Three Years of 'Decentralization' Promises Unfulfilled: Is Base Still Stuck in Place?

Author: Jon Reiter

Translation: Saoirse, Foresight News

In August 2023, we published an article suggesting that Base is essentially just a tool for Coinbase to provide centralized custody transfer services without the need for customer identification and anti-money laundering checks. The platform deliberately piles up obscure technical jargon and vague vision slogans to intentionally conceal the true nature of this business. Recently, Jesse Pollak (co-founder of Base) confirmed externally that the Base application has been reorganized under the parent company Coinbase's coordination, and Jordan Fish (known online as Cobie) will independently manage this product line. In the future, this product may even expand beyond the Base ecosystem. This fact makes our earlier viewpoint increasingly difficult to refute.

Coinbase holds multiple financial licenses globally, and this operation has serious compliance issues both in the past and present. As early as February 2023, Coinbase voluntarily admitted that Base had no decentralization attributes at its launch, and that year it also released a decentralization roadmap. We will elaborate below, but first the conclusion: this roadmap was shelved long before any substantial progress was made. L2Beat, an authoritative Layer 2 monitoring platform, currently rates Base as Stage 0 (this rating will be downgraded from Stage 1 to Stage 0 in August 2026), with the entire network fully controlled by the platform. In simple industry terms: this highly recognized Layer 2 monitoring institution has determined that Base has no decentralization features.

After our August 2023 article was published, Coinbase immediately released a Superchain ecosystem decentralization commitment, which explicitly admitted that Base is fully operated by Coinbase and claimed that it would work with Optimism and the entire Superchain ecosystem to gradually solve centralization issues. But like the previous roadmap, this commitment was also shelved without substantial progress.

In 2024, Vitalik publicly stated, calling on the industry to stop promoting Stage 2 Layer 2 products and to push all projects toward Stage 2 decentralization standards. In February 2026, Vitalik directly overturned the core idea that "Layer 2 scaling is the best solution for Ethereum scaling," citing that "the industry's progress toward Stage 2 standards is much slower and more difficult than initially envisioned."

It must be objectively stated here: whether in 2023 or 2024, no project in the industry had a mature, technically feasible Stage 2 solution that balances security and scalability; to this day, the projects Vitalik mentioned still haven't completed this complete solution. This is not due to the teams failing to execute a clear plan, but because the entire industry's R&D has yet to overcome the core technical challenges. For example: like a Mars exploration plan, the rocket blueprints are not even fully designed before R&D funds run out, and the project is forced to be shelved. The industry's bet on quickly achieving a decentralized technical path has now failed.

The above is a concise summary of the industry's status over the past three years. The vast majority of Ethereum Layer 2 networks face similar issues: the progress of decentralization in all Layer 2 projects is either slow and intermittent or completely stalled.

Next, we will meticulously break down Base's complete development history, and then confront the core issue the industry avoids: when a Layer 2 network remains in Stage 0 with full official control for a long time, what difference is there between it and a custodial fund institution or a fund transfer service provider? When should regulatory agencies initiate investigations into such platforms that lack proper licenses and skip customer identification and anti-money laundering processes?

Base Development History

Coinbase's original roadmap planned to implement a permissionless fault proof mechanism by 2023. Even if you don't understand this technology, the key point is: this core component was not launched on schedule in 2023, and it is a necessary part of removing the official control mechanism. The delay directly planted a huge隐患.

It wasn't until April 2025 that Coinbase finally announced the completion of this milestone. At that time, L2Beat rated Base as a Stage 1 Layer 2 network, defined as "basically decentralized, but still retaining an emergency control mechanism that the official can fully take over." Of course, stage classification itself carries some subjective criteria, and industry rating standards are continuously updated; the technical level achieved in April 2025 would now be classified as Stage 0 with full official control under the new standards. It is worth noting that multiple security incidents in recent years have confirmed that the control permissions claimed to be "only for emergency use" are being used more frequently by platforms, and the actual control power is far greater than what project teams initially claimed. Therefore, industry stage classification standards have been continuously tightened.

