Ethereum Founder Buterin Defends Coinbase Amid Fierce Debate: Here’s Why

Ethereum co-founder Vitalik Buterin has waded immediately right into a fast-escalating dispute over the position and threat profile of Coinbase’s Layer-2 (L2) community, Base, arguing that critics are conflating core ideas and overlooking concrete ensures that defend customers on fashionable L2s. “Base is doing issues the appropriate manner: an L2 on prime of Ethereum, that makes use of its centralized options to supply stronger UX options, whereas nonetheless being tied into Ethereum’s decentralized base layer for safety,” Buterin wrote, including that L2s like Base “are non-custodial… not glorified servers that occur to submit hashes.”

Ethereum’s Buterin Clarifies L2 Security

Buterin’s post arrived after Coinbase’s chief authorized officer Paul Grewal pushed again on commentary likening L2 sequencers to “exchanges,” and Base creator Jesse Pollak revealed an in depth thread explaining what a sequencer really does. Pollak described Base’s sequencer as a system that “collects person transactions, orders them on a first-in/first-out foundation, computes the ensuing state modifications, and batches them to Ethereum’s L1 for remaining settlement that’s sooner and cheaper than transacting on L1.”

In his phrases, sequencers “do NOT act as ‘matching providers’ or engines like these in conventional exchanges… the sequencer ensures these transactions are executed in a constant, ordered method, nevertheless it doesn’t determine matches or management commerce logic. That’s as much as the code.”

The crux of the controversy is custody and management: if an L2 can re-order, censor, or halt, does that make it functionally just like a centralized middleman? Buterin’s reply is that the Ethereum base layer finally governs person funds and supplies the escape hatches that matter.

“Base doesn’t have custody over your funds, they can’t steal funds or cease you from withdrawing funds (that is a part of the L2beat stage 1 definition),” he wrote, pointing readers to L2BEAT’s taxonomy and to concrete examples of “force-exit” and anti-censorship pathways carried out on the L1 contract layer. He emphasised that these aren’t theoretical niceties: “There are concrete pathways carried out in sensible contract logic on Ethereum L1… that be sure that the L2 customers’ funds are finally managed by L1, they can’t be stolen or blocked by the L2 operator.”

Buterin additionally addressed a recurring level of confusion: the notion that L2BEAT is a few form of ideological gatekeeper somewhat than a scorecard of goal assurances. “Many individuals have been confused by latest cynicism and assume that issues like L2beat are a bizarre form of nerd-sharia compliance authority. This is NOT what’s going on. The safety that L2s present, that L2beat measures, displays concrete properties that defend you as a person from being rugged.”

To illustrate, he linked to a walkthrough of person withdrawals when an L2 shuts down, and to a censorship-resistance incident earlier this yr the place an L2’s design allowed transactions to bypass an uncooperative operator—examples meant to make the ensures tangible.

The “stage-1” designation, typically cited to critique Base’s present decentralization, was one other flashpoint Buterin tackled head-on. “Yes stage 1 implies that a safety council with a 75% vote can override the onchain code,” he conceded. “However, stage 1 additionally requires {that a} quorum-blocking (>=26%) portion of the council sits outdoors the org that’s managing the L1. Hence, the org can’t unilaterally censor or steal by way of a safety council vote, so they don’t seem to be a custodian.”

Base Is Eying ‘Stage 2’

The Ethereum co-founder once more pointed readers to his framework for when and the way initiatives ought to progress to “stage-2,” the place even a unanimous council can’t override functioning on-chain logic. The coverage implication is specific: the presence of an emergency-brake governance layer doesn’t, in itself, remodel an L2 right into a custodian underneath regular operation, offered minority independence and L1-enforced exits are actual.

For Base, Pollak sketched a roadmap that aligns with that trajectory. “We’ve progressed Base to stage 1 decentralization over the past 2 years and enabled permissionless block proposals. Today, we’re actively working in direction of stage 2 and investing in additional decentralizing block constructing. Still day one.” Framed this fashion, the talk just isn’t whether or not Base is an change—Pollak was blunt: “so no, @base isn’t an unlicensed securities change”—however how rapidly and credibly it could scale back governance and operator powers whereas preserving the UX benefits that made L2s well-liked.

Underneath the rhetoric are two technical assurances that decide whether or not customers are literally protected. First is inclusion: even when a sequencer refuses a transaction, L2s like Base expose direct submission routes via Ethereum L1, letting customers power their transactions into the rollup and inherit the censorship-resistance of the L1 validator set.

Second is exit: if an L2 halts or misbehaves, customers can provoke withdrawals enforced by L1 contracts—with out the operator’s cooperation. Buterin’s level is that these are “concrete properties,” and each L2BEAT’s framework and up to date real-world incidents exist to confirm that they work in follow.

The stakes are bigger than a single community. How regulators and market individuals interpret “sequencer,” “custody,” and “decentralization stage” will form the following section of Ethereum scaling.

Buterin’s intervention was, at core, an try and reset definitions to what the code ensures.“This is what we imply once we say that L2s are non-custodial, they’re extensions of ethereum… There are concrete pathways… that be sure that the L2 customers’ funds are finally managed by L1.”

Whether that reframing cools the fevered discourse—or accelerates Base’s push to stage-2—now rests on how convincingly these assurances are demonstrated in manufacturing and audited by impartial frameworks.

At press time, ETH traded at $4,193.