Coinbase Powers Layer-2 Base Network with USDC Storage

Coinbase, an American cryptocurrency exchange, plans to enhance its Layer-2 protocol Base Network by storing users' USDC balances. This move aims to improve fund management and security, reduce fees, and accelerate settlement times without compromising user experience. Coinbase hopes this initiative will encourage industry-wide adoption of USDC storage and further promote its on-chain business.

Coinbase Enhances Layer-2 Protocol Base Network with USDC Storage Functionality

March 27, 2024

American cryptocurrency exchange Coinbase is bolstering its Layer-2 (L2) protocol, Base Network, with the introduction of new capabilities, including the storage of user balances in the US dollar-pegged stablecoin USDC.

Layering-On Functionality

In a recent post on the social media platform X, Max Branzburg, Vice President and Head of Consumer Products at Coinbase, announced the company's latest move with regard to Base. Branzburg stated that Coinbase intends to scale up the storage of corporate and retail customers' USDC balances on the platform.

This strategic shift enables Coinbase to enhance the management and security of customer funds while simultaneously reducing fees and accelerating settlement times. The key objective is to ensure that Coinbase users continue to enjoy a seamless experience despite these enhancements.

The publicly listed exchange views this development as an opportunity to drive its business forward on-chain.

USDC Storage Expansion

Notably, the decision to augment the storage of USDC balances for both corporate and individual customers on the L2 protocol coincides with Coinbase's recent focus on the stablecoin. Just days ago, the exchange forged a strategic partnership with Compass Coffee, a notable veteran-owned coffee chain headquartered in Washington D.C.

Under the terms of this partnership, Compass Coffee will accept USDC as a settlement option, introducing customers to the benefits of cryptocurrency payments, particularly USDC. The rising adoption of USDC is likely to necessitate a broader storage protocol, further corroborating Coinbase's latest initiative.

Industry Adoption

Coinbase expresses its optimism that other businesses will embrace this USDC storage approach. The exchange emphasizes that customer funds are fully secured and that it does not engage in any form of lending that would jeopardize their deposits. However, customers who explicitly request it can have their funds redirected.

Congestion Concerns

Coinbase customers are advised to be aware of potential transaction fee increases on the Base Network due to ongoing congestion issues. The exchange urges users to monitor the situation as efforts are underway to implement a sustainable solution for the ecosystem.