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The opinion of Kyle Torpey, a bitcoin journalist since 2014.
Encryption started as an ideal movement to distribute digital finance, but since Bitcoin began in January 2009, the long -term trend has been more centralized and powered.
This problem has been clear for a while, especially in relation to the dependence on the centralized stabble lecomin throughout the industry. However, the revolution of encryption in the existing Fintech is now becoming more blatant to the blockchain of this stabilization.
What is encryption? Or maybe a better foot: What are we doing here at this point?
From Bitcoin’s distributed vision to the centralized reality of encryption
In the January 2009 post, Bitcoin Creator Nakamoto Satoshi Nakamoto pointed out the dependence on the trust of a centralized third party in a traditional financial system. Nakamoto, which eliminates the need for a trusted third party, is a fundamental value proposal of his invention.
Since then, Bitcoin has evolved into a basic investment paper built around the Digital Gold story. Since no central parties control the monetary policy of Bitcoin, they are resistant to the dilution of the types found in the central digital assets.
Ether Leeum and other layer -1 blockchains, which enable more expressive smart contracts, are intended to bring the same kind of decentralization to other financial areas such as trading and loans.
The platform has been exploded for the past decade, but most of their activities are centered on stable coins issued in the center, such as USD Coin (USDC) and Tether (USDT). In addition, Ethereum has become fiercely competitive with alternative encryption networks such as Solana, which is willing to create a larger trade -off that prefers the usefulness of decentralization and lower fees.
Centralized stablecoins dominate encryption transactions
The potential problems related to Ether Lee’s dependence on the centralized stabble lecomin have become clear to some people in the previous encryption bull market. Vitalik Buterin, the co -founder of Ether Leeum, said in 2022, Tabble Lecos, such as USDC and USDT, said, “It can be an important determinant in the future controversial hard fork.”
For example, if you look at the trading volume data of distributed exchange exchange, you can see that centralized stablecoin is a major component that enables most of the activities found in these apps.
According to DEFILLAMA’s data, USDC and USDT have generated the most profits of all Crypto applications in the last 30 days. In addition, the platform, which is generally considered centralized than Ethereum such as Solana and TRON, has generated more profits than Ethereum last week.
The indicator of the hypothesis that the centralized stabloin does not necessarily need to work on the most distributed blockchain is that more USD payments are made in TRON, not Ether Leeum. This said that Ether Lee’s total USDT amounted to overtaking TRON, according to recent block data.
Coinbase and Base: Centralization meets decentralization
Ether Leeum Layer -2 Network Base is a particularly interesting development due to the recent incubation of Coinbase, the largest encryption exchange in the United States. Coinbase can use a popular exchange to force the user to be based on the onchain vision, and the publicly traded company collects fees from the blockchain as operator of the solo sequencer. Coinbase is an optimistic layer -2 rollup, so we use the minority ratio of that fee. ETH is also used as a gas token in the base.
Critics argue that the use of Coinbase’s base can be seen as a form of regulatory arbitrage and decentralized theaters, and the company can collect fees from customers and generate profits from customers without passing customers and money laundering checks. This lowers the coinbase cost and creates a more smooth on boarding and overall user experience for the basic user. This improved user experience is especially true when considering the abstraction of ETH as a gas token and considering the promotion of USDC as the main currency of the basics.
Basic fans will point out the introduction of defect evidence, indicating that L2 is promoting efforts for diversification. However, according to L2 Beat, despite the new roll -ups such as the unichain debut in the first stage, it remains in the 0 -level decentralization.
The most obvious example of the centralized level found in this structure is probably found in Coinbase’s relatively new Bitcoin loan products, which is a coinbase customer for USDC (Coinbase’s investor of the circle of the circle) CBBTC (Coinbase) You can borrow the default (published by Coinbase). Coinbase is the only sequencer to collect all fees).
At some point, there is room for question that in the context of the original Bitcoin Value proposal described by Satoshi, part of this part can be considered defi or crypto. This looks like a traditional financial institution or a fintech company that provides traditional centralized services. What features does the open blockchain provide in this new paradigm? Is it necessary?
It should be noted that Binance is not only found in Coinbase because it created what was known as BNB Smart Chain in 2017. Kraken has recently launched its own Ether Lee Layer -2 network, known as Ink. Step 1). But the combination of Base, USDC and CBBTC makes it easy to see potential centralization issues.
Encryption is merged with traditional finance
The popularity of basic and USDC is considered positively by many ETH owners today. However, the logical conclusion of this continuous tendency of more centralization may not be suitable for ETH’s value proposals in the long run.
If the user activity continues to centralize the USDC, Coinbase may eventually ask questions about not paying Ethereum. Except for regeneration of regulatory arbitration mentioned above, paying additional costs for decentralization provided by the basic class may be meaningless if most user activities include tokens issued in the center.
During the weekend, the lack of adjustment with the Base Ethereum was accused by Andre Cronje, co -founder of Sonic Labs.
In response to the criticism that the base is receiving X during the weekend, the base creator jesse pollack mentioned that Coinbase should maintain all ETH obtained by a virtue signal.
But he pointed out: “We also think it’s worth it to maintain ETH (more than 100K) to strengthen its role as a store of value at the rise point we create when building Ethereum when building Ethereum. do. It’s not a ‘solution’ people. If you need to be fixed, ETH is useful and productive is the final state. ”
According to a recent submission, Coinbase has 119,696 ETHs (about $ 330 million at the current price).
Meanwhile, Steven Goldfeder, co -founder of offchart labs, pointed out that the L2 -based revenue of Arbitrum was controlled by the distributed autonomous organization (DAO) and pointed out that the decision to sell ETH’s ETH went better with Ethereum ‘s. . success.
So where will this ultimately lead? Over time, the centralization, which is slowly encrypted, seems to be merged with the world of encryption. Traditional banks such as Wells Fargo, Paypal and Robinhood, encryption exchange such as coinbase and binance and traditional banks such as encryption networks such as solana and ethereum can compete with each other.
There is no doubt that Pollak is personally dedicated to decentralization, but especially if the commercial reality changes, the promise of the company publicly traded behind the network is not clear.
The base promises to be further distributed over time, including opening the ability to collect sequencer charges.
“We are devoted to decentralization because we believe that the open economy has a chance to grow more extensively.”
“In the basic onchain economy, the fees and more opportunities for others to make money will help to grow pies in general, and we think that the growth of the onchain economy will be beneficial to basic and all participants. . “
The foundation explained the goal of greater decentralization in 2025 in the January blog post. However, the decentralization of the default sequencer was not planned this year.
Of course, even if the coinbase is honest about the basic diversification intention, it does not change fundamental incentives. It is not clear that the recent promotion of financial institutions to create its own L2 on Ether Leeum has been suitable for ETH holders, especially due to a roll -up -oriented roadmap.
However, according to Etherealize founder Vivek Raman, which sells this Ethereum L2 strategy to Wall Street, it is cheaper for companies to outsourcing the consensus and verification of Ether Lee while maintaining the sequencer costs.
Regulators have previously blocked the launch of META’s DIEM platform, but Coinbase is making the same concept back in different forms. And the future of encryption can look like a previously abandoned DIEM model than Bitcoin’s CypherPunk spirit that started 16 years ago.
The encryption network has the advantage of decentralization, but it does not make the most. And as no one requires it, you can’t necessarily blame them.
Kyle Topy
Kyle Torpey has been dealing with Bitcoin and Crypto since 2014. In particular, Bitcoin Magazine and Forbes dealt with Bitcoin’s block -size war. Over the years, his works have been published in Fortune, Vice, Investopedia and other media.