This is a common chaos in the Web3 industry: not just superficial "decentralization theater," but project parties also misuse backend control permissions originally intended for "security protection and user asset safeguarding" for other purposes, and in extreme cases, even directly steal user assets. Many protocols touted as decentralized have suffered huge losses because the team kept admin keys, which were leaked, leading to asset theft.

For years, this publication has adhered to a conservative evaluation standard: all centralized control permissions should be assessed under the worst-case scenario, assuming the operator is malicious, and strictly evaluating "whether the platform has the ability to take away all user assets." Past security incidents have continuously validated the rationality of this evaluation logic, and now more and more industry practitioners are beginning to agree with this view.

Back to Base's development主线: despite lagging progress and limited effects, the project did achieve some minor roadmap progress. But in February 2026, Coinbase announced it would completely abandon the original plan to rely on Optimism for decentralization, and instead build a fully Base-controlled tech stack. Before the adjustment, some of Base's admin permissions were jointly held by Coinbase and Optimism; after the adjustment, all control permissions were consolidated into two multi-signature wallets: the centralized security committee multi-sig and the centralized coordinator multi-sig. Coinbase, with its strong financial resources and significant industry influence, could already exert considerable influence on Optimism, and now it can completely control the individuals and small partner institutions behind the two multi-sig wallets.

At this point, Coinbase not only fell far behind the 2023 plan but also directly abandoned the entire roadmap without introducing any feasible alternative development plan. More importantly, the small portion of control that was briefly diverted to Optimism was fully reclaimed by Coinbase. A joint venture could have jointly custodied assets, and the cooperation structure between Coinbase and Optimism briefly achieved this, at least taking a small step toward the 2023 roadmap. But with the roadmap completely abandoned, Base can no longer provide any substantive basis for advancing decentralization. Various marketing claims do not equal actual progress; empty hype is not real construction.

In June 2026, Base suffered two network outages. During the repair, Coinbase directly modified the underlying code, rolled back the entire blockchain data, and forced all nodes on the network to update the fix package to resume operation. Three and a half years after launch, Base remains in a fully centralized Stage 0, where the platform can use control permissions to directly handle user assets at any time. The facts are clear.

A Centralized Distributed Database

The repair operations during the two outages fully exposed Base's essence: it is just an ordinary centralized distributed database. There are countless mature commercial solutions on the market: Oracle, SAP, and IBM all have highly stable commercial databases; MySQL can be deployed and used for free; major cloud providers also offer cloud-based distributed database services. As long as business transaction volume matches hardware capacity, distributed databases have long been a mature and reliable technology, only encountering performance bottlenecks when handling extremely large traffic.

Base's transaction volume is only a few hundred per second, a performance level equivalent to traditional systems from the 1980s and 1990s. Looking at industry reports from the internet bubble period 20 to 30 years ago, many traditional enterprises handled transaction volumes orders of magnitude higher than Base. This performance level predates Bitcoin and even the widespread adoption of smartphones; early online banking required using a computer web browser, manually checking HTTPS encryption identifiers, and then entering passwords—a very outdated technical level.

You can look up reports from 2001 about eBay's system failures in the late 1990s. We are not underestimating the difficulty of system operations; we personally experienced various technical limitations in the 1990s: back then, we could only read digital camera images via serial ports; when doing medical imaging work, a computer worth as much as a luxury car could not load dozens of 16-megapixel black-and-white images at once; now, the cheapest Samsung phone can easily store and smoothly open several times that amount of image files.

But this does not mean Base is solving old technical problems. If you want to achieve the performance of 1990s traditional servers in a permissionless, globally distributed decentralized network, the engineering difficulty might be extremely high, or it might not be difficult—but Base has not made any effort in this direction. Today's Base is just an inefficient, unstable, and poor-experience distributed database, while similar database technology has been fully mature for decades. Coinbase has grand visions for Base. In 2023 and 2024, the industry could still be tolerant and discuss whether regulatory standards should be relaxed for innovation; but by 2025, this rhetoric has long become tiresome.

