Coinbase is adding a new layer to its business through the blockchain space

by Arthur · February 23, 2023

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Welcome back to Chain reaction.

This week, big news rolled out in the layer-2 blockchain space when Coinbase, the second largest crypto exchange by trading volume, launched Base, an Ethereum-focused layer-2 blockchain.

In the past, Coinbase has been on the trading and exchange side of its business, but this blockchain is switching up the script for the company as it moves into the decentralized ecosystem.

In an effort to expand further into the developer space, Coinbase is building Base to make it “dead easy” for developers to build dApps and for users to access those dApps through Coinbase products, Jesse Pollak, head of Base and chief protocol officer at Coinbase , told TechCrunch.

“Our goal is to achieve phase 4 of Coinbase’s master plan: to bring one billion users into the crypto economy,” Pollak added.

And the new blockchain is hitting the ground running as a number of crypto organizations such as Chainlink, Magic Eden, Animoca Brands, The Graph, have committed to building on the platform.

This news comes just two days after Coinbase announced its fourth-quarter 2022 earnings, which beat Wall Street’s revenue expectations of $581.2 million. Although the company generated $605 million in total revenue, it was down sharply from $2.49 billion in the year-ago quarter.

Table of Contents

This week in web3

Sam Bankman-Fried faces new charges for illegal political contributions

According to a new filing from the Southern District of New York attorney’s office, former FTX co-founder and CEO Sam Bankman-Fried (SBF) now faces four additional counts of fraud, bringing his total to 12 charges. With these new charges, the former crypto wunderkind has been accused of defrauding the Federal Election Commission (FEC), along with additional counts related to wire fraud and money laundering.

Digs into Coinbase’s better-than-expected Q4 results (TC+)

Coinbase’s fourth-quarter results show that alternative sources of income could be a key factor for exchanges as exchanges saw trading volumes fall, but other non-traded areas rise. TechCrunch delved into a number of questions we wanted to answer, including questions related to the company’s revenue mix, consumer activity, and ability to defend the fee cap rate during today’s crypto downturn.

Google Cloud partners with Tezo’s blockchain to bring web3 technology to its customers

Through Tezos’ enterprise baking program, new and existing Google Cloud customers will be able to build web3 applications as well as deploy nodes and index on Tezos’ protocol. This means that both companies and developers can leverage Tezo’s blockchain technology together with Google Cloud’s infrastructure. In general, Google Cloud plans to continue working with “key players in the web3 ecosystem” to continue to drive innovation for open source technology, James Tromans, director of engineering for web3 at Google Cloud, told TechCrunch.

NBA Top Shot creator to face lawsuit over securities status

Dapper Labs, the company behind many popular NFT aggregator projects, will face a lawsuit accusing it of selling unregistered securities. A class action lawsuit was first filed against Dapper Labs in 2021. The company filed a motion to dismiss the lawsuit before trial. And yet, as Coindesk discovered, U.S. District Judge Victor Marrero denied the request, meaning the case will move forward.

SEC accuses Terraform Labs and founder Do Kwon of defrauding investors

The US Securities and Exchange Commission has charged the collapsed blockchain firm and stablecoin operator Terraform Labs and its founder Do Kwon with defrauding US investors who bought the digital assets Terra USD and Luna. The SEC accused Kwon and the Singapore-based crypto firm of offering and selling an interconnected package of crypto-asset securities, “many in unregistered transactions” from April 2018 to May 2022, among other things.

The last pod

For this week’s episode, Jacquelyn interviewed Alex Adelman, co-founder and CEO of Lolli. Founded in 2018, Lolli is a bitcoin rewards app that allows people to earn bitcoin or cash back when they shop online or in person at over 10,000 stores such as McDonald’s, Starbucks, Dunkin’, CVS, Costco and so on.

Adelman was previously on the team that built commerce gateway Cosmic which was acquired by PopSugar in 2015, then Ebates and Rakuten in 2017. Like Jacquelyn, Adelman also went to UNC-Chapel Hill — go Tar Heels!

Lolli has grown significantly in recent years, from partnering with fewer than 1,000 stores to more than 10,000 stores to date. Adelman delved into the reward system in the crypto ecosystem and how it has evolved over the years – and what the future holds for Lolli.

We also delved deep into the topic of Bitcoin NFTs and Ordinals, which is the latest craze for the community. We discussed whether Bitcoin NFTs are good for the ecosystem, how the technology can grow in the long term and the possibilities of these digital inscriptions potentially fitting into Lolli’s business model.

Follow the money

AI-Powered Crypto Search Engine Kaito Raises $5.3 Million To Improve Web Browsing With AI, ChatGPT
Chain Reaction (not associated with TechCrunch’s podcast) raised $70 million to launch chips designed to compute encrypted data
Ethereum-based blockchain game Worldwide Webb raised $10 million in a round led by Pantera Capital
Multi-signature wallet provider It raised $2.8 million in a seed round
Galaxy Digital and PayPal co-led a $20 million round for chain security system Chaos Labs

This list was compiled using information from Messari as well as TechCrunch’s own reporting.