Why is Base reluctant to remove the "training wheels"?

Written by: Jon Reiter

Translated by: Saoirse, Foresight News

In August 2023, we published an article suggesting that Base is essentially just a tool of Coinbase, used to provide centralized custodial transfer services without implementing customer identity verification and anti-money laundering reviews. The platform intentionally builds obscure technical jargon and vague visionary slogans to cover up the true nature of this business. Recently, Jesse Pollak (co-founder of Base) confirmed that the Base application has been reassigned to be coordinated by its parent company Coinbase, with the well-known Jordan Fish (online name Cobie) independently responsible for this product line. In the future, this product may even expand beyond the Base ecosystem, making our earlier point even harder to dispute.

Coinbase holds multiple financial licenses globally, and this operation has serious compliance issues whether in the past or present. As early as February 2023, Coinbase admitted that Base did not have any decentralized attributes at its launch and subsequently released a decentralized development roadmap. We will elaborate on this below, but first, the conclusion: this roadmap has been shelved without any substantial progress. The authoritative Layer 2 network monitoring platform L2Beat currently rates Base as Stage 0 (this rating will be downgraded from Stage 1 to Stage 0 in August 2026), with the entire network fully controlled by the platform. To simplify explanation of industry jargon: this widely recognized Layer 2 network monitoring agency determines that Base has no decentralized characteristics.

After our August 2023 article was published, Coinbase promptly released a commitment to decentralized cross-chain ecology, directly admitting that Base is fully operated by Coinbase and claiming that it will cooperate with Optimism and the entire cross-chain ecosystem to gradually resolve centralization issues. However, like the previous roadmap, this commitment has also not made any substantial progress and has been shelved.

In 2024, Vitalik publicly stated a call for the industry to stop promoting Stage 0 Layer 2 products and to fully push projects towards Stage 2 decentralization standards. In February 2026, Vitalik even directly overturned the core idea that "Layer 2 scaling is the best solution for Ethereum scaling," citing that "the advancement of the industry towards Stage 2 standards is far slower and more difficult than initially imagined."

Here, it should be stated objectively: whether in 2023 or 2024, no project in the industry has produced a mature, secure, and scalable Stage 2 implementation technical solution; to this day, none of the projects Vitalik mentioned have been able to fill this complete solution. This is not due to teams failing to execute clear plans, but because the entire industry has not conquered the core technical solutions to this point. To give an analogy: it is like the Mars exploration program, where the rocket's complete blueprints have not been finished, development funds have run out, and the project has been forced to be shelved. Initially, the industry bet on being able to quickly open up decentralized technical paths, but now this bet has fallen through.

The above is a concise overview of the industry's situation over the past three years. The vast majority of Layer 2 networks on Ethereum face similar issues: the decentralization progress of all Layer 2 projects is either slow and sporadic or completely stagnant.

Next, we will detail the complete development trajectory of Base and then confront the core issues that the industry avoids discussing: When a Layer 2 network remains at Stage 0, fully under official control for an extended time, what is the difference between it and custodial fund institutions or fund transfer service providers? When should regulatory agencies initiate investigations targeting platforms that lack compliance licenses, bypass customer identity verification, and anti-money laundering processes?

Development History of Base

Coinbase's initial roadmap planned to launch a permissionless proof-of-failure mechanism in 2023. Even if you do not understand this technology, that is not the point; the key is that this core component did not go live as scheduled in 2023, and it is a necessary part of removing the official control safeguard mechanism, postponing its launch directly lays a huge hidden danger.

Only in April 2025 did Coinbase finally announce that this milestone was completed. At that time, L2Beat classified Base as a Stage 1 Layer 2 network, defining it as "basically achieving decentralization, but still retaining an emergency fallback mechanism that can be fully controlled by the officials." Of course, this stage division itself carries a certain degree of subjectivity and the industry rating standards are continuously updated; the technical level achieved in April 2025 would now be classified as a Stage 0 network under full official control by new standards. It is worth mentioning that in recent years, several security incidents have verified that those control permissions claimed to be "only for emergency use" have been used more frequently by the platform, and the actual control strength far exceeds the extent initially advertised by the project team, which has also led to tightening industry phase classification standards.

