Neutrality Principles: What Does This Mean For Base Network?

The most recent Ethereum layer-2 to break headlines in the industry is, undeniably, Base Network. Built using the OP stack, Base has blasted into the ecosystem with leading stories around memecoins, and booming decentralized-social applications, as well as noteworthy protocol hacks and the now-infamous $BALD rug pull.

“We’ve incubated Base inside of Coinbase as part of the company’s long-standing plan to create an open financial system that increases economic freedom globally. A low-cost and easy-to-use platform will help to create that system and bring the next billion users onchain. Base is that platform, and a plan is already underway to further decentralize over time.” - Coinbase

That said, Base was developed and launched by none other than industry-leading centralized exchange Coinbase. Being a centralized and for-profit entity, concerns may arise around Base’s independence and neutrality as it continues to grow and excite the cryptocurrency community.

In its blog post on August 24, Coinbase addresses the issue, lending further clarity to the relationship between the exchange and the booming L2. Furthermore, the blog goes on to detail five principles, jointly upheld by both the Base and Coinbase teams, adherence to which should ensure the ongoing decentralization and neutrality of the Base Network. 

Base’s Neutrality Principles

According to Coinbase’s blog, Base Network’s neutrality principles are as follows:

• Neutrality Principle #1: The Law of Chains. Coinbase is committed to uphold the “Law of Chains” as the paramount neutrality principle for Base. The Law of Chains establishes a common set of standards for all OP Stack blockchains and ensures both builders and users can access the neutral and open blockspace of Base. As the second core developer of the OP Stack, the Base team collaborated closely with Optimism on defining the initial draft of the Law of Chains and will continue to work closely with the Optimism Collective to evolve this principle as we receive community feedback.
• Neutrality Principle #2: Your Keys, Your Crypto. Coinbase does not custody or control the crypto that users bring to the Base network. Like on Ethereum mainnet, possession of a crypto asset depends on holding a valid private key. Users—not Coinbase—are responsible for their actions on the network.
• Neutrality Principle #3: Transaction Ordering is a Free Market. Coinbase does not influence, discriminate, or give preference for the ordering of transactions that occur on Base. Like the post office, the Base network delivers messages based only on time of receipt and optional priority fees set by users. No Coinbase product, customer, or partner gets special rights to jump the queue.
• Neutrality Principle #4: Equal Access to Information. Coinbase will not misuse any non-public information gleaned from Base. Private transaction data (including any insights that the Base team has access to by virtue of operating the sequencer, such as transaction ordering) is not used for marketing or any other business purposes. Coinbase and its partners will rely on the same publicly available data as everyone else.
• Neutrality Principle #5: Freedom to Exit. Coinbase does not impose limitations on withdrawals from Base. A user who is unsatisfied with Base is free to withdraw their assets at will and without any penalty. Coinbase does not use exit barriers to defend any subpar experience or policy.
  

Takeaways

Coinbase’s five principles for Base Network almost entirely typify the blockchain ethos and vision. Elements such as open-access, absolute self-custody, and equality of information are, in many respects, the foundations upon which a decentralized blockchain-driven future will be built.

However, these principles also address concerns relating to this case specifically. For instance, Coinbase/Base’s promise not to leverage unfair insights drawn from its running of the network’s sequencer - one of few parts of the L2 stack that remains largely centralized in nature.

Overall, Coinbase’s publishing of these core principles is encouraging, and will likely only serve to increase both trust-in and excitement-around, this hot new layer-2 network.