It’s only a matter of time until each cryptocurrency exchange and fintech company runs its own blockchain, according to OP Labs, builder of Ethereum Overlay Protocol Optimism.
The logic is straightforward and simple, says OP Labs product manager Sam McElvale, who points to the ongoing success for Coinbase’s Layer-2 (L2) Network Base since its debut in 2023.
For starters, the base has accrued an incredible ecosystem of users and developers to support the hill, Mcetvale said. But the biggest no-brainer is how a system like base combined with Coinbases Bitcoin-supported loans allows sleeping crypto assets that are in custody can make money by renting them out, he added.
The base was built using Optimisms up stack, a software product that helps users develop LAG-2 blockchains that work with Ethereum but provides faster, cheaper transactions. McElvale said that Base’s success, it is the largest layer 2 with a number of measurements, including the total value locked, is an illustration of how the industry is likely to develop.
“I expect any crypto exchange and every fintech company to run their own blockchain for the next five years,” Mcingvale said in an interview. “If you own Bitcoin on Coinbase, on a button, they take the Bitcoin, move it to the base, which then allows you to borrow USDC from it. And now you can go and do what you want with that USDC.”
Both optimism and rival arbitum assume that a transaction is valid – and thus “optimistic” – with potential fraud discovered through permitted troubles. Optimistic Rollups increases the flow of Ethereum’s base layers by processing transactions off-chain to reduce the calculation load that distributes security by publishing transaction results on the underlying or LAG-1, blockchain. Another approach is to use zero-knowledge evidence to create rollups that publish cryptographic evidence of validity of off-chain transactions.
McElvale, who was instrumental in building the custody company at Coinbase, makes it an additional point that simply keeping crypto in cold storage on a platform works relatively expensive.
“Traditionally, there has been a cost to custody a lot of crypto due to all security consequences,” said McElvale. “Unlike custody where you don’t really pay for it, these shares are lent and things happen to them under the cap. Crypto is still much more beginning, but it moves in that direction.”
Obviously, there has been a bit of basic abuse that happens in cryptoma. Global Exchange Kraken has introduced Ink, a LAG-2 blockchain that also uses optimism, like Bybit, Bitget and OKX. Fintech companies like Robinhood, for example, also examine their own L2s associated with Ethereum.
Optimism’s modular vision of an interoperable “Superchain” would ideally allow users to go from one blockchain to another, just as their browser moves from one site to another, Mcingvale said.
“Early adopters in Crypto were far more willing to cope with some kind of crappy ux,” McElvale said. “People waited 12 seconds for something to confirm and paid $ 50 because it was this new technology that they explored probably related to being online in the mid -90s. As if it was painful.”
