Ethereum Layer-2 Protocols May Move Away From Token Incentives In The Future – Coinbase Developer

With the Ethereum ecosystem advancing to regular upscaling, Layer-2 networks are gaining momentum daily. However, some industry experts believe that Layer-2 token incentive models might become obsolete due to rapid changes.

Phasing Out Token Incentives

According to Jesse Pollak, Coinbase’s head of protocol and Base leading developer, Layer-2 networks offering token incentives would soon become a thing of the past. Speaking at the ETHDenver 2023 event, Pollak notes that there is yet to be a plan to integrate a token with Base.

The American crypto exchange, Coinbase recently launched Base, an Ethereum Layer-2 scaling solution. Pollak added that at Coinbase, tokens are seen as powerful incentive tools to change a user’s behavior and a developer’s pattern.

However, he explained that over the past few years, a new pattern has emerged where tokens are leveraged as incentive mechanisms without product fit for the underlying chain it was meant to serve. Thus, the Coinbase developer noted that tokens had been linked with risky situations on Layer-2 platforms.

Explaining what Base is all about, Pollak stated that the Coinbase product allows users to develop applications without an incentive process. According to him, Base is a world apart from others in that developers can use it to build decentralized apps and seamlessly make it available for real-world use.

Moving From Token Models To User Experience

The focus, as Pollak opined, will be more on user experience and distribution than on tokenization. The Base developer points out that any current decentralized applications (dApps) are designed purely for cryptocurrency trading.

He believes that crypto is not limited to trading alone, as more is needed to make it the future of the digital economy. On Coinbase’s Base, Pollak reiterated that the aim is to help developers easily build applications that people want to use to solve real-life problems.

According to Pollak, Base seeks to invest in foundational infrastructure like the Ethereum Improvement Proposal 4844 to make the network more secure and low-cost than other Layer-2 protocols. On transaction costs, Pollak revealed that it costs between 10-15 cents to process transactions on L2s, and Base intends to bring the price down.

Despite Base launching its testnet last month, the core developer noted that the mainnet launch would be live in the coming months. Moreover, Base has no plans to issue a native token, but several developers have reportedly expressed their readiness to start building on the platform.

According to the founder of Blockdaemon, Konstantin Richter, his firm will collaborate with Base as its infrastructure partner. Richter suggests that Base should not have a token as he believes proof-of-stake (PoS) is no longer attractive in crypto.

He added that Blockdaemon operates more PoS nodes than any other platform, and PoS only performs when digital asset prices increase. Meanwhile, the founder explained that Blockdaemon intends to use the Base network to ascertain how participants can run nodes and earn a fixed fee.

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