On The Brink with Castle Island - Rowan Stone (Coinbase) on Bringing Offchain Users Onchain (EP.483)

Episode Date: December 11, 2023

In this episode, we sit down with Rowan Stone who leads Business Development at Base – the layer-2 network on Ethereum launched by Coinbase earlier this year. Rowan expands on: The decision to build Base using Optimism's OP stack and the "Superchain" vision The vectors of centralization in L2 networks and the path to decentralization Early use cases on Base across DeFi, loyalty and the creator economy The role of business development in growing an L2 network

Hi, everyone. This is Ria. Welcome back to On the Brink. In this episode, I sat down with Rowan Stone, who leads business development at Base, the L2 that Coinbase launched earlier this year. In this episode, Rowan expands on the role of business development in growing an L2 ecosystem, why Coinbase decided to build base using the OP stack and his views on Optimism's super chain vision. The use cases that Rowan is especially excited about across defy, loyalty, and the creator economy, web three social, and so on, the vectors of centralization in L2s today, and the proposed path to decentralization and more. Here's my conversation with Rowan. Matt Walsh and Nick Carter are partners at Castle Island Ventures.

All of these expressed by them or the guests on this podcast are solely their opinions and do not reflect the opinions of Castle Island Ventures. Guests and hosts may maintain positions in the assets discussed in this podcast. You should not treat any opinion expressed by anyone on this podcast as a specific inducement who make a particular investment or follow a particular strategy, but only as an expression of their personal opinion. This podcast is for informational purposes only. Brought down by bad mortgage investments, Lehman, which has 25,000 employees, will be liquidated. The federal government loans American International Group, AIG, $85 billion.

This is a different kind of market, and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage giants that have been threatened by the housing crisis. The Bank of England has pumped 75 billion pounds more to Britain. in Zailing Economy with a new round of quantitative easing. You print a couple trillion dollars and all of a sudden people start to worry. So out of this worry, we have something called a Bitcoin. Hi, everyone.

Welcome back to another episode of On the Brink. This is Ria from Castle Island Ventures and I'm joined today by Rowan Stone, who is the head of BD at base. Rowan, great to have you here. Thanks so much for joining us. Thanks for having me. Great to be here. Yeah, absolutely. Maybe to start off, why don't you tell us a little bit about what you were working on prior to base and what ultimately led you to base and what does a head of BD for base look like?

Happy too. So I've been in the crypto space for quite a long time, been specifically at Coinbase for a couple of years now. And my role really is heading up what we call the on-chain BD team. So we look after partnerships and initiatives and growth efforts across a bunch of different. verticals, things like defy and social and governance and gaming and infrastructure, and obviously the creator space, which is super, super popular and growing really quickly. And we also look after some of the specific Coinbase products. So we help on the business side with things like USDC, Coinbase RapDef, and I serve as the business and operations lead for base, Coinbase's layer two. And what does it look like? We are aiming to bring a million builders and a billion.

users on-chain as quickly as we possibly can. And to make that happen, we really need to make on-chain as affordable and as useful as possible. And we need to build the best possible developer environment to start getting people to actually engage and build. And so a big part of our role, at least for just now, is starting to pad out a minimally viable ecosystem and start to make transacting and operating on base fun and useful. So that's where we've been focusing most of our time and attention over the past six to 12 months. Got it. While we're on this topic of what business development for base looks like, how is it different in your perspective from what business development and growth for a

traditional company looks like? Great question. I think the biggest difference here is the fact that base is completely open, completely permissionless, and although centralized as a coin-based product, aiming to decentralize as quickly as possible. And that makes it a little bit unique in terms of how we grow. And one of the main differentiators, for example, if we compare versus a standard coin-based product, be that like exchange or any other part of the business, we are moving slowly and we are engaging with regulators and we are doing things in a compliant, methodical way. And so entering a new market takes significant effort, significant time, lots of strategic positioning, and once we have all the pieces in place, we have the right

fee at rails, and we have the right licensing and all that kind of thing, then we can start to roll out. Whereas base is inherently open and global, and so we can approach things in a completely different way. We can be much broader to start with, and we can figure out in which geographies really we're starting to see traction, and from there start to double down in those areas. So a very different approach, but beyond that, it's very builder-focused. It's first and foremost, a infrastructure layer and really a layer that we want builders to come and use. Our aim is to be just the natural spot for builders to build. And the positioning here, our thesis, our hope is that if we can provide good distribution

