Vitalik Buterin Praises Coinbase’s Base As True Ethereum Layer-2 ‘Doing Things The Right Way’

Ethereum co-founder Vitalik Buterin has publicly endorsed Coinbase’s layer-2 (L2) solution, Base, amid a growing debate over L2 centralization and regulatory scrutiny. 

”Base is doing things the right way,” he said on X. ”An L2 on top of Ethereum, that uses its centralized features to provide stronger UX features, while still being tied into Ethereum’s decentralized base layer for security.”

He noted that Base does not have custody over investor funds, and ”cannot steal funds or stop you from withdrawing funds.”

Clarifying L2 Misconceptions

Buterin said that Base is non-custodial, meaning it cannot take your money or block withdrawals. L2s are just extensions of Ethereum, not “servers” that control your funds, he added.

He cited examples that demonstrate how this works:

•During the dYdX v3 shutdown, users safely withdrew over $70 million using StarkEx’s “Escape Hatch.”

•On Sony’s Soneium project, developers avoided censorship by using Ethereum’s main chain.

Such cases show that Base is following Ethereum’s security rules.

Ethereum’s Economy And L2 Growth

While Ethereum has lost revenue to L2s like Base, Buterin said previously that it can still earn through low-risk DeFI protocols, which may work for ETH in the same way search has for Google.

Base is growing fast and recently created more daily tokens than Solana. Layer-2 tokens are also surging, reaching a total market cap of $19.1 billion, according to CoinMarketCap.

A December upgrade called Fusaka will make L2s faster and improve Ethereum’s mainnet profits.

Regulatory Worries

Regulators are concerned that centralized L2 sequencers act like exchanges, and Securities and Exchange Commission (SEC) Commissioner Hester Peirce has said this could bring L2s under SEC oversight if they handle securities.

Coinbase’s Chief Legal Officer, Paul Grewal, disagreed in a post on X. He compared L2s to cloud providers like Amazon Web Services: “If an exchange runs on AWS, is AWS an exchange? Obviously not.”

Base co-founder Jesse Pollak said in a Sept. 22 post on X that sequencers are more like “traffic controllers,” helping order transactions efficiently.

But he added that users can still interact directly with Ethereum, helping to keep everything decentralized and censorship-resistant.