped in some way. And we actually have been, we've been giving out NFTs over the last nine months to every contributor as they've joined. And so that will be, you know, on chain on the record. It's also showed on base.org/ about, which is really cool. We get to render everyone's ENS profiles.

• 1:02:40Speaker 02

  But also like just a huge shout out to Brian Armstrong. Like six, six years ago in 2016, bear market, before 2017 bull market, Brian Armstrong wrote the Coinbase secret master plan, which was a four part plan. The first phase was build the protocols, Bitcoin, Ethereum. The second phase was build the exchange, Coinbase exchange. The third phase was build the consumer interfaces. It's Coinbase wallet, MetaMask, Trust Wallet, Coinbase DApp wallet. Fourth phase, build millions of DApps that bring billions of users into the crypto economy. He wrote that six years ago.

• 1:03:19Speaker 02

  And we think about base as phase 3.5. It's the platform that makes it possible, that makes it easy for developers to build those millions of dApps, for users to use those millions of dApps, and for billions of people to come into the crypto economy. And so when I think about what five years' success looks like, I said this earlier, but it's that on-chain is the next online. It's that this is not a thing of like, have you tried crypto? It's like crypto is powering every single part of our day-to-day experience, whether it's the money that we spend, the money that we save, the games that we play, the social apps that we use. Those things have been replatformed from this online platform, which has been incredibly powerful from an information perspective and given everyone access to information everywhere,

• 1:04:04Speaker 02

  but has still been beholden to that same centralization from a money perspective, from a value perspective. And those products have now been replatformed onto this on-chain platform, which has the same information characteristics of being globally available, and for the first time, from a money and value perspective, is also globally available. It is also a level playing field that anyone can build for. And I think that future, that future where our everyday lives are powered by the on-chain crypto economy is gonna be, it's gonna be incredible. And Base is gonna be at the center of it, with optimism, with Ethereum, and with all of the other people who are gonna be using the OP stack or other toolkits that interoperate with the OP stack, which is also great, to scale the global on-chain economy.

• 1:04:49Ryan Sean Adams?

  Bullish, Jesse. Very, very bullish as we end this. So what is the emoji for Base? Are we doing the blue circle? Is that the thing?

• 1:04:57Speaker 02

  We're doing the blue circle. We say that the blue circle represents

• 1:05:01Ryan Sean Adams?

  Wise choice.

• 1:05:02Speaker 02

  Kind of the platform of crypto. It represents trust, it represents surety, security, it represents economic freedom. I think we've had the green money sign for a little too long, and we believe that the blue circle, the foundation, is the next thing. The one sad thing about the blue circle, which I'm very sad about, is you can't add it to your Twitter name or your Twitter profile, because they don't want it to look like the verified symbol. Now, you can add it to your Farcaster name or your Lens name, and people will be doing Shout out to the centralized social media being built on the on-chain platform. But the blue circle is what it's all about. We're recording this on the 22nd. You've probably seen the blue circle teaser that's on the internet today.

• 1:05:46Speaker 02

  Tomorrow, we'll be talking about the blue circle, talking about base and talking about what we think is the next chapter of the crypto economy.

• 1:05:53Ryan Sean Adams?

  There we go. Blue circle bullish. We'll see if we can get Elon Musk to change his mind on the blue circle thing. We've got to get him on Bankless first, but this is so very exciting, Jesse. Thank you for sharing this news with us today and the entire Bankless community. Super excited to see.

• 1:06:11Speaker 02

  Yeah, thanks for having me, y'all. This is awesome.

• 1:06:13Ryan Sean Adams?

  Action items for you, Bankless Nation. Got to end with this. Base.org is the name of the website that just went live today with this announcement. I will include a link in the show notes to that. Also, David and I, Bankless, has a stream, a live stream, is it a live stream, David? With the optimism team that's coming tomorrow. So that would be Friday, the 24th, I suppose. What time we doing that stream, David? That is going to be at 10 a.m. Eastern time. So we'll get the optimism side of this equation as well, now that we've had the Coinbase side of the equation, of course. Got to end with this. None of this has been financial advice. How dare you think that it was? All of crypto is risky. Eth is risky. So is DeFi. You could definitely lose what you put in, but we are headed west. This is the frontier.

• 1:06:58Ryan Sean Adams?

  We're off to explore new frontiers, this time on Base. It's not for everyone, but we're glad you're with us on the Bankless journey. Thanks so much.

• 1:07:05David Hoffman?

  Hey, we hope you enjoyed the video. If you did, head over to Bankless HQ right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence. We recommend joining our daily newsletter, podcast and community as a Bankless premium subscriber to get the most out of your Bankless experience. You'll get access to our market analysis, our alpha leaks and exclusive content, and even the Bankless token for airdrops, raffles and unlocks. If you're interested in crypto, the Bankless community is where you want to be. Click the link in the description to become a Bankless premium subscriber today. Also, don't forget to subscribe to the channel for in-depth interviews with industry leaders, Ask Me Anythings and weekly rollups,

• 1:07:48David Hoffman?

  where we summarize the week in crypto and other fantastic content. Thanks, everyone, for watching and being on the journey as we build out the Bankless Nation.