and provide the right tooling and provide affordable and reliable block space, we're going to be able to have builders come and just start to deploy their applications here. And obviously, the more adapt, the more utility, the more chance we have of gaining adoption, and that's really the driver we're trying to push here. So you mentioned that one of the goals is to onboard the next million builders onto base, on chain, into crypto. How do you think about creating an environment that makes it much easier for them to build

and operate relative to maybe what existed pre-base or what existed pre-el two's more broadly? Yeah, I think for me, the two primary friction points that exist, at least in my mind, are preventing us really meaningfully pushing forward as an industry and getting more adoption. That crypto is still way too expensive broadly. And we're doing a lot of work in that space. L2s are firmly in the bucket of how do we collapse transaction costs and how do we get to a point where block space is just a commodity that's reliable and affordable and easy to get access to. The other big friction is that this stuff is still hugely complicated. And it's not just hugely complicated from a user perspective.

It's hugely complicated to build on. And if a developer's got a cool idea, there's so many questions they need to answer before they can even start to write code and start to deploy that cool idea. The where do I build, how do I build, what's the right methodology? There's just tons of things that we'll need to think about. And for me, a big part of that problem is that as an industry, We've been off building in 50 different directions for the past decade or so. And we've made a ton of progress.

There are more and more cool things to be done on chain every single day. But ultimately, if you're knocking on your neighbor's door and trying to show them the top 10 coolest apps that are available right now, the chances are they're on five or six different chains. And that means that your neighbor needs to have five or six different block explorers to see their transactions in these different places. And they may need to use multiple wallets. they may have to use two or three wallets.

And so if we're wanting to bring a billion users and a million builders on chain, these types of things need to be fixed. And so we're not solving this. We're trying to take a step in the right direction and urge people to start thinking a little bit differently. But the reason or one of the big reasons that we chose to build on OP stack is that it's an open standard for layer two. And because it's open, because it's permissionless,

because it's MIT licensed, we can accelerate the development of that tech stack and then encourage others to build on it. And the idea here is that rather than building in 50 different directions, we try and get some central mass to build in a particular way so that we can start having interoperability between a bunch of these different chains. And the thinking here is that we don't expect the future to be one big chain to rule them all. Much more likely there's going to be tens, hundreds even of different chains that come together to collectively scale in lots of different verticals.

Maybe they'll be specialized, there'll be something for creators, something for gaming, et cetera, et cetera. And so these things need to be able to talk to provide a good user experience and a good builder experience. So the hope is that by taking a step forward in that realm and trying to build towards this super chain vision that optimism has, we're encouraging people to start doing the same. Understood.

From the outside in, it seems as a. if base is a general purpose L2 built using the OP stack. Is the right way to think about base as a general purpose L2 or are there specific categories of applications that you're trying to attract and specialize in on top of base? And in the last two and a half to three months since base has launched, has there been a specific category of applications that has really taken off relative to others? The first thing I need to say is, I have almost turning into somewhat of a tagline, and that is the basis for everyone. And I think that's really important. We can't trumpet the

global, decentralized, open, permissionless type sentence if we then say, oh, but by the way, it's for this. So no, base really is aiming to be a general purpose builder platform. And we want to attract developers that have ideas in lots of different verticals. For sure, certain verticals are further ahead in the adoption curve than others. There's better product market fit in certain areas than others. Defi clearly, the first time as a space, as an industry, we have real product market fit. We've built this incredible new system that enables anyone anywhere to have access to things that they wouldn't have had access to previously. We're also seeing a ton of traction in the creator realm, empowering creators to better own and distribute and remove layers of complexity

and connect directly with their audiences. Tons of cool stuff happening there. Onchained Summer, which I'm sure we can talk about in a bit, was like a great demonstration of what's possible in that realm. But I think speaking specifically about base and thinking about what's had good traction so far, we can't not talk about Friend Tech. They've just crushed it. They created something pretty unique, very unique actually. And they've enabled people to start to monetize their social following. And they've enabled individuals who want access to particular people to have that direct connection. It's been driving a ton of volume, a ton of transaction, a ton of excitement. I think in the first maybe week or two of them launching, they pretty much had the entire

