Vitalik Buterin critiques Coinbase’s corporate influence over Base, which accounts for 60% of layer 2 revenue.

Ethereum co-founder Vitalik Buterin has indicated a significant change in the blockchain’s roadmap, marking the conclusion of the “branded shard” era.

On February 3, Buterin expressed that the industry’s earlier “rollup-centric” approach is no longer relevant, pointing to quicker scaling on the primary Ethereum layer and the slow advancement of decentralization among leading rollups.

This philosophical adjustment directly impacts the Coinbase-supported Base network.

In recent years, the Ethereum layer-2 solution has evolved into one of the largest consumer-oriented rollups within the crypto landscape, securing over $11 billion in total value locked (TVL).

However, Buterin’s revised roadmap raises questions about the legitimacy of Layer-2s that depend on corporate affiliations instead of distinct technical advantages.

This situation places considerable pressure on Base, prompting inquiries about whether Ethereum’s shifting definition of “aligned scaling” undermines the long-term economic benefits of the Coinbase-backed layer-2 solution, especially regarding the profitable revenue model associated with centralized sequencing.

Related Reading

Did Vitalik just pick a side? Inside Ethereum's layer-2 loyalty test

Base and Arbitrum generate the majority of profits; what role does Polygon play?

Oct 22, 2025 · Gino Matos

A substantial revenue generator

Indeed, Base has proven to be a financial success since its inception in August 2023.

CryptoSlate previously reported that the network accrued over $75 million in revenue in 2025, representing nearly 60% of the total revenue for the entire Layer-2 sector that year.

Market analysts have observed that the gap between its revenue and operational expenses is a defining characteristic of its current business model.

Importantly, data from L2BEAT shows that Base paid around $1.52 million to Ethereum in the past year for transaction data posting and settlement costs. This averages to about $4.180 daily, or approximately $0.000406 per user transaction.

In return for this relatively modest fee to the main network, Base captures considerable value. Recent metrics indicate that the network processed around 12 million transactions and hosted approximately 409,453 active addresses within a 24-hour period.

For Coinbase, this is not merely an experiment. It serves as a high-margin diversifier that capitalizes on on-chain activity even during cyclical fluctuations in spot trading volumes.

Related Reading

Ethereum lost over $100 million in fees this year, and one corporate giant kept the profit

Layer-2 networks drive Ethereum’s activity but retain a larger share of profits, resulting in a significant revenue shift for the blockchain.

Dec 31, 2025 · Oluwapelumi Adejumo

The challenge of corporate governance

Buterin’s critique addresses the disconnect between the ideal of rollups and the reality of Base’s current operations.

He contended that many Layer-2s operate as separate chains with bridges rather than as genuine extensions of Ethereum. This is primarily due to their reliance on multisig (multi-signature) wallets, security councils, and centralized operators for upgrades.

In this context, Buterin’s “new path” proposes three practical criteria for the chains: encouraging them to achieve more than mere scaling, ensuring at least Stage 1 maturity when managing Ethereum assets, and emphasizing interoperability.

Notably, Base meets the first maturity criterion but encounters a complex ceiling.

L2BEAT currently categorizes Base as a Stage 1 rollup. This classification recognizes that users have a mechanism to exit the system even if the centralized operators cease to function.

However, it also underscores certain risks. Upgrades must receive approval from multiple parties, and there is no obligatory delay on upgrades.

This implies that users lack a built-in “exit window” if they disagree with a code modification. L2BEAT also highlights the centralized sequencer’s capacity to extract MEV (Maximal Extractable Value) if it opts to exploit its position.

This presents a specific dilemma for Coinbase, which is a publicly traded company in the US.

Yet Buterin has criticized projects that remain at Stage 1 because “their customers’ regulatory needs necessitate ultimate control.”

Coinbase cannot easily transfer upgrade keys to an anonymous decentralized autonomous organization (DAO) without potentially breaching anti-money laundering and know-your-customer (KYC) compliance requirements.

If Base maintains a security council veto for regulatory safety, it risks being categorized as a project that Buterin describes as “not scaling Ethereum” in a trustless manner.

Related Reading

Digital “Robin Hood” bots steal from hackers but don't always give back to the poor

As MEV bots become crypto’s unintended emergency responders, users are left vulnerable to profit-maximizing intermediaries.

Jan 25, 2026 · Gino Matos

Lower data costs jeopardize Base’s profits

The second factor pressuring Base is technical. Ethereum is actively reducing the cost of its own blockspace.

In January, Ethereum implemented the second Blob Parameters Only hard fork, the final phase of the Fusaka upgrade.

This update enhances data capacity by increasing the maximum blob limit to 21 and the target to 14 per block, thereby significantly lowering transaction costs for Layer-2 rollups like Arbitrum and Optimism.

The availability of this data presents a double-edged sword for Base.

On one side, cheaper blobs result in lower marginal costs per transaction, benefiting consumer applications and high-frequency activities that thrive on the network.

Conversely, it necessitates a reevaluation of the value proposition. If Ethereum’s primary layer becomes sufficiently inexpensive, the straightforward appeal of “cheaper EVM execution” diminishes.

The central debate revolves around rent extraction. Critics assert that rollups generate substantial fee revenues while contributing relatively little to Ethereum for security.

For context, Base submitted approximately 531.54 GiB of data to Ethereum over the past year. As the main network scales, the political economy of sequencers, the entities responsible for transaction ordering, becomes increasingly relevant.

If the ecosystem shifts toward shared sequencing or other established mechanisms to mitigate centralized control, the value of possessing those ordering rights may decline. Base could excel in total usage volume but suffer in the “take-rate” it charges per transaction.

Can Base succeed?

Coinbase seems acutely aware that the period of generic scaling is concluding.

Jesse Pollak, the lead developer for Base, publicly acknowledged that it is encouraging to see Ethereum scaling its Layer-1 and concurred that layer-2s cannot simply be “Ethereum but cheaper.”

In light of this, he mentioned that the network is shifting towards differentiation to adapt to the new roadmap by “developing the best products and unlocking new real use cases across trading, social, gaming, creators, and predictions.”

Importantly, Base has already achieved notable success in this area, becoming a favored platform for popular consumer applications like Friend.tech and Clanker.

Meanwhile, market analysts have suggested that distribution is Base’s strongest competitive advantage.

The network directs users to Coinbase platforms, such as wallets and swaps, and bolsters the company’s B2B tooling stack. This creates a funnel through which revenue flows via multiple channels, not solely through sequencer fees.

Buterin’s remarks implicitly diminish the long-term value of “branding as Ethereum scaling,” but they do not lessen the importance of providing a consumer on-ramp.

Overall, Base is positioned to continue thriving in terms of growth and monetization in the near future.

Nonetheless, the long-term threat remains significant.

If the market increasingly evaluates rollups based on their level of decentralization and credible exit guarantees, Base may need to hasten its progress toward stricter upgrade constraints, which could place Coinbase in a challenging position.

The post Vitalik Buterin takes shot at Coinbase’s corporate control of Base which dominates 60% of layer 2 income appeared first on CryptoSlate.