Ethereum Founder Vitalik Defends Coinbase’s New Blockchain Amid Controversy – What’s Going On?

What Happened

The defense came amid broader discussions about Ethereum’s economic sustainability and infrastructure development ahead of the December 3 Fusaka upgrade.

However, Stage 2 systems should only be activated once sufficient mathematical confidence in the underlying cryptographic systems is achieved.

Market Context

The dYdX v3 shutdown provided concrete evidence of Layer 2 escape mechanisms functioning as designed.

When the decentralized exchange ceased operations, users accessed over $70 million in trapped funds through StarkEx’s built-in “Escape Hatch” system, with $30 million successfully withdrawn using L2Beat’s open-source interface.

The escape process required users to submit three Ethereum transactions, each accompanied by a Merkle proof verifying their asset state.

Why It Matters

Recent incidents, including Sony’s Soneium censorship attempts and the dYdX v3 shutdown, have highlighted both the risks and protective mechanisms built into modern L2 architectures.

These real-world examples support Buterin’s argument that Layer 2 solutions represent genuine extensions of Ethereum rather than independent systems with custody risks.

Details

Ethereum co-founder Vitalik Buterin defended Coinbase’s Base blockchain against criticism, emphasizing that Layer 2 solutions provide genuine security guarantees through Ethereum’s base layer rather than operating as “glorified servers.”

His comments addressed growing confusion about L2Beat’s role as a security assessment platform and misconceptions about Layer 2 custody models.

Buterin clarified that Base maintains non-custodial properties where users retain ultimate control over their funds through smart contract logic on Ethereum’s main chain.

The intervention occurred as Layer 2 networks face scrutiny over centralized features while providing enhanced user experiences.

Meanwhile, Ethereum’s on-chain revenue fell 44% to $14.1 million in August despite ETH reaching new highs, which has raised questions about the network’s long-term economic model as Layer 2 adoption reduces base layer fee generation.

Real-World Proof: When Layer 2 Security Actually Works

While technically complex, the mechanism operated without requiring permission from dYdX operators, validating Buterin’s claims about Layer 2 non-custodial properties.

Similarly, Sony’s Soneium network showed censorship resistance when the company attempted to block “unapproved” tokens at the RPC level.

A developer bypassed the sequencer entirely by forcing transactions through Ethereum’s main chain, proving that OP Stack architecture prevents permanent censorship, regardless of operator intentions.

The incident destroyed early token positions worth thousands of dollars before the workaround emerged.

However, the successful bypass validated OP Stack’s design philosophy that forces all Layer 2 networks to inherit Ethereum’s core security properties, including transaction finality guarantees.

The concrete pathways implemented in smart contract logic have proven functional under stress conditions, including operator shutdowns and attempts at censorship.

Ethereum Seeks Sustainable Revenue Beyond Speculation

Notably, Buterin also highlighted L2 security, and his mathematical framework for Layer 2 security stages reveals why gradual progression from centralized control to full decentralization makes sense.

His analysis shows that Stage 1 rollups with 75% security council override requirements provide optimal security when proof systems remain unproven.

The security council model requires quorum-blocking minorities outside primary organizations to prevent unilateral censorship or fund theft.

This distributed governance approach strikes a balance between innovation speed and user protection during the maturation process of complex cryptographic systems.