of crypto Twitter in and actively using. So they're building fast, they're iterating quickly. Every time I log into that app, there's something new. The UI's changed a little bit or some features been added that makes it a little bit slicker. Super cool to see. And definitely, for me, the thing that stands out is having most traction so far. Out of curiosity, how did Frontex decision to build on base come about? Was that a function of you actively, if you're able to share, talking to the team and courting them to base? or was it more of a, hey, we think that for all of these reasons,

base is the most compelling option. So we're going to make the active decision to build on base. We'd love to get your thoughts on that. It wasn't us courting in any way, shape, or form. I think we did a pretty good job during Tessnet and during run-up to main net, of gathering some excitement and some attention from the broader community and ensuring that it was well understood what our principles were and what we're trying to achieve and what base is all about.

And so L2 Blockspace essentially at this point is a commodity. We differentiate with distribution and by trying to position ourselves as the best possible environment for builders. And so they were attracted to that. They're aligned with what we're trying to do. They clearly want distribution because it's really important for a social app in the early days to have access to lots and lots of eyeballs. And so I guess we're attracted to base for those reasons.

Understood. Beyond Friend Tech, what other applications and use cases have you seen in the early days on base that you're most excited about? I think Blackbirds, the other one that's really cool, and I believe in your back garden. So they are building a loyalty type application for restaurants. You scan an NFC chip at the door, immediately recognizes who you are. And then restaurants can start layering in rewards, but also better understanding their customers. and customer behaviors and all that kind of cool stuff. They've deployed on base. They're growing pretty quickly. I think they have somewhere between 15, maybe 20 restaurants now.

I believe all of which are in New York. Bummer for me down in Panama. But super cool to see, and something that I think we're going to see more and more of. It just makes sense. There's certain use cases for blockchain tech that just are a natural fit. And loyalty for me is one of those

that is a bit of a no-brainer. So cool to see them build. Yeah, I completely agree. It's a use case that I'm surprised hasn't existed until now. It just seems like such a natural implementation on top of on-chain rails. So I'm super excited to see them continuing to expand the number of restaurants that they're working with. And I'm excited to see what happens once they have a critical mass of restaurants and users that are using this unified platform to manage their loyalty across the board. So I'm super excited about that one as well. I want to take a step back

and just talk about Coinbase's decision to architect an L2. What was the rationale? And you spoke to this a little bit, but maybe we can have a more comprehensive discussion around the benefits of having the L2 being a part of Coinbase's ecosystem. For us, Coinbase is a really large crypto company. However, Coinbase, although generating tons and tons of transactions and clearly operating on chain every single day, it's still very much a big centralized entity. And really, if we think about how that business has been built over the past decade, it's gotten really good at the fiat to crypto piece, operating as a bridge to bring people from the fiat world into the crypto world, perhaps for the first time, perhaps they're season that's been around a while

either way. And thinking about where crypto goes from here, it's very obvious that people are going to be transacting more and more on chain. And we want to ensure that we are an active part of that kind of development of the space, continuing to operate as a bridge. And this time, instead of bridging from fiat to crypto, we bridge from crypto centralized within Coinbase to having people actually owning their own funds, having an identity on chain, minting things, creating things themselves, playing on-chain games, just exploring that world that's unfolding super, super quickly. And if we take a step back for a second, think about why we chose to deploy a chain of our own, it's really that, and I talked to this a little bit before,

we don't believe in a future where there's one big chain, we reckon there's going to be a whole bunch of chains. And in a world where there's a whole bunch of chains, and ideally, all of these chains can communicate together or like meaningful segments of the market can interoperate, it makes sense for us to have a chain of our own and us to actively participate in that space. As a business, we have a very large number of very sharp, very sophisticated engineers. So it's been in the space for a long time. And so we're really well equipped to actively lead in and try and help drive progress, try and help with decentralization, try and help with improved security, lots of different methodologies, speed, security, whatever. And so decision was made

actually quite a number of years ago to explore. And at the time, the moons didn't quite align. It just didn't quite make sense. The original exploration was, should Coinbase have a layer one blockchain and the ultimate output was probably not. It's going to be siloed. It's going to be difficult to connect other places. That was revisited a couple of times over the years. And this most recent time went through the full exploration of, okay, we know we want to do this. We want to give Coinbase engineers a place, a home in the on-chain world that they can start building. Layer one clearly is not going to scale enough in most cases, like some layer ones will. But then unfortunately, layer ones that can scale a decent amount are connected to the rest of the ecosystem.

