Vitalik Buterin praises Base as the ‘right way’ amid L2 sequencer ‘FUD’

Ethereum co-founder Vitalik Buterin has praised Ethereum layer-2 Base’s attack to decentralization successful effect to caller concerns implicit Base’s sequencer and whether it should beryllium treated arsenic an exchange.

“Base is doing things the close way: an L2 connected apical of Ethereum, that uses its centralized features to supply stronger UX features, portion inactive being tied into Ethereum's decentralized basal furniture for security,” Vitalik Buterin said connected Tuesday. 

He added that the Coinbase layer-2 does not person custody implicit your funds, “they cannot bargain funds oregon halt you from withdrawing funds.”

True layer-2s are non-custodial, helium continued. “They are extensions of Ethereum, not glorified servers that hap to taxable hashes.”

Buterin’s comments came amid caller cynicism implicit the explanation of layer-2 networks and concerns of centralization. L2s person been thrust into the spotlight pursuing comments by SEC Commissioner Hester Peirce successful a podcast connected Sept. 7. 

Are L2s the aforesaid arsenic exchanges? 

Many layer-2s usage centralized transaction sequencing to supply amended rates and forestall front running by bots. Peirce alluded to imaginable regulatory implications if these “matching engines” behave similar centralized exchanges. 

“If you person a matching motor that’s fundamentally controlled by 1 entity that controls each the pieces of that, past that looks a batch much similar an exchange, and we’re going to person to deliberation astir that.”

However, she besides said that if the assets that are being “matched” are not securities, “then we don’t person a batch to accidental astir it.” 

Layer-2s are infrastructure providers similar AWS 

Coinbase main ineligible serviceman Paul Grewal argued that calling layer-2 sequencers similar Base “exchanges” fundamentally misunderstands their relation and function.

The SEC defines an “exchange” arsenic providing a marketplace for bringing unneurotic buyers and sellers of securities, helium said, adding that layer-2s are “general-purpose blockchains that run arsenic infrastructure.”

They process messages arsenic code, calling astute contracts, and batch each transactions, whether they are payments, calls oregon messages. 

Related: Vitalik Buterin proposes minimalism arsenic cardinal to layer-2 blockchain success

He compared layer-2s specified arsenic Base to Amazon Web Services: Both tally codification provided by developers, including speech applications, but that doesn’t marque the infrastructure supplier itself an exchange. 

“If an speech runs connected AWS, is AWS an exchange? Obviously not.”

Basic functions of L2 sequencer. Source: CoinEx

Sequencers are not matching engines  

Base co-founder Jesse Pollak followed up with much details connected however sequencers function.

Users tin transact done Base’s sequencer oregon straight done Ethereum, maintaining afloat decentralization and censorship resistance, helium said. 

“It’s similar a postulation controller ensuring creaseless travel done a high-priority postulation lane that enables vehicles to get wherever they’re going faster.”

He besides cleared up the matching motor misconception, stating that sequencers bash not enactment arsenic “matching services” oregon engines similar those successful accepted exchanges. 

“Matching engines brace bargain and merchantability orders astatine circumstantial prices to execute trades. Sequencers don’t bash that — they simply find the bid successful which transactions are processed.”

If layer-2s were classified arsenic exchanges, they would request to registry with the SEC arsenic securities exchanges, comply with extended regulatory requirements, and perchance look restrictions connected operations, hence the manufacture pushback. 

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