By 2030, Coinbase executive predicts the emergence of ‘massive’ use cases for cryptocurrencies.

By 2030, Coinbase executive predicts the emergence of 'massive' use cases for cryptocurrencies.

The Rise of Base: Coinbase’s Impact on the Blockchain Industry

Coinbase, one of the leading cryptocurrency exchanges, made a splash in the blockchain industry with the launch of its new blockchain called Base in late July. Since then, Base has swiftly established itself as a major player among Ethereum-based layer-2 chains. In fact, on September 21st, the chain recorded an impressive 677,000 transactions and 870,163 new addresses. By comparison, Arbitrum, another popular layer 2 chain that launched in June 2021, had 925,000 transactions and 54,233 new addresses on the same day.

Base has quickly become the host for numerous decentralized projects. Jesse Pollak, the head of protocols at Coinbase, shared during an interview at Messari’s Mainnet conference in New York City that Base is already hosting decentralized inflation oracles, restaurant rewards projects, insurance aggregators, and much more. The platform has attracted hundreds of decentralized projects, showcasing its versatility and potential for growth.

In the interview, Pollak highlighted Coinbase’s vision for Base: to bring the next million builders and billion users on-chain. This ambitious goal speaks to the broader wave of adoption that the blockchain industry is expecting in the coming years. Pollak emphasized that it is not just about Base, but about the larger movement of embracing blockchain technology and developing applications that can improve people’s lives. He anticipates that achieving this vision will happen within this decade, with one million developer jobs by 2030.

To reach mainstream adoption, Pollak identified three key areas that need improvement. Firstly, the cost of using blockchain applications must be reduced significantly. Coinbase has already made significant strides in cost reduction with Base, with the same app that previously cost $5 or $10 now costing only 5 to 10 cents. However, further reduction is necessary to make the cost imperceptible to users.

Secondly, the usability of blockchain applications needs improvement. This includes building better wallet experiences to streamline the user experience and make it more accessible to a wider audience. Lastly, a better identity infrastructure on the blockchain is essential to enable the next wave of big use cases. Currently, consumer borrowing in developed countries relies on under-collateralized borrowing through credit cards or buy-now-pay-later arrangements, which is not feasible on-chain without reliable identity systems. Lower costs, better wallets, and improved identity systems are crucial to driving mainstream adoption.

When asked about the focus on the market price of cryptocurrencies, Pollak provided an insightful perspective. He referred to the technology lifecycle and drew parallels with previous technological innovations like the internet or electricity. During the early stages, financial bubbles and speculation are almost inevitable. It fuels innovation and draws in capital that ultimately drives impact and change. For cryptocurrencies and blockchain, Pollak believes it is time to move beyond the speculative phase and focus on bringing utility to everyday people, now that the infrastructure is in place.

Choosing Ethereum as the foundation for Base was a strategic decision for Coinbase. They considered building an alternative layer 1 blockchain but opted to be part of the larger Ethereum ecosystem instead. Ethereum’s dominance in terms of value, activity, and developer community made it a natural choice. By building Base as an Ethereum layer 2 solution, Coinbase not only contributes to scaling Ethereum but also benefits from being part of a vast ecosystem.

Regarding Ethereum’s scalability challenges, Pollak acknowledged the community’s shift in strategy. Originally, the plan was to accomplish scalability through layer 1 solutions and sharding. However, with the emergence of layer 2 solutions in 2020 and 2021, the focus shifted to building the infrastructure necessary to enable innovation at the layer 2 level. Coinbase has played a part in this by supporting initiatives like EIP-4844, which introduced data availability for rollups, reducing fees and increasing transaction throughput. Although the scalability problem is not entirely solved, significant progress has been made over the past two years.

To illustrate this progress, Pollak referred to the L2Beat data, which indicates a significant increase in transactions per second (TPS) on layer 2 projects. Just two years ago, the average TPS on layer 2 projects was eight, while Ethereum’s mainnet averaged 13 TPS. Today, layer 2 projects achieve 58 TPS, compared to Ethereum’s 11 TPS. This represents a substantial improvement, showing that the infrastructure is evolving to handle more transactions.

The interview also touched on the initial success of Friend.tech, a social media decentralized application (DApp) on Base. While some critics may consider such applications as trivial, Pollak emphasized their significance. He drew a parallel to the early days of social apps on the internet, which were initially dismissed but eventually gained massive adoption and became a crucial aspect of people’s lives. The next generation of on-chain social apps will provide users with sovereign ownership and control, allowing them to benefit from their creativity rather than being controlled by large corporations.

Pollak concluded the interview by discussing the search for blockchain’s “killer app.” He believes that there will not be a single killer app; rather, there will be many. One example of a killer app with real-world adoption is stablecoins. The volume of stablecoin transactions over the past year has been massive, and Pollak envisions stablecoins driving economic freedom in the coming decade. However, stablecoins are just the beginning, as there are many other on-chain applications that will significantly improve people’s lives.

As Coinbase’s Base gains prominence in the blockchain industry, it is clear that the vision of bringing millions of builders and billions of users on-chain is well underway. With the continuous advancements in scalability, cost reduction, usability, and identity infrastructure, the blockchain industry is poised for mainstream adoption. The potential for innovative and impactful applications is immense, paving the way for a future where blockchain technology becomes an integral part of everyday life.

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