And so we didn't want to be isolated on an island. We very much wanted to be part of the very quickly growing ecosystem that is Ethereum. And so building a layer two and helping to scale Ethereum alongside everybody else, building on layer two, just seemed to be the natural choice. And then we really centered on optimism, and I mentioned this previously, because A, we get on really well with the team. And it's important that we're building alongside people that kind of have a similar mentality, believe in the same types of things as us. And B, the tech stack is modular, which means that we can do a whole bunch of cool things that wouldn't be possible otherwise. And then C, most importantly, to me,

it's fully open source and MIT licensed, which means that anybody anywhere can actively lean in and participate. And it means that we can actually build in community, which we believe is the right way to be progressing. Absolutely. As I think about the value proposition for Coinbase in having this on-chain and off-chain component, I analogize it to the way that Apple has made it so seamless to move across devices and across very critical applications within the Apple ecosystem to the point where the end user doesn't think about it. And hopefully, through this, we get to an experience where people don't think about moving on and off-chain. And I think the industry broadly is making progress in that direction. So that's super exciting to see.

For sure. There's a couple of products, actually, or a couple of tech stacks, if you like, that really help move the needle there. One thing that Coinbase has been working on and using for quite a long time is MPC or multi-party computation like tech for wallets. And the first deployment of that is just enabling a user in Coinbase.com to sign up what we had as a web3 wallet and quite quickly be transacting on chain. We don't need to worry about complexities of storing keys or backing up seed phrase. We shard the key at our. side, we have a copy, we have a copy. It's all good. But the key is that within a couple of clicks, they're ready with a wallet, they can move a balance from Coinbase directly into it. And the next

click would be on Uniswop doing a trade, or on Avey or minting an NFT and OpenC, whatever it ends up being, just bridging that gap between centralized off-chain and on-chain. And then the other big unlock, I think, just tons, but the another big one that comes to mind is a counterstraction. And that there's a tech stack that's being built out pretty quickly with smart contract wallets and all that kind of thing. Enabling DAPs to remove DAS from the equation is going to be a massive unlock. And just that simple thing from a user onboarding perspective. And I think Frentex is actually a great example. They did it pretty well.

There's huge friction there. If you want to open a DAP for the first time and you don't have a wallet and you're not funded, you're in a world of pain. Even with the slick Coinbase onboarding and things like that, it's still going to be a world of of pain. It's going to take you a little bit of time to fund your wallet and to get up to speed and get ready. Whereas with account abstraction and enabling gasless transactions, which, for anyone listening that's not aware, it's just basically the DAP funding the gas on behalf of the user, the back-end infrastructure that enables that to work in a really slick way.

It just means that the user's in and they're transacting really quickly. So from an onboarding perspective, it's going to really grease the wheels. And I think the last thing, going off on a tangent here, but while we're talking about things that are going to be major unlocks, I think the other one that's top of mind for me just now is identity. I say that because it's really hard to figure out who owns a particular wallet. Obviously, a wallet address is pseudonymous. And if you are a defy protocol or if you are, I don't know, a lender of some sort and you want to lend to a user, at the moment, you're going to want them to over collateralize. And that's a fairly large area of friction that's stopping normal users wanting to lean in and use what's available. So I think,

unlocking identity is going to be one of these watershed moments where we realize, wow, there's a ton of new cool stuff that we can now do because we know that this address is owned by Rowan and he's here and this is his credit rating or this is his trust or whatever the question may be. So super excited on that front. And I think we're seeing a number of really cool companies building a breakneck seed trying to plug that gap. I agree with all of those things. I think being able to use things like MPC and account abstraction to make the process of onboarding and transacting on chain much more seamless is a massive unlock. I think I saw a dashboard by someone named Kofi on Twitter on the number of smart contract wallets on base and it was a non-trivial amount. So that's really cool to

see. And yeah, to your point, being able to do things like gasless transactions and not having to authorize each and every small action. For example, if you're playing an on-chain game, you don't want to have to click into your wallet to authorize each and every transaction that you're doing within the game. That's a huge unlock. And yeah, lastly, on identity, definitely an unsolved problem, but it's definitely, I feel like we're starting to make progress on that as an industry. Bridging identity and reputation and on and off-chain context is super important. You guys were obviously very thoughtful in deciding to build an L2 and to specifically build an L2 in the optimism ecosystem. Can you talk a little bit about how did the base team work with the optimism

