- Coinbase will store customers’ USDC on Base as it plans to move its business on chain.
- Mixed reactions from the crypto community follow Coinbase’s move to go fully on-chain.
- Base sees a new high in Total Value Locked as its team moves to reduce fees.
Coinbase has taken a huge step in its plans to operate business fully on chain by moving the USDC of users to its rising Layer 2 network Base beginning on Tuesday. While the move may reduce fees and improve settlement time, it has met mixed reactions from the crypto community.
Coinbase to move all of its USDC to Base
Coinbase is moving more of its corporate and customer USDC stablecoin to Base, its Ethereum Layer 2 blockchain platform. The move was announced on Tuesday in an X post by the company’s Vice President, Max Branzburg, who said that the change will enable the exchange “to manage and secure customer funds with lower fees and faster settlement times, with no impact to the Coinbase user experience.”
This aligns with Base’s original vision, which is to be the “on-chain home for Coinbase products, users, and assets,” as stated on its website. As a result, Coinbase can onboard its 100 million users to web3 through Base.
Read more: COIN pumps over 20% after Coinbase Q4 earnings call
After the announcement, Ryan Sean Adams, host of the Bankless podcast, went on X to share his excitement, saying that “eventually all crypto assets will move on chain, then banks…every asset is a token, every bank is a future chain.”
However, another X user expressed concerns about the safety of their assets. Another suggested that the centralization of Base may pose a risk. “USDC will be moved from the Coinbase server handling customer funds to the Base L2, which is controlled by the single sequencer managed by Coinbase,” he said. Coinbase had previously said it plans to decentralize its sequencing role in the future gradually.
Max Branzburg tried to calm the fears by saying, “We always store your assets 1:1. We will never repurpose your funds. We do not lend or take any action with your assets, unless you specifically instruct us to.”
TVL on Base reaches new high
The move of USDC to the chain follows significant growth on Base, as its on-chain data shows that the Layer 2 network is breaking new ground.
The total value locked (TVL) on Base crossed $1.069 billion on Tuesday, up 139% month-on-month and exceeding the $1.004 billion of Optimism, according to data from DeFiLlama.
Much of this growth comes from the recent rally of meme coins in its ecosystem and its Aerodrome automated market maker (AMM). Aerodrome holds half of Base’s TVL, with USDC accounting for $870 million value on the L2 – an amount likely to rise as Coinbase brings in more USDC.
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Base is also recording increased growth in active wallets and volume as it has seen its average fees rise close to rates before Ethereum’s Dencun upgrade, which slashed transaction costs on L2s. However, the Base team announced in an X post that they are already working on ways to reduce user fees while “targeting a 400x scalability.”
