Coinbase Base shows the company turning a corner

Bryan van der Beek—Bloomberg/Getty Images

Something strange is happening at Coinbase. For nearly two years, the company had been operating as the bloated corporate baron of the crypto world, delivering underwhelming results even as its executives gorged themselves on share sales. But lately, there’s a different aura around Coinbase. The company seems lean, focused and shows a coolness not seen since the start-up days.

This was proven by the announcement last week of a new blockchain called Base. The blockchain is a so-called Layer 2 chain that sits on top of Ethereum that will process transactions cheaper and more efficiently and is built using code from Optimism – a popular open source project that is already one of the leading projects in the effort to scale Ethereum .

The launch of Base is important for several reasons. First, it means Coinbase has finally joined rival Binance in running its own blockchain. This gives the company a convenient platform to introduce its millions of customers to a variety of decentralized apps, potentially turbocharging the wider world of Web3 in the process. Coinbase also claims that Base is a key forum for developers, which could both expand its influence and help its long-running push to diversify its revenue stream.

Meanwhile, the decision to make Base a complement to Coinbase’s open-source Optimism ecosystem won rare applause from cryptopurists who like to deride the company as too corporate and controlling. While the Base rollout wasn’t without issues, the overall vibe of the project seems to have won Coinbase renewed goodwill with influential figures in the crypto world.

This successful launch of the major project comes after Coinbase has significantly reduced its staff, and started focusing on its core crypto business instead of Hollywood vanity projects, which have been a source of distraction in recent years. This can only improve the company’s bottom line. This renewed focus, along with a recent uptick in crypto trading and Coinbase’s newly lucrative stablecoin business, will likely give beleaguered shareholders a pleasant surprise for the company’s next earnings report.

None of this means that Coinbase has definitively turned the corner and returned to the days in early 2021 when the stock traded above $300. Like everyone else, the company is navigating a brutal regulatory landscape and is dependent on the ongoing recovery in the broader crypto market. But for now, it feels like Coinbase is doing things right from a financial and product perspective – and even becoming one of the cool kids in the industry again.

Jeff John Roberts
[email protected]
@jeffjohnroberts

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