A fresh controversy is marinating, this time over Base, Coinbase’s Layer 2 network. All of this would follow a new memecoin dubbed “Base is for everyone,” which quickly inflated in value before crashing soon after. The token debut, combined with Base’s ERC-20 faucet native to their new Bridgeless world, produced jaw-dropping numbers. It then rocketed to a market capitalization of over $17 million in less than an hour, only to drop almost 90% in value during just 20 minutes. Coinbase critics have been quick to accuse Coinbase and the Base project of bad faith with this strike. They especially go after the platform for allegedly providing validation to speculative memecoins.
This incident raises questions about the safety and transparency of Base, a platform positioned as user-friendly and accessible to the masses. Concerns are now intensifying regarding the concentration of token ownership and the potential for market manipulation within the Base ecosystem. Coinbase has tried to be explicit about its agenda with the tokens a connected wallet would receive. This single incident has smeared Base’s reputation and sparked intra-crypto-community debate far and wide.
The Rise and Fall of "Base is for everyone"
Base, Coinbase’s new Layer 2 solution, is designed to deliver a scalable, cost-efficient environment for decentralized applications. Jesse Pollak, the head of the Base project at Coinbase, is leading the effort to make the platform easy enough for the average person to use it. Their aim is to inspire global blockchain adoption. Possibly the most interesting feature of Base is how easily it integrates with Zora. That means creators can easily generate and tokenize more immersive content as NFTs with the “Create” format. This back-end system automatically generates a special token for the creator each time she mints a new post.
The “Base is for everybody” memecoin emerged from this ecosystem. Released initially on Zora, the token took off almost immediately, propelled by a wave of speculation and excitement. As such, it began trading extremely actively on the Base network just minutes after launch. Within days, a rush of investors piled on, enthusiastic to ride the wave of the newest memecoin mania. The demand sent the price through the roof, catapulting the market capitalization above $17 million in an almost staggering 24 hours.
The meteoric rise also had an equally meteoric fall. The worth of "Base is for all" exploded, only to crash down like a house of cards. In under 20 minutes, it dropped almost 90%. Its market capitalization collapsed to under $2 million, decimating most investors with early or otherwise opportunistic positions. This volatility served as a sobering reminder of the very real risks associated with memecoins and the potential for life-changing losses.
Controversy and Criticism
Adding insult to injury, one particular wallet address associated with Base was gifted 10 million of these tokens. This value equals 1% of the overall supply. The community saw from that data that the top three wallets control a staggering 47% of the total token supply. Here’s what that looks like with the most concentrated distribution. This caused concern for what could potentially be insider activity. It illustrated the token’s vulnerability to manipulation by a small group of holders.
Coinbase has walked back its initial statement since then, specifically stating that the tokens the Base-linked wallet holds would not end up on Base. The news comes after Sweetgreen in June announced that it wouldn’t sell the tokens. In place of rewards, it will instead route all trading fees accrued from the tokens back into funding Base’s developer community.
We won’t sell it. We will redirect any value to funding public goods on Base. - Coinbase
This action has not totally silenced the criticism. Now, some of the most prominent KOLs (Key Opinion Leaders) in the crypto space are literally sounding the alarm. They claim that Coinbase and Base are irresponsibly marketing a highly speculative memecoin.
The Broader Implications for Base
The "Base is for everyone" incident raises serious questions about the due diligence and risk management practices within the Base ecosystem. The platform is designed to be open and easy to access. It also needs to take strong proactive steps to prevent users from being victimized by ugly, dangerous or manipulative projects. Whether it’s a joke or a serious investment, creating and launching memecoins on Base has never been so easy. This simplicity combined with the potential for concentrated ownership creates an environment highly conducive to exploitation.
The incident further demonstrates the difficulty of promoting innovation while developing appropriate regulation. This is a key issue with government oversight in the decentralized finance (DeFi) arena. If platforms like Base really want to empower their users and help creativity flourish, they need to be rigorous about preventing their systems from being used for nefarious ends. Striking the appropriate balance between freedom and security will be vital to the long-term health of the DeFi ecosystem.
Additionally, this event highlights the critical need for investor education and responsible trading practices. Memecoins are, for one, extremely speculative and risky endeavors in and of themselves. Investors should apply lots of common sense before jumping into the deep end on any crypto. Do your due diligence, particularly on cryptos that have little practical use or a checkered past.
