Because the siren song of DeFi is truly beautiful, right? The fiscal emancipation, no-boundaries exchange of currency, disruptive creative technologies… Coinbase’s splashy new Layer 2, Base, dangled that carrot, though, claiming to be the one to onboard the next billion users to Web3. In doing so, did they unknowingly open the floodgates to a digital den of robbers?
Innovation Or Invitation to Exploit?
Let's be frank. Permissionless systems may be attractive in theory, but they are dangerous by design. No gatekeepers mean no safeguards. It's the Wild West, but instead of six-shooters, we're talking about smart contracts that can drain your wallet faster than you can say "impermanent loss."
The "Base is for everyone" memecoin escapade would be another strong example. Even a celebratory tweet from Base’s official account seemed innocuous enough. It soon turned into the launching ground for a pump-and-dump scheme, milking thousands of users with still-sky-high losses. All of a sudden, a 17 million market cap poofed into thin air by almost 90% in 20 minutes. That's not democratization; that's devastation.
Was it Coinbase's fault? Technically, no. They’ll try to convince you that that token wasn’t official, that Zora Create makes these things automatically. About the author Jesse Pollak is an advocate for tokenized content and the democratization of ownership. Let's connect some dots here. Coinbase is a regulated entity. They have a responsibility to their users, a responsibility that goes beyond just delivering the infrastructure.
Decentralization Doesn't Mean Abdicating Responsibility
Imagine a bank dramatically flinging open its doors. It’s like allowing kids to open lemonade stands on street corners, while knowing that some of those lemonade stands are really just front operations for money laundering schemes. Would you hold the bank responsible when consumers are defrauded? Of course you would!
Coinbase, through association, gives credibility to projects on Base. When their official account tweets "Base is for everyone," it's interpreted as an implicit endorsement, especially by retail investors who are new to the space and don't understand the nuances of memecoin mania.
This isn't about stifling innovation. This is about protecting users. Our goal is to ensure that Base doesn’t become a haven for rug pulls and other scams. In doing so, we shield first-time participants and preserve the good name of the larger Web3 ecosystem.
How Can We Fix This Mess?
The solution isn't simple, but here are a few concrete steps Coinbase and other Web3 infrastructure providers can take:
- Enhanced Due Diligence: Before promoting or highlighting projects on their platforms, conduct thorough due diligence to identify potential red flags.
- Clearer Disclaimers: Make it abundantly clear that user-generated content is not endorsed by Coinbase and carries significant risk. Think cigarette pack warnings, but for DeFi.
- User Education: Invest in educational resources that teach users how to identify scams, understand tokenomics, and manage their risk.
- Community-Driven Moderation: Implement community-driven moderation systems to flag suspicious activity and provide warnings to other users.
- Transaction Monitoring: Implement transaction monitoring tools to detect and flag potential pump-and-dump schemes.
| Action | Benefit |
|---|---|
| Enhanced Due Diligence | Reduces the likelihood of promoting fraudulent projects. |
| Clearer Disclaimers | Informs users of the risks associated with unaudited projects. |
| User Education | Empowers users to make informed decisions and avoid scams. |
| Community-Driven Moderation | Leverages the collective intelligence of the community to identify and flag suspicious activity. |
| Transaction Monitoring | Detects and flags potential pump-and-dump schemes, allowing for quicker intervention. |
This is not an attempt to get Coinbase to start acting like the crypto police. Along with such influence comes responsibility and the need for them to realize that authority gives them power. Now it’s their turn to take concrete action to protect their users.
It’s not mere dollars at stake, either. It’s the collateral damage to our public reputation and the overall corrosion of faith in the whole industry.
Whether you’re a fan of it or not, Web3 promises an abundant new reality full of financial empowerment. Let’s stop making it a happy hunting ground for criminals and con artists. If we don’t, we’ll be left with nothing more than shattered dreams and drained bank accounts.
So, what can you do? Demand accountability. Show Coinbase that you want them to be accountable for the projects created on Base. Encourage initiatives that foster transparency and security across the entire Web3 ecosystem. Discuss the risks of crypto investing with your friends and family.
The future of Web3 depends on it.