This is a common issue in the Web3 industry: not only is there a superficial "decentralization performance," but project parties will also repurpose the back-end control permissions originally used for "security protection, user asset security" for other purposes. In extreme cases, they may even directly steal user assets. Many protocols that claim to be decentralized have suffered massive losses because the team hid the admin keys and assets were stolen after the keys were leaked.

For many years, our publication has consistently adhered to a conservative assessment standard: all centralized control permissions must be assessed under the worst-case scenario, assuming malicious intent on the part of the operator, and strictly evaluating whether "the platform has the ability to take all user assets." Past various security incidents have continuously verified the rationality of this assessment logic, and more and more industry practitioners are beginning to agree with this viewpoint.

Returning to the main line of Base's development: even with delayed progress and limited effects, the project has made some minor progress within the roadmap. However, in February 2026, Coinbase announced the complete abandonment of the original plan relying on Optimism to push decentralization, instead opting to build a technology stack fully controlled by Base. Prior to the adjustment, some administrative permissions of Base were jointly held by Coinbase and Optimism; after the adjustment, all control permissions were consolidated into two multi-signature wallets: a centralized security committee multi-signature and a centralized coordinator multi-signature. Coinbase has ample funds and significant industry influence, enabling it to exert substantial influence over Optimism; now it can completely dictate the individuals and small partnering organizations behind these two multi-signature wallets.

At this point, Coinbase not only fell far behind the planned schedule established in 2023 but also directly abandoned the entire roadmap without launching any feasible alternative development plans. More critically, the small part of control that was briefly diverted to Optimism was completely reclaimed by Coinbase. The joint agency could have jointly hosted assets; the partnership structure between Coinbase and Optimism once briefly achieved this, at least marking a tiny step forward towards the 2023 roadmap. However, with the roadmap completely abandoned, Base can no longer provide any substantial justification for pushing decentralization. Various marketing promotions do not equate to actual progress; mere hype does not count as real construction.

In June 2026, Base experienced two consecutive network outages, during which Coinbase directly modified the underlying code, rolled back all blockchain data, and required all nodes in the network to synchronize an updated repair package to restore operations. After three and a half years online, Base still remains at a completely centralized Stage 0, where the platform can directly exercise control rights at any time to handle user assets; the facts speak for themselves.

A Centralized Distributed Database

The repair operations during the two outages thoroughly exposed the essence of Base: it is merely an ordinary centralized distributed database. There are countless mature commercial solutions on the market: Oracle, SAP, and IBM all offer highly stable commercial databases; MySQL can be deployed for free; various major cloud providers also offer cloud-based distributed database services. As long as the transaction volume matches the hardware capacity limit, distributed databases are already a mature, reliable technology, and performance bottlenecks arise only when dealing with massive scale traffic.

Base's transaction volume is only a few hundred transactions per second, and its performance level is comparable to traditional systems from the 1980s and 1990s. Looking back at industry reports from the internet bubble 20 to 30 years ago, it can be found that many traditional companies at that time handled transaction volumes several orders of magnitude higher than Base. This performance level predates the birth of Bitcoin and even predates the proliferation of smartphones; in the early days of online banking, users could only operate through computer web pages and had to manually verify HTTPS encryption tags before entering passwords, which was a very outdated level of technology.

Everyone can refer to reports from 2001 about eBay's system failures in the late 1990s. We do not underestimate the challenges of system maintenance; we have personally experienced various technical limitations of the 1990s: back then, images from digital cameras could only be read via serial ports; during medical imaging work, a computer worth as much as a luxury car could not load dozens of 16-megapixel black-and-white images at once; yet today, even the cheapest Samsung smartphone can easily store and open image files that are several times larger.

However, this does not mean that Base is overcoming outdated technical challenges. If one were to achieve the performance of traditional servers from the 1990s in a permissionless, globally distributed decentralized network, the engineering difficulty may be extremely high, or it may not be too difficult — but Base has not made efforts in this direction at all. Today's Base is merely an inefficient, unstable, and poorly experienced distributed database, while similar database technologies have been fully mature for decades. Coinbase holds grand aspirations for Base; in 2023 and 2024, the industry might still be accommodating, discussing whether to relax regulatory standards for innovation; but by 2025, this rhetoric has already lost its appeal.