team leading up to base main net? And then how are you continuing to work with optimism and contribute to that ecosystem? Because I know that there's a number of different ways that you guys are supporting each other. I think probably the biggest project, if you like, or scope that we've worked on together pre-base is something called EIP 4844. And we talked before. Bases essentially a giant aggregator of transactions that enables us to have economies of scale, just a standard L2. And so it collapses transactions from the 5, 10, 100 buck mark that we saw for layer one during the last full market, down to five to ten cents generally. But that's still way too expensive for the majority of mass market use cases. And so we need to find a way to scale all layer twos. And EIP

4844, for anyone unaware, is essentially carving out dedicated block space, which is actually called blob space. I kind of love a feeling of names. Blob space is a pretty cool word. It's carving out blob space on layer one. And that's a dedicated spot that gives layer twos. like Optimism Mainnet and Arbitrum and Base, some level of certainty in terms of what the pricing for publishing back to Layer 1 is going to be, but it also gives some dedicated capacity. And so that enables us to collapse transaction fees on OP Main Net and Base and Arbitrum by a pretty decent margin. We're looking at 2 to 5x, something like that, in the short term. And then every quarter thereafter, there's an ability for us to expand that blob space a little bit further,

and so collapse transactions a little bit more. This is ultimately aiming for sub one cent transactions on layer two and some level of smoothing out of the transaction price curve. Because right now, even on layer two, in times of, let's just use bull as the example, in a bull market, you're going to have big fluctuations in gas costs. It's going to go from 10 to maybe 15, 20 cents, and then back down to So we want to get to a point where we are fractions of a cent, up to a cent type deal. That's the aim there. And that's an effort that we worked hand in hand with both optimism and arbitram. And that's partly what gave us the confidence to lean in with optimism.

Working with our team is awesome. They're very sharp, very technically savvy. And they're building a direction that we agree with. Going back to this idea of just BD and growth and success of, the base ecosystem. Can you speak to how you guys are thinking about funding, either from a venture capital perspective or a grants perspective, to grow the ecosystem and support projects, both financially as well as through the base team and the coin base team in achieving success on base? grants is something that is top of mind we are asked on a hourly basis not even a daily basis

what we're doing in the grant space we started off quite slowly and very methodically and trying to start small see what works so we partnered or worked closely with the team at nowisdow and prop house to spin up a very simple restrictive grants program there and that enables individual builders and small entities to deploy something cool in a variety of different verticals and then be rewarded for that thing. We're now moving into a more generalized grant space. These are still going to be much lower value, much more modest, trying to be very targeted. The idea here is not you have a DAP on three different chains and you want $500,000 to deploy on a new one. The idea is very much, you're an individual developer and you've got a cool idea to make, I don't know, a decentralized

Oracle or something. And it's going to take six months of your life to deploy this. And so we issue a grant to cover that time and inspire that open source contribution. So that's where we are today. We're also working with optimism on this front. So the next round of retroactive public goods funding is currently open. And builders on base are eligible for that round. So if somebody's building on base, I want to apply for funding, they can do that through the normal portal on optimism and governance. Moving forward, funding-wise, we obviously have point-based ventures within the group,

and they are operating something called the base ecosystem fund, and that exists to ensure that there is some capital for seed or pre-seed and early-stage builders that want to build cool things on base. And they've made a number of investments so far, and there's a number of really cool groups coming together to deploy tech on base, which is awesome to see. I think a good follow-up question for that might be, are there any requests for products that you guys have that you're hoping for people to build on base?

Absolutely. Brian Armstrong actually wrote a blog post not too long ago about some of the things that he was super excited to see being deployed on chain, just on-chain broadly, base or otherwise. And they were things like identity solutions, which we all know is super important for unlocking utility. There's also things like flat coins. So stable coins have driven huge amounts of utility to lots and lots of people around the world. Flat coins are kind of like the next iteration potentially of that. We don't fully know if there's tons of demand, but theoretically they make a ton of sense. And the idea there is to have a coin that's inflation adjusted. So it maintains some stable store of value.

