Coinbase team recently published a blog post titled Coinbase Protocol Team Advances Crypto Community and announced that they will integrate the Ethereum L2 scaling solutions soon on Aug 27. Ethereum scaling efforts have been gaining steam lately with the major teams releasing products lately, including Arbitrum and Optimism. However, since Polygon is currently ready, it would become the first scaling solution to get support from Coinbase for direct deposits/withdrawals.
This would be a great boost for Coinbase and Ethereum L2 solutions as the adoption and demand would likely pick up for both. It’s a win-win situation for both parties as they can synergistically benefit from each other. The users who are out because of Ethereum fees will be able to transact on the network again while enjoying the security guarantees of the base layer.
According to the blog post, the solutions being considered for integration, apart from Polygon are Optimism, Arbitrum and Starkware. The Coinbase integration is highly useful in the sense that users wouldn’t even have to make a single tx on the base layer, which would be still pricey. They can simply buy Ether and Ethereum based tokens on Coinbase and get them to directly withdraw to Ethereum L2 scaling solution. By then, the ecosystem around L2 solutions would have developed in such a manner that there wouldn’t much need to move the tokens back to the base layer.
An important component of the crypto-world, Coinbase is the premier fiat-on-ramp and digital currency exchange. It allows people to buy cryptocurrencies using FIAT or traditional money and also helps to liquidate crypto-assets back to it. It also features a secure exchange where users can trade crypto-assets. The service further features a wallet, where users can store cryptocurrencies and analyze data related to price/portfolio worth.
About L2 Scaling Solutions
The Layer 2 scaling solutions are decentralized protocols that increase the processing capacity of a blockchain (hence scaling) and as a result, relieve congestion on the network. They work by delegating the network processing “off-chain” to their own chain, processing it there, before settling the final balances on the base layer mainnet. It’s extremely necessary that big exchanges like Coinbase, Binance, etc. integrate them, so average users can benefit from increased throughput and more capacity on blockchains.
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