Coinbase Transfers Customer USDC to Ethereum L2

Coinbase is set to transfer numerous customer and company accounts of the USD Coin (USDC) stablecoin to Base, a Layer 2 Ethereum blockchain they deployed over seven months ago.

Max Branzburg, Coinbase’s Vice President, announced on X on March 26 that this move aims to help the cryptocurrency exchange “manage and secure customer assets with lower fees and faster payment times”. This change only affects accounts on Coinbase.com, excluding the Coinbase Wallet, where users are responsible for their own private keys.

Currently, user tokens on Coinbase.com are stored in a wallet secured by computation from multiple parties. Branzburg emphasizes that Coinbase always holds customer assets on a 1:1 basis and does not lend them out unless instructed. David Hoffman, co-host of Bankless, focused on Ethereum in a post on X on March 26, explaining that Coinbase’s on-chain action opens up opportunities for an on-chain financial system in the future.

Coinbase is carving the path towards a future onchain financial system

Eventually, all financial institutions will move their operations onchain

and they will be better for it https://t.co/dVoAfms0dv

— DavidHoffman.eth/acc🦇🔊 (@TrustlessState) March 26, 2024

Ryan Sean Adams, Bankless co-host, believes this move will also set a precedent for cryptocurrency exchanges and banks to follow suit. “Every asset is a token in the future […] Every bank is a chain in the future,” Sean Adams added. However, not everyone agrees with this move. A user named “callmeKappa.algo” on X suggested that Base is becoming too centralized in its current state.

Coinbase is moving its business onchain

Eventually all crypto exchanges will move onchain

Then banks

Every asset is a future token
Every bank is a future chain

Ethereum is the world's settlement layer pic.twitter.com/vI704TR4Zw

— RYAN SΞAN ADAMS – rsa.eth (@RyanSAdams) March 26, 2024

Currently, Coinbase is the only ordering tool on Base, according to data from L2BEAT, meaning the exchange fully controls the chain. However, the company has committed to gradually decentralizing Base over time.

Base was launched as a scaling solution for Ethereum on August 9, 2023. It uses optimistic rollups to store off-chain transaction data and sends transactions to the Ethereum base layer.

Related: Coinbase Offers Freebies for Ethereum NFT Game Parallel

Coinbase also open-sourced Base in October to increase transparency and accountability, while allowing the community to contribute to the project. According to L2BEAT, Base is currently the fourth largest Layer 2 Ethereum network in terms of total value locked, behind Arbitrum, Optimism, and Blast.

Base reached an all-time high of 2 million daily transactions on March 16, while daily new user numbers continue to rise.