So rather than being pegged to a dollar, it's pegged some unit of a current. Pretty cool. There was also a recent ecosystem summit, where Brian and Jesse and a number of people hosted a ton of cool builders across the space and tried to mentor and inspire and just help generally anybody was looking to build in a variety of these different verticals. And that was in collaboration with the Ventures team, who are obviously writing checks and making investments in some of the companies that come through these.

So really cool to see and something that we're going to be doubling down on. We'll be a lot more active in the grant space, working closely with optimism, but also diverting some of our own sequencer revenues to ensure that we're funding builders and bringing people, empowering people and getting them to build cool things on chain. Absolutely. So another thing you mentioned is retroactive public goods funding. Just to level set for the audience, could you explain what exactly that means? So there's two ways to fund and inspire growth and reward contributions.

We've seen both in the market. One way is to issue a grant up front and hope that the person you're issuing the grant to delivers something of value. Clearly, that's a little bit of a gamble. The other way of doing it is to simply issue grants to the builders retrospectively that have already delivered value.

So the idea of retroactive public goose funding is to look at the ecosystem and say, such and such has delivered a ton of value here. we're going to send a grant to reward them for their contributions. I think one obvious call out here, Zach XBT, is one of the recipients of a grant relatively recently. I think it was in the last round of optimism, retroactive public goods funding. And the idea there is he's just someone we need to have around. He's doing work that somebody needs to do to try and clean up this space in some way, shape, or form. And the community felt that he should be rewarded for those

contributions and therefore a grant was issued. More specifically, it's typically a typically about have you driven growth in users or have you driven cool utility or have you increase the value locked in a particular network? If so, we want to reward you for that contribution. Definitely. That's super helpful. Thanks for going over that. Another thing that you've mentioned a few time is just a decentralization of base. And I think that's a really important topic. I think before we dive into how you're thinking about decentralizing over time, it would be helpful maybe for listeners to understand what are the vectors of centralization on base or L2s within the optimism stack more broadly?

The primary vector here is the sequencer itself. So L2s rely upon a sequencer to essentially process transactions. And right now, all transactions on base are processed by a single sequencer, which is operated by Coinbase. Now, there's a ton of other vectors. There's like ownership of keys and control of the challenger role and a variety of other different things that we could get into. But I think the primary vector by far is this single sequencer.

And so a big part of our decentralization roadmap is to move away from Coinbase being the sole sequencer and move into a world where that function is somewhat decentralized. And it will very likely be a crawl, walk, run type environment where it'll initially be a small number of parties that are sharing sequencing, and then ultimately the vision is to try to get to a decentralized sequencing layer, whereby anybody can participate in that and be rewarded for their contribution for doing so. So that's a really big part of the decentralization roadmap, and to be clear, like I say, currently, Coinbase is the single sequencer, but we're aiming to move away from that as quickly as we can. The other part is who controls the ability to upgrade

the network? And what I mean by that is who holds the keys. So who can make a change the underlying smart contracts. And we have focused on this as our first area of decentralization. And so there's been a number of blog posts talking about this. But the aim here is to share the keys with optimism and then eventually move to a completely decentralized upgrade type ability. So there's a couple of governing pieces here. The first one is essentially communicating how optimism and the super chain, intend to operate from a governance perspective, what's important. And that document or that thesis is called the Law of Chains. That's been socialized through OP governance. And that really just states

what users can expect, what chain operators can expect, what DAPs can expect in terms of how things will be run. And then the second big piece is currently in discussion. But this is essentially moving to a group, a large multi-signer group, which will have control of over technical upgrades or the chains within the super chain. And the reason for, I say centralizing, it really shouldn't be saying centralizing, but pooling the upgradeability for a variety of chains into a decentralized structure,

but one decentralized structure, is to ensure that these chains all stay at technical parity. And the reason for that is if we end up with just all chains in the super chain, going off in 50 different directions, we haven't solved that core problem of interoperability. While they're all in technical parity, it's going to be significantly easier for us to enable those chains to communicate properly.

