Ethereum co-founder Vitalik Buterin has signaled a elementary change within the blockchain roadmap, declaring that the period of “branded shards” is successfully over.
On February 3, Buterin argued that the trade’s earlier “rollup-centric” imaginative and prescient not is smart, citing sooner scaling of the principle Ethereum layer and slower tempo of decentralization among the many fundamental rollups.
This philosophical repair falls squarely on the Coinbase-backed Base community.
Over the previous few years, Ethereum’s Layer 2 answer has grown into one of many largest client rollups within the cryptocurrency ecosystem, with over $11 billion in whole worth secured (TVS).
However Buterin’s new roadmap place calls into query the effectiveness of Layer 2, which depends on partnerships with corporations quite than its personal technical utility.
Consequently, there may be quite a lot of strain on the bottom. This raises the query whether or not Ethereum’s evolving definition of “coordinated scaling” will erode the long-term financial benefits of Coinbase-backed layer 2 options, particularly the profitable income fashions related to concentrated sequences.
big income supply
The truth is, Base has been a monetary revelation since its launch in August 2023.
crypto slate We beforehand reported that the community generated greater than $75 million in income in 2025. This determine accounted for nearly 60% of the general Layer 2 sector income in the identical 12 months.
Market individuals level out that the distinction between the corporate’s income and working prices is a attribute of its present enterprise mannequin.
Notably, L2BEAT knowledge reveals that Base paid roughly $1.52 million for Ethereum final 12 months to submit transaction knowledge and canopy settlement overhead. This works out to a median of about $4.180 per day, or about $0.000406 per consumer interplay.
In change for this comparatively low royalty paid to the principle community, Base captures vital worth. Metrics over a current 24-hour interval present that the community processed roughly 12 million transactions and hosted roughly 409,453 energetic addresses.
For Coinbase, that is extra than simply an experiment. It’s a extremely worthwhile decentralized technique of monetizing on-chain exercise even when spot buying and selling volumes are cyclical.
Dilemma of company management
Buterin’s criticism focuses on the hole between the beliefs of the rollup and the fact of Base’s present operations.
He argued that many Layer 2s nonetheless perform as separate chains with bridges quite than true extensions of Ethereum. That is primarily as a result of they depend on multisig (multi-signature) wallets, safety councils, and centralized operators for upgrades.
With this in thoughts, Buterin’s “New Path” contains three sensible filters for the chain. It is about pushing us to do greater than scale, sustaining not less than Stage 1 maturity when working with Ethereum belongings, and prioritizing interoperability.
Particularly, Base has cleared the primary hurdle of maturity however faces a posh ceiling.
L2BEAT at present classifies Base as a Stage 1 rollup. This designation permits customers to have a mechanism to exit the system even when a centralized operator not exists.
Nevertheless, it additionally highlights dangers. Upgrades have to be permitted by a number of entities, and there are not any obligatory delays to upgrades.
This implies there isn’t a built-in “exit window” if the consumer doesn’t conform to the code change. L2BEAT additionally flags the flexibility to extract MEV (Most Extractable Worth) if a central sequencer chooses to make the most of that place.
This poses a singular dilemma for Coinbase, a publicly traded firm in america.
However Buterin criticized the undertaking for being caught in Stage 1 as a result of “buyer regulatory wants require final management.”
Coinbase can not simply switch improve keys to nameless decentralized autonomous organizations (DAOs) with out probably violating anti-money laundering and know-your-customer (KYC) compliance obligations.
If Base retains its Safety Council veto on regulatory security grounds, it dangers falling into the class of initiatives that Buterin describes as “not extending Ethereum” within the trustless sense.
Low cost knowledge threatens Base’s earnings
The second drive that narrows down the bottom is technical. Ethereum is aggressively decreasing the price of its personal block area.
In January, Ethereum activated the second Blob Parameters Solely laborious fork, the ultimate stage of the Fusaka improve.
This replace will increase knowledge capability by rising the utmost blob restrict to 21 and the per block goal to 14, which considerably reduces transaction prices for layer 2 rollups similar to Arbitrum and Optimism.
This wealthy knowledge availability is a double-edged sword for Base.
Alternatively, the cheapness of blobs means a decrease marginal price per transaction, which is a tailwind for client apps and high-frequency actions that thrive on the community.
Alternatively, it forces you to alter your worth proposition. As soon as Ethereum’s fundamental layer turns into low cost sufficient, the easy pitch of “cheaper EVM execution” will lose its validity.
The central debate facilities on lease assortment. Critics argue that whereas rollups generate massive charge streams, they pay comparatively little to Ethereum for safety.
For context, Base posted roughly 531.54 GiB of information to Ethereum final 12 months. As main networks develop, the political financial system of sequencers, the entities that order transactions, comes into focus.
If the ecosystem strikes to shared sequences and different built-in mechanisms to cut back centralized management, the worth of proudly owning these ordering rights might decline. Base might win on whole utilization, however it could lose on the “take charge” it prices per transaction.
Can the bottom win?
Coinbase appears to be acutely conscious that the times of generic scaling are coming to an finish.
Jesse Pollak, lead developer at Base, has publicly acknowledged that it’s nice to see Ethereum prolong Layer 1, and agreed that Layer 2 can not merely be “Ethereum however cheaper.”
With this in thoughts, he stated the community is steering towards differentiation to outlive the brand new roadmap by “constructing one of the best product and unlocking new real-world use instances throughout buying and selling, social, gaming, creators, and forecasting.”
Particularly, Base has already achieved nice success on this area of interest, changing into the popular dwelling for viral client functions similar to Good friend.tech and Clanker.
In the meantime, market analysts argue that distribution is Base’s strongest moat.
The community pushes customers to Coinbase surfaces similar to wallets and swaps, and helps the corporate’s B2B device stack. This creates a funnel the place income flows by means of a number of channels, not simply sequencer charges.
Buterin’s submit implicitly reduces the long-term worth of “branding Ethereum as scaling,” however it doesn’t cut back the worth of delivery to shoppers.
Total, Base is positioned to proceed to be a winner when it comes to development and monetization within the brief time period.
However the long-term risk stays actual.
If the market more and more costs rollups with ranges of decentralization and dependable exit ensures, Base must speed up in direction of tighter improve constraints, which might put Coinbase in a tricky place.