Three and a half years after launch, Base is built on a blockchain, but this blockchain has not been used to create any new or original product logic. The entire system is still centrally operated by Coinbase from start to finish. The blockchain instead adds unnecessary operational difficulty, equivalent to actively choosing a "hard mode" to run a mature database technology, yet never achieving decentralization. Just because a company deliberately chooses a more complex and troublesome technical solution does not mean it deserves special regulatory treatment.

Why We Always Emphasize the Entity is Coinbase, Not Base

In the article, we frequently attribute control to Coinbase rather than Base. This statement is fully supported by facts. You can check Coinbase's official announcement blog; at the end of the article, the recruitment section reads:

Building the next generation of the internet is a shared endeavor. If you are interested in scaling, security, or promoting Base's decentralization, welcome to apply for our positions. Click here to view job openings.

Clicking the recruitment link leads to the Greenhouse recruitment platform, where all positions clearly indicate that hires belong to Coinbase as full-time employees or outsourced contractors. In the announcement's comment section, Coinbase full-time employees also uniformly refer to the Base team as "we." Base's official website user agreement and privacy policy are also filled with Coinbase entity identifiers.

Coinbase's external narrative is: Coinbase is only an incubator, and once the project achieves decentralization, Coinbase will not bear related legal responsibilities. But the reality is clear: the entire system is operated by Coinbase full-time employees; and a Stage 0 Layer 2 network has no decentralization, so Base is essentially a Coinbase business. This is the core reason why this article directly names Coinbase throughout.

Industry Prospects and Legal Controversies

The Web3 industry is often questioned on a core issue: many projects do not need blockchain at all, yet they forcibly incorporate chain technology. Base's initial explanation was that blockchain is the only technology with the potential to efficiently solve scaling issues, a view that remains controversial. However, after years of building with no substantial progress, three sharp questions must be put on the table:

• Did Coinbase's decentralized roadmap, released years ago, lack a complete and executable plan from the very beginning?
• Given the current stagnation of Base and the entire industry's Layer 2 networks, is it feasible to achieve full decentralization in the short term?
• How much tolerance should regulators grant to innovation, and when should compliance investigations be initiated?

Coinbase holds financial licenses in multiple countries and is legally prohibited from operating a fund transfer platform that does not require customer identification or is not subject to custodial supervision. This is both a mandatory obligation attached to various licenses and a uniform legal requirement applicable to all market participants. In the early stages of a new project, moderate regulatory tolerance is reasonable—software development inherently has vulnerabilities, and user asset security requires磨合, which the industry understands. However, no reasonable argument would suggest that a project with zero progress in decentralization for 40 months can indefinitely enjoy lenient regulatory policies.

As a publicly traded company on the US stock market, Coinbase is obligated to release truthful and accurate public information, especially regarding its business plans, development prospects, and shareholder interests. If Coinbase never had a concrete decentralization implementation plan from the start and only promoted vague "conceptual ideas" to the public, it would raise serious integrity issues: Did the company deliberately conceal its technical shortcomings and falsely claim to the market that it had the capability to implement decentralization?

Years of development with zero progress seem less like industry building and more like a deliberate consumption of regulatory tolerance. From February 2023 to August 2026, Base's decentralization rating has remained at Stage 0, with no positive breakthroughs. The development team indeed completed basic tasks such as coding and launching, and the platform has processed a large amount of user assets, physically "doing work"; but the so-called output consists only of continuous marketing from the team, with no substantive results on the core goal of decentralization.

Even if Base adds more features and more complex underlying mechanisms, it does not matter. The evaluation criterion has never been whether engineers find the development interesting or whether basic development work is completed. The core standard is: Can this system provide legal and practically valuable services that match Coinbase's publicly disclosed project plans?

As things stand, Coinbase's series of actions essentially attempt to package "we have never found a path to compliant decentralization" as "we are tackling major industry challenges and should be permanently exempt from regulatory constraints." This narrative was already questioned years ago and is now full of holes.

Corporate innovation deserves reasonable room for trial and error. We do not require that all project plans of listed companies be flawless and executed perfectly. However, when plans fail for years and the operating model is suspected of conducting fund custody and transfer services without a license, legal consequences must follow. Otherwise, financial regulatory rules will lose all binding force.