So quick recap, because I did a bit of ramble there. The first part of decentralization for us is decentralizing control of the blockchain itself, so that technical upgrades are no longer governed specifically by Coinbase, but instead by the OPE community, if you like. And then the next big piece of that roadmap is moving away from a single sequencer and moving into a world where there are multiple different parties all coming together, to sequence transactions, not just on base, but on all super chain chains. Definitely. In that world, in that future, what role would Coinbase play in this

decentralized version of base? We will be essentially distribution and core development. And the hope is that we're not the only people developing. The hope is that we're building in community and that inspires people to actively participate and actively. lean in, that we will, irrespective, continue to build, both for our base, but also for the broader super chain, and help decentralize and improve security there. And we will continue to pull people in. That's our primary role. We want to enable builders, and we want to provide distribution, and we want to continue to provide tooling that makes it significantly easier for both users to engage, but also builders to build. One thing that you mentioned earlier in this conversation is

this concept of in the future, there will be general purpose roll-ups, there will be app-specific roll-ups. In your view, why would an application want to build on, or when would they choose, maybe is the right way of framing it, to build in a general purpose environment, such as base, versus launch their roll-up? And do you think that we'll see maybe in the future general-purpose roll-ups being a testing ground, and then after a certain point when they've achieved some level of growth, they transition to being an app-specific role-up. How do you think about that? I think you nailed it there. I think the likely path of development for the majority of use cases is going to be start in a shared environment, build on a base or an optimism mainnet,

or some chain that makes sense, gives you the reliable secure block space that you're looking for. And then as you grow and as you get product market fit and as demand increases, the economics are going to start swinging the other direction. So rather than being incentivized to build in the shared environment where it's just there's a lot less friction for you to get up and running, you're going to be incentivized to own the infrastructure and you're going to want to move using a AWS or GCP type analogy, you're going to want to move from the shared services up to your own dedicated hardware, in this case, running your own chain. And so part of the draw for OP stack is that there's a well-trodden path to enable that. Someone can come, they can build on base,

and they can get to scale. And then when it makes sense for them, they can spin out and start with their own individual deployment of OP stack. Now, that's not going to be the slickest process in the world. There's work to do there to make that really slick. But it's going to be significantly easier to go from base to OP stack than it is to go from, I've started building in some chain, and now I want to build something completely new. You're using the, you're using the same. You're using same technology, and so the migration will be significantly simpler. I want to talk a little bit about the traction that BASE has seen in the last two and a half, three months since launching. Can you talk about what metrics you guys are looking at,

what has traction looked like so far? It's been an incredible launch. There's an insane amount of work still to do, but OnChane Summer was successful. It drove a ton of content on chain, which has captured a ton of eyeballs and resulted in a lot of people engaging in a lot of cases for the first time, which is amazing to see. We are pretty much tracking what you'd expect. We're tracking number of users. We're tracking number of builders. Super important for us that we have as many builders as possible actively building. We're tracking the total value, if you like, on chain. And we're tracking the number of transactions, because for us, we take a small margin in every transaction, and that's what funds the development of everything that we're talking

about here. That's the revenue driver, if you like. So it's all about bringing more users on chain, bringing more assets on chain, and giving builders a captive audience to build applications for. So I have a couple of follow-up questions. One being, do you have a sense for what is the breakdown of existing crypto users and existing crypto builders versus net new crypto users and net new builders that are on chain for the first time by a base? Loosely, but not in enough detail for me to really get into the nitty gritty here. I think taking a step back, broadly speaking, the vast majority of activity on layer two's today is existing crypto users.

And the reason for that is just a bit of a pain in the ass to use this stuff still. There's a ton of effort going into making it significantly easier. We talked about a bunch of this stuff, things like NPC and account abstraction, things like Coinbase just leaning in and supporting these networks so that users can get directly into them quite quickly. But the reality of the situation is that it's only in the past six to 12 months that a lot of this stuff has started becoming available. And so we're not there yet.

We don't have tons and tons of net new users. But the thing that seems to be driving the most net new users is the creator side and the social side. Those are the kind of areas where we're seeing the most adoption from net new. this is my first address or this is my first time from interacting on chain, clean wallet, whatever you want to count as. And that's exciting. It's really cool. So the next wave of Fremtex and of creator platforms are very likely to continue that trend. And that's what we're hoping to see. Absolutely. Another comment I wanted to make was I think that Jesse shared,

going back to this question around traction, I think Jesse shared this chart showing the number of transactions on L2. And I don't know if it was specific to base or just L2s more broadly versus L1 Ethereum. And I just remember seeing that chart like a year ago and it was completely flipped. And it's really exciting to see so many people building on L2s and so many users onboarding onto L2s and actually shows that L2s are seeing product market fit and people are just resonating with lower, more consistent fees and just a much. faster, better user experience. That's what's all about. Absolutely.

