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An inside look at Base

An inside look at Base

Base, an open-source Ethereum layer 2, is now officially live.

There’s never a dull moment on the blockchain. Here’s what you need to know this week:

Crypto markets await key info. From Thursday’s inflation report to the SEC’s rulings on bitcoin ETFs, these are the headlines to watch. 

Everything you need to know about Base. How the new Ethereum “layer 2” network makes building and using dapps easier than ever.

Onchain Summer is in full swing. Coca-Cola®, Atari, OpenSea, and over 50 leading companies, artists, and creators are coming together for a multi-week onchain celebration.

MARKET UPDATE

Bitcoin volatility hits six-year lows, BTC ETFs approach decision deadlines

All summer now, crypto prices have held remarkably steady — with bitcoin volatility dropping to a six-year low in July, according to ARK Invest. But as fears of a deep recession begin to recede, inflation continues to cool, and Wall Street continues to pursue new crypto ambitions, what could the next market catalyst look like? Let’s take a look at some possibilities. 

As inflation cools, Bank of America reversed its recession prediction.

This Thursday, the latest Consumer Price Index (CPI) report — a key inflation metric that measures the prices Americans pay for a wide range of goods and services — is expected to show that prices ticked up very slightly, largely as a result of higher gas prices. Many analysts are now predicting that the Federal Reserve will pause interest-rate hikes in September, after raising rates 11 times between March 2022 and this June.

Per CoinDesk, “To the extent that Fed tightening helped bring along bitcoin's price crash, the slowing and perhaps end of that tightening has been seen as a factor in bitcoin's modest recovery.” 

Additionally, Bank of America has joined the Federal Reserve in predicting a “soft landing” for the economy, meaning a recession could be avoided while the economy continues to see growth. BoA is the first major bank to pull their recession forecast, citing the declining inflation numbers and slowing wage growth. 

SEC decisions on bitcoin ETFs are on the horizon.

In June, crypto prices got a boost following a slew of news around Wall Street’s crypto initiatives. The biggest headlines were about a number of Wall Street’s biggest players — including asset-management giant BlackRock — pursuing SEC approval of a “spot” BTC ETF (which would buy bitcoin and sell shares to the public via conventional brokerages). 

For years now, the SEC has denied such applications, but given BlackRock’s track record of success, industry watchers are cautiously optimistic that results could be different. The agency is required to respond to ARK Invest’s filing by Sunday, and will hit deadlines for other applicants including BlackRock in the coming months. 

One potentially positive sign could be the SEC’s June approval of BITX’s leveraged bitcoin futures ETF, which is a fund that uses leverage (or borrowed capital) to place high-risk bets on the future price of BTC. (Non-leveraged BTC futures ETFs have existed for several years.) Also in the approval pipeline are around a dozen applications for Ethereum futures ETFs.  

So, just how likely is the SEC to approve a spot BTC ETF? Bloomberg Intelligence currently puts the odds at 65% (up from 50%).   

The bottom line… 

Despite months of declining trading volumes and low volatility, activity around crypto markets has continued bubbling. And while it’s too soon to tell whether markets are poised to wake up after their summer snooze, at least some big-money investors are betting that they might. According to a new report from CoinShares, institutional investors stopped shorting (or betting against) BTC for the first time in three months.

ALL ABOUT THAT BASE

What is Base? Inside the new Ethereum-scaling L2 platform

Ethereum, which just celebrated its eighth birthday, was created to be a highly flexible blockchain that can run a huge range of smart contract-powered decentralized apps, from DEXs and NFT projects to games and more. Because the main Ethereum network can only process about 30 transactions per second, “layer 2” (L2) solutions — which work kind of like an HOV lane on a busy highway by moving some transactions to a faster, speedier parallel blockchain — have been developed to enable more scale.

This week, Base, a new L2 incubated at Coinbase, opened to everyone. Now, users can bridge ETH to Base, explore decentralized apps in the ecosystem, and participate in Onchain Summer — a month-long interactive festival curated in collaboration with partners including Coca-Cola®, Atari, and OpenSea.

Here’s what you need to know.

  • For users, Base is designed to be a faster, lower-fee alternative to the main Ethereum network, while maintaining the main blockchain’s security. For developers, it’s designed to be easier to build on and offers seamless integration with Coinbase products, including Coinbase Wallet, Coinbase NFT, and the Coinbase app. 

  • L2s are a major pillar of web3, with more than $10 billion in ETH currently bridged to various L2 chains (which now collectively host more daily transactions than the main Ethereum blockchain). As of Tuesday, before the full public launch, more than $130 million had already been bridged to Base and thousands of developers were working on projects for the blockchain. 

  • Base is built on Optimism’s open-source OP Stack. Optimism is one of Ethereum’s main L2 solutions — it works via a technique called Optimistic Rollups, which, as CoinDesk puts it, “bundle large amounts of transaction data into digestible batches.” Optimism-based blockchains allow users access to the same kinds of apps and experiences as the main ETH network (DeFi, minting NFTs, gaming) but with significantly lower fees. 

  • The Base ecosystem currently has over 100 decentralized apps (dapps). Experiences available to users include the sci-fi trading card game Parallel, the NFTs and collectibles platform Zora, and the decentralized exchange giant Uniswap

  • No new token is being launched with Base – fees on the network are paid in ETH. As Coinbase protocol lead Jesse Pollak told Fortune, “In general, our thesis is that Ethereum is a very workable gas token. It’s what people are already used to holding and spending to use onchain applications.”

  • If you’re curious about Base, you can begin by participating in the month-long Onchain Summer festival (more below), which features daily onchain activities throughout August. Get started by bridging a small amount of ETH via Coinbase Wallet and minting a free, commemorative NFT.

BLOCK PARTY

Visit the future of the internet during August’s Onchain Summer festival

If you’ve been wanting to explore more of what crypto has to offer but weren’t sure where to start, we have you covered. To celebrate the launch of Base, Coinbase has teamed up with over 50 top brands, artists, and builders for Onchain Summer — a month-long celebration of all the ways the new L2 ecosystem is powering the future of the internet, featuring new mints every day for the rest of August. Here's just a little of what we have planned.

  • On Wednesday (8/9) users can kick off the first day of Onchain Summer by minting a “Base, Day One” commemorative NFT that celebrates the public launch of Base.

  • On Thursday (8/10) you can mint a unique piece designed by digital artist deekaymotion in collaboration with NFT collector Cozomo de Medici, brought to you by decentralized social network FWB.

  • On Friday (8/11) users can snag a limited-edition starter pack for Parallel, a sci-fi trading card game, and unlock access to the Parallel Beta

  • On Saturday (8/12) you can mint onchain music NFTs from artists like Boys Noize, Kleerup, and Laidback Luke — powered by anotherblock, which lets fans own shares of their favorite songs and earn royalties alongside artists.

  • On Sunday (8/13) Coca-Cola® is bringing artworks from the global Masterpiece campaign onchain with works from emerging artists Aket, WonderBuhle, Fatma Ramadan, Vikram Kushwah, Stefania Tejada, as well as timeless artists like Munch, Vermeer, and Van Gogh. 

  • All month, users who bridge some ETH to Base can mint a free NFT that “commemorates you being early, one of the first to teleport to the new internet.” (If you’ve never used a crypto bridge before, just note that gas fees can go up or down depending on how much traffic there is on the Ethereum network.)

TOKEN TRIVIA

What is a good way to improve your online security?

A

Use strong, unique passwords

B

Turn on 2-factor authentication

C

Maintain a low profile

D

All of the above

Find the answer below.

Trivia Answer

D

All of the above