ETH Drama Unfolds: Coinbase’s Secret Life Exposed! šŸ˜±

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What to know:

  • In a twist worthy of a soap opera, Coinbase is sitting on a treasure chest of over $300 million in ETH, according to a Base team member who took to X to squash the rumors of liquidations like a bug under a boot.
  • Andre Cronje, the oracle of layer 2s, claims these solutions are making ether as inflationary as a balloon at a kid’s birthday party. šŸŽˆ

In the grand theater of cryptocurrency, a member of the illustrious layer 2 scaling solution known as Base has stepped onto the stage to refute the scandalous whispers that its sequencer, Coinbase, has been peddling ether (ETH) like a street vendor selling hot dogs.

“Listen up, folks! Coinbase has amassed a whopping $300M+ in ETH, which is more than double all of Base’s ETH earnings combined,” declared the ever-eloquent Kabir.base.eth on X this past Sunday. “Base and Coinbase are not just holding onto ETH; weā€™re practically hugging it! Weā€™ve got 100K ETH+ and $300M+ to prove it!”

Kabir, with the flair of a seasoned storyteller, added that Base employs offchain custody for security and audit reasonsā€”because who doesnā€™t want their funds to be as safe as a squirrelā€™s winter stash? Thatā€™s why the funds make a little trip to Coinbase, he explained, emphasizing that the Ethereum layer 2 solution is all about earning and spending ETH like itā€™s going out of style, using it for Layer 1 costs and doling out support like a generous uncle at Christmas.

But wait! Kabir’s comments came after the mysterious figure known as Santisa claimed that Base has been shoveling all sequencer fees to Coinbase since the curtain rose on this production, suggesting that the sequencer has likely sold these coins faster than a magician can pull a rabbit out of a hat.

Coinbase, the star of this show, is supposedly the only sequencer node on Base, orchestrating the transactions in a specified order and boosting transaction throughput (or speed, for those who prefer plain English). And yes, Coinbase charges a fee, collected in ETH, for this sequencer roleā€”because nothing in life is free, not even in the world of crypto.

Santisa’s take echoed the concerns of Sonic Labs founder Andre Cronje, who lamented the use of centralized sequencers in layer 2 solutions, which lead to profit models that are about as aligned with Ethereum’s values as a cat is with a dog. šŸ±šŸ¶

In essence, while Layer 2 scaling solutions rake in a hefty revenue from transaction fees, they send a mere crumb to the Ethereum mainnet for data availability and security purposes. In other words, most fees collected in ETH are either hoarded or offloaded into the market, reducing the fee revenue and associated ETH burning on the mainnet. This, my friends, is how ETH’s supply gets a little bloated.

“L2s are the reason Ethereum is inflationary again. SCALE ETHEREUM. They can snag the Sonic tech for free. 0 charge. Will 1000x their throughput,” Cronje proclaimed on X, sounding like a tech-savvy prophet with a flair for the dramatic.

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2025-02-10 13:47