What happened?
Ethereum co-founder Vitalik Buterin defended Coinbase’s Base blockchain against criticism, addressing misunderstandings about Layer 2 custody models. He emphasized that Layer 2 solutions provide legitimate security guarantees via Ethereum’s base layer and not merely as “glorified servers”. This defense discussions on Ethereum’s economic sustainability and development plans in view of the impending December 3 Fusaka upgrade.
Who does this affect?
This affects all users of Ethereum, especially those utilizing Layer 2 networks and Coinbase’s Base blockchain. Decentralized exchanges like dYdX v3 and companies like Sony that recently faced issues with L2 networks would particularly take note. Ethereum’s economic model is also under watch due to a significant decrease in on-chain revenue despite ETH reaching new highs.
Why does this matter?
The ongoing debate matters because it has market implications for Ethereum and its Layer 2 networks. Defending Layer 2 solutions validates their functionality under stress conditions, such as operator shutdowns and censorship attempts. It is also crucial for the upcoming Fusaka upgrade that aims to enhance Layer 2 capabilities and mainnet sustainability. The discussion around Ethereum’s economic model, Layer 2 adoption, and base layer revenues gives insight into the future direction of the network.