July 21, 2024
Base and Optimism Networks Join Forces, Supported by Coinbase's Commitment to Neutrality
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Governance and Revenue Partnership: Base and Optimism Networks Team Up, Backed by Coinbase’s Neutrality

The developers responsible for the Base and Optimism networks have jointly declared an agreement to share revenue and governance. Additionally, Coinbase, which is the parent company of Base, has disclosed a set of “neutrality principles” to prevent the centralization of Base. This announcement was disseminated through three separate blog posts on August 24. These posts were authored by the Optimism Collective, Base, and Coinbase, respectively.

Coinbase’s post, attributed to the company’s engineering lead, Will Robinson, zeroes in on the concept of neutrality. Robinson commits that Coinbase will uphold its role as a neutral participant in the Base network. The exchange will not “custody or control the crypto that users bring to the Base network,” and it will refrain from manipulating transaction orders for self-gain or exploiting non-public information from Base. Robinson asserts that Coinbase’s marketing team and other divisions will solely utilize publicly available data from block explorers and tools in their endeavors to promote Coinbase’s products, avoiding any privileged advantage from operating Base’s sequencer. Withdrawals from Base will be processed without censorship, in line with what Robinson terms “freedom to exit.”

As per the Optimism Collective’s post, upgrades to Base’s smart contracts can only occur through a two-of-two multi-signature wallet account. One signature is controlled by Base, while the other is managed by the Optimism network’s team, referred to as the Optimism Foundation. This setup ensures that any upgrades to Base require approval from the Optimism team. As more chains choose to adopt the OP stack and join the super-chain, governance responsibilities will be transferred to a “security council” comprising representatives from all chains within this ecosystem.

Under the terms, Base will allocate either 2.5% of its revenue or 15% of its profits to the Optimism Collective, whichever is greater. In return, Base will receive up to approximately 118 million OP tokens, granting it a say in Optimism’s protocol governance. This allocation is capped at 9% of the total votable supply to maintain equilibrium, as outlined in the announcement. Base’s own post, attributed to its main creator Jesse Pollak, assures a gradual transition towards decentralization, progressing from Ethereum co-founder Vitalik Buterin’s “stage 0” to “stage 2” of layer 2’s decentralization. The Base team aims to enhance the scalability of existing Optimism clients, op-geth and op-node, and introduce a new client named “op-reth” to diversify client types. Furthermore, the team will continue developing Pessimism, a real-time network monitoring tool designed to detect cybersecurity threats early.

Moreover, Pollak confirms that Base will share revenue with the Optimism Collective and eventually transfer upgrade keys to an Optimism security council.

Critics of the Base network have raised concerns about its existing centralization, potentially inviting regulatory scrutiny from the United States Securities and Exchange Commission. Attorney Gabriel Shapiro, for instance, has expressed that Base could pose significant risks to the industry.

Coinbase CEO Brian Armstrong sparked discussion on March 7 by suggesting that “centralized players” on Base should implement identity verification. Despite these critiques, numerous Ethereum investors remain hopeful that Base and the Optimism Superchain will contribute to bringing new users into the Ethereum ecosystem.

Image by freepik

Disclosure Statement: Miami Crypto does not take any external funding, or support to bring crypto news to the readers. We do not have any conflicts of interest while writing news stories on Miami Crypto.

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