Coinbase, the leading U.S. cryptocurrency exchange, has revealed plans to move its operations on-chain. One of the major changes involves storing customers’ USDC balances on Base, its Ethereum layer 2 extension blockchain.
Recent reports indicate that the exchange will store corporate and customer USDC balances on Base.
Coinbase transfers customers’ USDC balances to Base
Renowned cryptocurrency celebrity and X user Ryan Sean Adams posted about the development on March 26. Adams outlined potential trends that will emerge as Coinbase moves its operations on-chain.
Adams said Coinbase’s decision to move on-chain will trigger similar moves by other exchanges. Over time, all exchanges will also migrate their operations to the chain.
Additionally, X users expect banks to be the next to adopt blockchain technology. Furthermore, it states that every digital asset is the token of the future, and every bank is the chain of the future. This will make Ethereum the global settlement layer of the future.
Max Branzburg, Vice President of Product Management at Coinbase gave Preliminary announcement Regarding Coinbase’s plan to transfer operations to Base. In his report, he provides an in-depth look at how Coinbase manages and protects the assets of users on the platform.
The Coinbase vice president said the exchange maintains a 1:1 ratio in storing customer funds with its reserves. Additionally, he assured users that Coinbase would never buy back their funds.
In addition, the vice president stated that they will not lend out user funds or perform any operations on user funds without instructions from customers.
Benefits of on-chain migration
Coinbase will create some benefits for users and the platform by migrating its operations on-chain.
The move increases cryptocurrency management for users and enables automatic settlement of USDC. Additionally, it enhances the Coinbase customer experience with fast transaction execution.
Additionally, the migration also reduces fees for users, making their payouts lower than most prominent blockchains. Additionally, it encourages interoperability between Base and other blockchains such as Ethereum, Polygon, etc.
This means users can easily receive or send funds from multiple blockchains without restrictions. The Coinbase layer 2 scaling network automatically exchanges other assets for USDC to complete each transaction.
Meanwhile, news of the on-chain movement has been received with enthusiasm by many in the crypto industry.
They believe this is a positive step towards building a sustainable financial chain. Additionally, they hope other exchanges and the broader banking industry will follow Coinbase’s move in the future.
On the other hand, some have criticized Coinbase’s plans, emphasizing the exchange’s centralized control over Base.
However, Coinbase intends to gradually decentralize Base over time. It is working to make the blockchain more transparent and open source its code to encourage public participation.
