Vitalik Buterin takes shot at Coinbase’s corporate control of Base which dominates 60% of layer 2 income

Ethereum co-founder Vitalik Buterin has signaled a fundamental shift in the blockchain’s roadmap that declares the era of the “branded shard” effectively over.

On Feb. 3, Buterin argued that the industry’s previous “rollup-centric” vision no longer makes sense, citing faster scaling on the main Ethereum layer and the sluggish pace of decentralization among major rollups.

This philosophical correction lands squarely on the Coinbase-backed Base network.

Over the past years, the Ethereum layer-2 solution has grown into one of the largest consumer-facing rollups in the crypto ecosystem, with more than $11 billion in total value secured (TVS).

However, Buterin's new roadmap position calls into question the validity of Layer-2s that rely on corporate affiliation rather than unique technical utility.

As a result, this places significant pressure on Base. It raises the question of whether Ethereum’s evolving definition of “aligned scaling” erodes the Coinbase-backed layer-2 solution's long-term economic edge, particularly the lucrative revenue model tied to centralized sequencing.

A massive revenue engine

Indeed, Base has been a financial revelation since its launch in August 2023.

CryptoSlate previously reported that the network generated more than $75 million in revenue in 2025. This figure accounted for nearly 60% of the revenue of the entire Layer-2 sector that year.

Market observers have noted that the disparity between its income and operating costs is the defining feature of its current business model.

Notably, data from L2BEAT indicates that Base paid approximately $1.52 million to Ethereum over the last year to post transaction data and cover settlement overhead. This averages approximately $4.180 per day, or about $0.000406 per user operation.

In exchange for this relatively low rent paid to the main network, Base captures significant value. Recent 24-hour metrics indicate that the network processed approximately 12 million transactions and hosted roughly 409,453 active addresses.

For Coinbase, this is not just an experiment. It is a high-margin diversifier that monetizes on-chain activity even when spot trading volumes are cyclical.

The dilemma of corporate control

Buterin’s critique targets the gap between the rollup ideal and the reality of Base's current operations.

He argued that many Layer-2s still function as separate chains with bridges rather than true extensions of Ethereum. This is largely because they rely on multisig (multi-signature) wallets, security councils, and centralized operators for upgrades.

In light of this, Buterin’s “new path” involves three practical filters for the chains: urging them to do more than scale, maintaining at least Stage 1 maturity when handling Ethereum assets, and prioritizing interoperability.

Notably, Base clears the first hurdle of maturity but faces a complex ceiling.

L2BEAT currently classifies Base as a Stage 1 rollup. This designation acknowledges that users have a mechanism to exit the system even if the centralized operators cease to exist.

However, it also highlights risks. Upgrades must be approved by multiple entities, and there is no mandatory delay on upgrades.

This means users lack a built-in “exit window” if they disagree with a code change. L2BEAT also flags the centralized sequencer’s ability to extract MEV (Maximal Extractable Value) if it chooses to exploit its position.

This creates a specific dilemma for Coinbase, which is a publicly traded US company.

Yet Buterin has criticized projects that stall at Stage 1 because “their customers’ regulatory needs require them to have ultimate control.”

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

If Base retains a security council veto for regulatory safety, it risks falling into the category of projects Buterin describes as “not scaling Ethereum” in the trustless sense.

Cheaper data threatens Base's profits

The second force squeezing Base is technical. Ethereum is aggressively lowering the cost of its own blockspace.

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

This update increases data capacity by raising the maximum blob limit to 21 and the target to 14 per block, thereby significantly reducing transaction costs for Layer-2 rollups such as Arbitrum and Optimism.

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

On one hand, cheaper blobs mean lower marginal costs per transaction, which is a tailwind for the consumer apps and high-frequency activity that thrive on the network.

On the other hand, it forces a change in the value proposition. If Ethereum’s main layer becomes cheap enough, the simple pitch of “cheaper EVM execution” loses its potency.

The core debate centers on rent extraction. Critics argue that rollups generate large fee streams while paying comparatively little to Ethereum for security.

For context, Base posted approximately 531.54 GiB of data to Ethereum over the last year. As the main network scales, the political economy of sequencers, the entities that order transactions, comes into focus.

If the ecosystem moves toward shared sequencing or other enshrined mechanisms to reduce centralized control, the value of owning those ordering rights could fall. Base could win on total usage volume but lose on the “take-rate” it charges per transaction.

Can Base win?

Coinbase appears acutely aware that the era of generic scaling is ending.

Jesse Pollak, the lead developer for Base, publicly stated that it is great to see Ethereum scaling its Layer-1 and agreed that layer-2s cannot just be “Ethereum but cheaper.”

Considering this, he stated that the network is pivoting toward differentiation to survive the new roadmap by “building the best products and unlocking new real use cases across trading, social, gaming, creators, and predictions.”

Notably, Base has already achieved significant success in this niche, becoming a preferred venue for viral consumer applications like Friend.tech and Clanker.

Meanwhile, market analysts have argued that distribution is Base’s strongest moat.

The network pushes users into Coinbase surfaces, such as wallets and swaps, and supports the company’s B2B tooling stack. This creates a funnel in which revenue flows through multiple channels, not just sequencer fees.

Buterin’s post implicitly reduces the long-run value of “branding as Ethereum scaling,” but it does not reduce the value of shipping a consumer on-ramp.

Overall, Base is positioned to remain a winner on growth and monetization in the near term.

However, the long-term threat remains real.

If the market increasingly prices rollups by their level of decentralization and credible exit guarantees, Base may need to accelerate toward tighter upgrade constraints, which could place Coinbase in a tight position.

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