Back to Course

3. Advanced Course

0% Complete
0/0 Steps
  1. 1. What is Taproot?
  2. 2. Blockchain bridges – what are they?
  3. 3. What is Ethereum Plasma?
  4. 4. What is Ethereum Casper?
  5. 5. What is Zk-SNARK and Zk-STARK? 
  6. 6. What is Selfish Mining? 
  7. 7. What is spoofing in the cryptocurrency market? 
  8. 8. Schnorr signatures - what are they? 
  9. 9. MimbleWimble - what is it? 
  10. 10. What is digital property rights in NFT?
  11. 11. What are ETFs and what role do they play in the cryptocurrency market? 
  12. 12. How to verify a cryptocurrency project – cryptocurrency tokenomics 
  13. 13. What is the 51% attack on blockchain?
  14. 14. What is DAO, and how does it work?
  15. 15. Zero-knowledge proof – a protocol that respects privacy 
  16. 16. What is EOSREX?
  17. 17. What is Proof of Elapsed Time (PoET)?
  18. 18. Mirror Protocol – what it is? 
  19. 19. What are synthetic assets? 
  20. 20. How to create your own NFT? 
  21. 21. Definition of DeFi, and what are its liquidations?
  22. 22. New identity system - Polygon ID
  23. 23. Ethereum Foundation and the Scroll protocol - what is it?
  24. 24. What is Byzantine fault tolerance in blockchain technology?
  25. 25. Scalability of blockchain technology - what is it?
  26. 26. Interchain Security - new Cosmos (ATOM) protocol
  27. 27. Coin Mixing vs. Coin Join - definition, opportunities, and threats
  28. 28. What is Ethereum Virtual Machine (EVM) and how does it work?
  29. 29. Soulbound Tokens - what are they, and how do they work?
  30. 30. Definition of LIDO - what is it?
  31. 31. What are Threshold Signatures, and how do they work?
  32. 32. Blockchain technology and cyberattacks.
  33. 33. Bitcoin script - what it is, and what you should know about it.
  34. 34. What is zkEVM, and what are its basic features?
  35. 35. Do confidential transactions on blockchain exist? What is a Confidential Transaction?
  36. 36. Algorithmic stablecoins - everything you should know about them.
  37. 37. Polygon Zk Rollups ZKP - what should you know about it?
  38. 38. What is Web3 Infura?
  39. 39. Mantle - Ethereum L2 scalability - how does it work?
  40. 40. What is the NEAR Rainbow Bridge?
  41. 41. Liquid Staking Ethereum and LSD tokens. What do you need to know about it?
  42. 42. Top 10 blockchain oracles. How do they work? How do they differ?
  43. 43. What are Web3.js and Ether.js? What are the main differences between them?
  44. 44. What is StarkWare, and recursive validity proofs
  45. 45. Quant Network: scalability of the future
  46. 46. Polygon zkEVM - everything you need to know
  47. 47. What is Optimism (OP), and how do its roll-ups work?
  48. 48. What are RPC nodes, and how do they work?
  49. 49. SEI Network: everything you need to know about the Tier 1 solution for DeFi
  50. 50. Types of Proof-of-Stake Consensus Mechanisms: DPoS, LPoS and BPoS
  51. 51. Bedrock: the epileptic curve that ensures security!
  52. 52. What is Tendermint, and how does it work?
  53. 53. Pantos: how to solve the problem of token transfer between blockchains?
  54. 54. What is asymmetric encryption?
  55. 55. Base-58 Function in Cryptocurrencies
  56. 56. What Is the Nostr Protocol and How Does It Work?
  57. 57. What Is the XDAI Bridge and How Does It Work?
  58. 58. Solidity vs. Rust: What Are the Differences Between These Programming Languages?
  59. 59. What Is a Real-Time Operating System (RTOS)?
  60. 60. What Is the Ethereum Rinkeby Testnet and How Does It Work?
  61. 61. What Is Probabilistic Encryption?
  62. 62. What is a Pinata in Web 3? We explain!
  63. 63. What Is EIP-4337? Will Ethereum Account Abstraction Change Web3 Forever?
  64. 64. What are smart contract audits? Which companies are involved?
  65. 65. How does the AirGapped wallet work?
  66. 66. What is proto-danksharding (EIP-4844) on Ethereum?
  67. 67. What is decentralised storage and how does it work?
  68. 68. How to Recover Cryptocurrencies Sent to the Wrong Address or Network: A Practical Guide
  69. 69. MPC Wallet and Multilateral Computing: Innovative Technology for Privacy and Security
  70. 70. Threshold signature in cryptography: an advanced signing technique!
  71. 71. Vanity address in cryptocurrencies: what is it and what are its characteristics?
  72. 72. Reentrancy Attack on smart contracts: a threat to blockchain security!
  73. 73. Slither: a static analyser for smart contracts!
  74. 74. Sandwich Attack at DeFi: explanation and risks!
  75. 75. Blockchain RPC for Web3: A key technology in the world of decentralized finance!
  76. 76. Re-staking: the benefits of re-posting in staking!
  77. 77. Base: Evolving cryptocurrency transactions with a tier-2 solution from Coinbase
  78. 78. IPFS: A new era of decentralized data storage
Lesson 77 of 78
In Progress

77. Base: Evolving cryptocurrency transactions with a tier-2 solution from Coinbase

With the growth of the cryptocurrency ecosystem, innovative solutions aimed at improving the scalability, efficiency, and overall usability of transactions are attracting increasing attention. 

