Coinbase (COIN), a Nasdaq-listed centralised digital asset exchange, announced this Thursday that an Ethereum (ETH) scaling product would use layer 2 network Optimism technology (OP). As a result, the prices of the cryptocurrencies in the Optimism ecosystem skyrocketed.
Developer Jesse Pollack recently announced that the testnet of Base, a new layer-2 scaling solution designed in collaboration with Coinbase, has launched with the objective of introducing a billion new customers to cryptocurrency. According to Pollack, Base will be built on top of OP, another ETH layer-2 scaling solution that offers rollups.
According to CoinGecko, the token, OP, is up 16% on the day and reached just above $3 before retreating to roughly $2.90 at press time. In comparison, most major cryptocurrencies have remained relatively stable in the previous 24 hours, with none climbing above 1%. Optimism-native lending protocol Sonne Finance’s SONNE token has jumped 82%, taking the seven-day tally to over 300%.
Layer-2 solutions are intended to make transactions quicker and less expensive than they are on their associated layer-1 blockchains, such as Ethereum, where costs have been known to skyrocket during high network demand. Base claims that it opted to collaborate with Optimism because they both acknowledged the need of making ETH cheap to mainstream users.
This control of price is accomplished by initially processing transactions on a different chain before settling those transfers on the mainnet in chunks known as rollups. “The Base Chain will commit a portion of transaction fee revenue back to the Optimism Collective,” tweeted Optimism on Thursday.
Coinbase’s entry into Ethereum layer 2 comes a year after the exchange opened a marketplace for non-fungible tokens. With over 240 investments, Coinbase Ventures is one of the most aggressive venture capital companies in crypto today, according to Analytics Insight.
Base will also include a development kit for creating decentralized apps, as well as a bridge that will allow users to jump to other blockchains such as Solana (SOL) and Bitcoin (BTC). This has given much hope for Base’s future as a go-to site for decentralized apps.