After three and a half years online, with a blockchain underlying it, this blockchain has not been used to create any new, original product logic; the entire system remains centralized under Coinbase's operation. The blockchain instead increases operational difficulties, akin to choosing to run a mature database technology under "hard mode," yet it has never been able to achieve decentralization. Just because a company deliberately chooses a more complex and troublesome technical solution does not mean that it should receive special treatment from regulators.

Why We Emphasize Coinbase as the Entity, Not Base

In this article, we frequently point to Coinbase as the controlling entity rather than Base, a statement that is fully supported by facts. You can check the official blog of Coinbase, where the recruitment section at the end contains the following statement:

Building the next-generation internet is a collective endeavor. If you are interested in scaling, security protection, or promoting Base's decentralization, you are welcome to apply for our positions; click here to see recruitment requirements.

After clicking the recruitment link, it redirects to the Greenhouse recruitment platform, where all positions are clearly marked as belonging to Coinbase, with the roles as full-time employees or outsourced contractors. In the comments section of the announcement, Coinbase's official employees consistently use "we" to refer to the Base team. The user agreement and privacy policy on Base's official website also prominently feature Coinbase's branding.

The logic promoted by Coinbase externally is: Coinbase is merely an incubator, and once the project achieves decentralization, Coinbase will not bear legal responsibilities. But the reality is clear: the entire system is operated by full-time Coinbase employees; and a Stage 0 Layer 2 network does not possess decentralization, therefore Base is fundamentally a business under Coinbase. This is the core reason why this article repeatedly names Coinbase directly.

Industry Outlook and Legal Controversies

The Web3 industry is often questioned on a core issue: many projects do not actually require blockchain technology yet forcibly pile on chain technology. Base's initial explanation was that blockchain is the only technology with potential for effectively solving scalability issues, a viewpoint still debated today. However, after years of construction with no substantial progress, three sharp questions must be brought to the fore:

• Did Coinbase's decentralized roadmap lack a complete and feasible execution plan from the very beginning?
• Considering the stagnation of Base and the overall industry Layer 2 networks, is it feasible to achieve complete decentralization in the short term?
• How much leeway should regulatory agencies allow for innovation, and when should compliance investigations be initiated?

Coinbase holds financial licenses in multiple countries, and by law cannot operate a fund transfer platform that requires no customer identity verification and is not subject to custodial supervision. This is both a hard obligation attached to various licenses and the legal regulations that apply uniformly to all market entities. In the early stages of a new project, measured leniency from regulators is reasonable; software development itself has vulnerabilities, and user asset security needs adjustment, which the industry can understand. However, no reasonable viewpoint would suggest that an absence of decentralized progress for 40 months can continue to indefinitely enjoy relaxed regulatory policies.

As a publicly listed company in the U.S., Coinbase has the obligation to release truthful and accurate public information, particularly regarding company business plans, development prospects, and shareholder rights. If Coinbase has never had a viable plan for implementing decentralization and continuously promotes vague "concepts," it raises serious integrity issues: is the company deliberately concealing its technical weaknesses and misleading the market about its decentralization capabilities?

The years of development with no progress should not be classified as industry advancement but rather a deliberate consumption of regulatory leniency. From February 2023 to August 2026, Base's decentralization rating has remained at Stage 0 with no positive breakthroughs. The development team has indeed completed basic tasks such as coding and launching, and the platform has circulated a large amount of user assets, thereby completing "work" physically; however, the so-called output is nothing more than continuous marketing promotions, yielding no substantial outcomes regarding the core goal of decentralization.

Even if Base introduces more features or more complex underlying mechanisms, it is irrelevant. The assessment standard has never been whether engineers find the development interesting or whether they have completed basic development; the core standard is whether this system can provide legal, valuable services, and align with the project plans publicly stated by Coinbase.

Considering the present situation, Coinbase's series of actions essentially attempt to package "we have never mastered the path to compliant decentralization" as "we are working on significant industry challenges and should be permanently exempt from regulatory constraints." This rhetoric has faced skepticism for years, and it is now riddled with faults.

Corporate innovation should indeed be granted adequate testing space, and we do not require publicly listed companies to have flawless project plans executed perfectly. However, after years of failed planning and operational modes suspected of conducting custodial and transfer services without a license, they must face corresponding legal consequences. Otherwise, financial regulatory rules will lose all binding power.