And the chart you're talking about, it shows Ethereum essentially flatlining in terms of activity. And the reason for that is not negative in any way she perform. It's just that Ethereum is essentially at capacity. And when we say at capacity, obviously there is tons of headroom, but the headroom requires the gas cost to go absolutely mental. And we saw during the last kind of DFI summer, I say the last DFI summer, I guess it's been the only real DeFi summer. But during DeFi summer, I remember doing a ton of different transactions where I was paying two, three, four hundred bucks just to approve a token, which is one of the least gas intensive exercises you can have. Actually doing a swap could be $1,200. We can't get back

to that point. It just doesn't make sense. It's not going to scale. It's not going to work. And so that chart shows Ethereum being relatively stable at capacity. I think we can loosely use that term. And layer two is just in this up into the right curve. And I think we're going to continue to see that as more and more and more layer two's come online and as more and more gaps with good utility drive more and more users on chain. And Athenaium benefits massively because all of this is rolling back up and publishing two layer one. We're all in the same EVM environment. We're all building in community. This is not about layer two trying to compete or take away from. It's very much some of the sharpest builders in the space coming together to collectively scale a thing. And that's super exciting.

Another thing you mentioned is OnChain Summer, which was a campaign that you guys ran, I think, shortly after Base launched to try and just have opportunities, fun opportunities for people to participate on chain. Can you talk a little bit about how you thought about designing that? What were some of the exciting pieces of it? What was surprising maybe as a result of Onchain Summer? And how did that drive activity and adoption? For sure. And for anyone unaware, Onchain Summer was like a miniature festival style celebration.

And the idea was to bring onchane culture and art and music and gaming and all these kind of things together to show what's possible and just celebrate what's available and what's possible. possible. So we partnered with 20 plus different creators and marketplaces to bring cool content for a variety of different verticals into onchainsummer.xyZ, where every day for three in a bit weeks, we had a drop and it was done by people like Coca-Cola, people like another block, and people like Iskra and friends with benefits and tons of different groups across the space. and it went really well. I think we had somewhere in the region of 270-odd-thousand individual unique wallets participating in the Daily Mint, being excited and collecting some of the work from each of these people. And I think in total we ended up with about 700-ish-thous

minted. So a great way to start, great way to demonstrate what's possible on Shane and show that crypto isn't just about speculation. I think this is really a great way to start, great way to demonstrate what's possible on Shane and show that crypto isn't just about speculation. I think this is really important for the conversation that's currently happening on the hill. One of the things that we get asked the most is why should we provide real detailed regulation for an industry that's just fueled by nothing more than speculation? And so I've probably said the word utility about a million times when we've been chatting, but it's super important that we really drive cool, useful things because that means that we can, with a straight face, in a credible way, say, no, we need really.

regulation for the crypto space because we are empowering creators and we're enabling people to engage in a more meaningful way and we're powering the next generation of loyalty programs and we're enabling cross-order payments in a significantly slicker much more affordable way and we're providing access to next-gen products and having an ability to point to real utility is massively important for that entire effort so on-chain summer for me was a massive success It's something that we will iterate and improve upon and try and do again and pull even more different builders and creators into the space. But yeah, it was a ton of fun. And I think broadly, people enjoyed it. Absolutely. I thought it was a really fun way to get people involved and

transacting on chain. And I think it was one of those things that showed crypto and non-crypto users that there is a way to have fun on chain and that being on chain can be really lighthearted and fun and exciting. So I love that. And yeah, to your point, I think showcasing more use cases that are non-speculative and showcasing use cases where operating on public blockchain networks is providing real value to a number of different stakeholders around the world is definitely very important. So it's awesome to see that. And I'm excited to continue. continue to see that, those kinds of use cases, be proven out. Well, Rowan, I think we're at our time. It's been such a pleasure to have you on. Thanks so much for going in a winding direction that

I took this conversation. I really enjoyed it. It's been a ton of fun. Thank you very much. And look forward to speaking to you again. Take care. Thanks for listening to another episode of On the Brink with Castle Island. To find out more about Castle Island, visit castle island.V.C. To listen to all of our podcast episodes, please go to On the Brink dashpodcast.com or just click on the tab in our website.

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