In this context, it’s worth taking a look at Base – a Layer 2 solution from Coinbase that is generating a lot of interest among cryptocurrency enthusiasts and investors.

What is Coinbase’s Layer 2 solution?

On August 9, 2023, the leading cryptocurrency exchange, Coinbase, announced the release of “Base.” It’s a tier-2 solution, described as a “bridge to the cryptocurrency economy.” The goal of Base is to put already existing Coinbase products on the chain and create an open ecosystem for millions of new decentralized applications. In short, Coinbase acts as a scalability platform, eliminating the limitations of bandwidth and transaction confirmation time on the blockchain. This innovative idea has the potential to transform the way users experience the platform itself and affect transaction efficiency.

Recall that Layer 2 solutions are protocols implemented on current blockchains to increase their scalability and reduce transaction fees. The Layer 2 initiative from Coinbase is a strategic step to address the scalability issues of the Ethereum blockchain, on which the Coinbase platform is largely based.

In practice, the Layer 2 network acts as an overlay, enabling faster and cheaper transactions by processing them outside the main Ethereum blockchain. This process involves implementing an additional layer that handles most transactions. This activity does not affect the core network. As a result, users can benefit from a more efficient and cost-effective approach.

How does the Base solution work?

The Base solution is based on Layer 2 technology, meaning that it operates “above” the main blockchain, primarily Ethereum. The main idea is to move some of the transactions off the main chain, which translates into a significant improvement in scalability and a reduction in transaction costs.

Base uses rollup technology that allows multiple transactions to be collected and consolidated off the main chain, and then reports one aggregate confirmation on the main chain. This makes transaction confirmation much faster and reduces the costs associated with transaction processing.

What benefits does the Tier 2 solution from Coinbase implement?

Users using the Coinbase platform can reap significant benefits from the use of Tier 2 technology. One of the key advantages is the reduction of transaction fees. Due to the strain on the network, traditional blockchain transactions very often have high costs. With Layer 2 transactions, which take place off the main chain, the risk of overloading is also reduced, and thus the fees are decreased. In addition, the Layer 2 network speeds up the transaction process. Users receive virtually instant confirmations of their transactions.

The Layer 2 network on the Coinbase platform takes on particular importance, especially in the context of decentralized finance (DeFi). DeFi applications running on various blockchain networks often have high transaction fees and short confirmation times. The implementation of the Layer 2 solution is a step towards a smoother and friendlier DeFi experience on the Coinbase platform.

Risks associated with Tier 2 solutions

Despite the numerous benefits of Layer-2 solutions, it is crucial to be aware of potential problems and concerns. An important aspect is the ability to interoperate with other Layer-2 solutions, especially in the diverse ecosystem of cryptocurrencies. Ensuring seamless communication and compatibility between different networks is, therefore, becoming a key factor for the fuller adoption of the technology.

In addition, the security of transactions executed outside the main chain requires meticulous control. Despite the strong security measures in Tier 2 solutions, the decentralized nature of blockchain technology mandates systematic monitoring.

As an industry leader, Coinbase must continue proactive security measures to assure users that their funds are safe, even in the new operational paradigm.

Coinbase development using the Base solution

The use of Tier 2 technology marks a significant advance in the development of the Coinbase platform as a venue for handling transactions related to cryptocurrencies. This not only demonstrates the company’s commitment to improving user convenience but also puts Coinbase at the forefront of technological innovation across the crypto industry.

Additional capabilities and upgrades in Coinbase will be introduced as technology advances, reinforcing the role of Tier 2 as a key component of the cryptocurrency infrastructure. With a large user base and industry influence, Coinbase is perfectly positioned to shape and drive the future of Layer 2 technology.

Summary

Base, as an innovative Tier-2 solution from Coinbase, ushers in a new era of cryptocurrency transactions. Speed, reduced costs, and increased scalability are key advantages of this solution, which can contribute to the further development of the blockchain ecosystem.

However, the success of Base depends not only on its technological sophistication but also on the acceptance of the cryptocurrency community and its ability to compete with other Tier-2 solutions. Ultimately, Base opens up new prospects for cryptocurrency transactions, defining new standards of performance in this dynamic environment.

Complete today’s lesson!

  1. Scalability of blockchain technology – what is it?
  2. Interoperability in the world of cryptocurrencies and blockchain.
  3. What is layer 0?
  4. What is layer 1?