Wall Street Has No Clue!
By Scott Melker who is known the Wolf of All Streets
Yesterday morning, a middle-aged investment banker on Wall Street made his way to his desk and sifted through the news his interns had prepared for him. At the bottom of the pile was a story labeled "potential junk."
The headline read: "Coinbase to Launch Layer 2 Solution."
Perplexed, the banker scratched his head and took a chance on opening the folder his interns had prepared. This is what he found inside.
Overview:
“ꌃꍏꌗꍟ ꀤꌗ ꍏ ꌗꍟꉓꀎꋪꍟ, ꒒ꂦꅏ-ꉓꂦꌗ꓄, ꀸꍟᐯꍟ꒒ꂦᖘꍟꋪ-ꎇꋪꀤꍟꈤꀸ꒒ꌩ ꍟ꓄ꃅꍟꋪꍟꀎꎭ ꒒2 ꌃꀎꀤ꒒꓄ ꓄ꂦ ꌃꋪꀤꈤꁅ ꓄ꃅꍟ ꈤꍟꊼ꓄ ꌃꀤ꒒꒒ꀤꂦꈤ ꀎꌗꍟꋪꌗ ꓄ꂦ ꅏꍟꌃ3. ꌗ꓄ꍏꋪ꓄ ꌃꀎꀤ꒒ꀸꀤꈤꁅ ꂦꈤ ꓄ꃅꍟ ꌃꍏꌗꍟ ꓄ꍟꌗ꓄ꈤꍟ꓄ ꓄ꂦꀸꍏꌩ ꍏꈤꀸ ꌗ꓄ꍏꌩ ꓄ꀎꈤꍟꀸ ꎇꂦꋪ ꓄ꃅꍟ ꀎᖘꉓꂦꎭꀤꈤꁅ ꎭꍏꀤꈤꈤꍟ꓄ ꒒ꍏꀎꈤꉓꃅ.”
After realizing the potential significance of the last story he had just read, our banker begrudgingly decided to clear his head by using a few eyedrops and give the overview one more chance, putting all his brainpower into understanding the implications of the news.
“Base is a secure, low-cost, developer-friendly Ethereum L2 built to bring the next billion users to web3. Start building on the Base testnet today and stay tuned for the upcoming mainnet launch.”
Feeling bewildered by the technical jargon in the story about "Coinbase launching a layer 2 solution," and not having any prior knowledge about Ethereum, L2, or the third web, our fund manager frustratingly decided to defer to the notes prepared by his interns. Perhaps they had a better understanding of what this all meant.
Intern Notes:
The latest news reveals that Coinbase is launching a new product called "Base," which is a layer 2 network built on Ethereum and powered by Optimism. This developer-friendly platform aims to onboard the next one billion users into the cryptoeconomy and supports Coinbase's mission to be the most accessible crypto platform, with the ability to serve over 110 million users and $80 billion in assets.
It is important to note that Base is not an isolated network; rather, it is a bridge within the cryptoeconomy. As it is built on Ethereum, developers from various ecosystems are encouraged to use Base and bring their innovations with them. The software will be open-source with a full commitment to decentralization.
Through Base, developers will have access to the tools necessary to create lending platforms, decentralized exchanges (DEXs), non-fungible tokens (NFTs), games, stablecoins, wallets, and other applications. The layer 2 network will be permissionless, and infrastructure will be provided for all types of applications. There will be no token, and ETH will be the base layer. The platform will be freely available, scalable, secure, and open source, much like Polygon, Optimism, and Arbitrum, combined with the Coinbase fanbase and developer army.
Additionally, there will be a Base Ecosystem Fund that supports early-stage projects. The roadmap for the mainnet is expected to be released in the coming weeks.
Our annoyed fund manager slams the folder on his desk, curses like a sailor, and accuses Coinbase of trying to replace him. Surprisingly, our banker is right for once. Coinbase is, in fact, replacing him, his fund, and his clients through the democratization and open availability of pure digital finance, all at the same time.
Of course, this story is made up, but it's not too far from the truth. The reality is that only a fraction of Wall Street actually understands what Coinbase is aiming to do with Base, and it took me, a crypto-native, a second take to understand it. However, this isn't a bad thing, and let me explain why.
We must remind ourselves that Coinbase has always prioritized being a "beginner-friendly" platform. Therefore, Coinbase will not launch anything they believe their users are incapable of using or benefiting from. Although Coinbase would love for all 110 million users to utilize Base, realistically, only a fraction of them will use it. But the majority of us will still benefit, making it a huge win-win.
I particularly like the simple motto that Base uses to describe its vision, "onchain is the new online."
Here are my takeaways from Base. First, it is a significant win for the entire industry. Coinbase will benefit from the success of Ethereum, and vice versa. Second, Coinbase has an entirely new revenue stream that we are only beginning to understand. BSC did $342 million in volume and null.28 million in fees all within the last 24 hours. On the news of the announcement, COIN was down but eventually recovered to end the day slightly positive. Wall Street still has no idea what is coming.
Playing devil's advocate, we must consider how the SEC could interfere with Base. Although Base is smart to not release a token, it is still possible for the SEC to find an angle to claim that Base enables the creation and/or sale of securities. I'm not prepared to answer this question, but I imagine Coinbase's legal team has already considered it. Coinbase has been denied before by offering products that the SEC didn't like, and I doubt they want to make the same mistake twice. As we've learned, Coinbase is ready to go to court if need be.
Wall Street is so f**ked. Base for the win.
