Ethereum co‑founder Vitalik Buterin has publicly praised Coinbase’s Layer 2 network Base, describing it as an example of how scaling solutions can balance decentralization with usability. His comments come during an industry debate about whether centralized transaction sequencing in L2s resembles the operations of an exchange.
Buterin: Base shows how L2s can remain non‑custodial
On Sept. 23, 2025, Buterin posted on X that Base represents “doing things the right way: an L2 on top of Ethereum that uses its centralized features to provide stronger UX features while still being tied into Ethereum’s decentralized base layer for security.”
He emphasized that Base, unlike custodial services or exchanges, cannot seize or restrict user funds:
“They cannot steal funds or stop you from withdrawing funds. This is part of the L2Beat Stage 1 definition,” he wrote.
Stage 1, defined by analytics platform L2Beat, requires that even if a security council can intervene in code, enough members must be independent of the L2 operator to prevent unilateral control over assets. Buterin argued that this ensures withdrawals remain governed by Ethereum’s Layer 1 logic, making L2s extensions of Ethereum rather than dependent intermediaries.
🚨 Major shakeup in Ethereum’s Layer 2 ecosystem: dYdX v3, a long-standing decentralized exchange, has shut down, leaving over $70M in user funds not withdrawn.
— L2BEAT 💗 (@l2beat) November 5, 2024
What happens to assets on an L2 when it stops, and what role does L2BEAT play? 🧵👇
Regulatory questions about sequencers
Buterin’s defense came against a backdrop of rising scrutiny. Earlier in September, SEC Commissioner Hester Peirce raised concerns on a podcast that L2 sequencers, which control how transactions are ordered, could resemble exchanges if dominated by a single entity.
“If you have a transaction matching mechanism that is effectively controlled by a single entity managing all its elements, then it is much more like an exchange, and we will have to consider this fact,” Peirce said on Sept. 7, while adding that if the underlying assets are not securities, “we don’t have a lot to say about it.”
Many L2s, including Base, rely on centralized sequencers today to keep fees low and improve user experience.
Coinbase responds: L2s are infrastructure, not exchanges
Coinbase’s chief legal officer, Paul Grewal, challenged the notion that L2 sequencers should be treated as trading venues. In a series of posts on Sept. 23, he said equating sequencers to exchanges is “spreading FUD.”
“L2s are general‑purpose blockchains that operate as infrastructure,” Grewal wrote, comparing their role to Amazon Web Services, which runs code for many apps but is not itself an exchange.
He argued that applications such as decentralized exchanges built on Base contain the matching logic, while the sequencer merely orders transactions and submits them to Ethereum for settlement.
Jesse Pollak: sequencers are traffic controllers, not matching engines
Base cofounder Jesse Pollak expanded on that point, explaining that Base’s sequencer processes transactions on a first‑in, first‑out basis before batching them to Ethereum.
“It’s like a traffic controller ensuring smooth flow through a high‑priority lane,” Pollak wrote.
He stressed that sequencers do not decide trade matches, those occur in application smart contracts. Users can also bypass the Base sequencer entirely by transacting directly on Ethereum, preserving decentralization.
Pollak added that Base has progressed to Stage 1 decentralization and is working toward Stage 2 by decentralizing block building further.
Base adoption surges
Buterin’s praise coincides with rapid adoption for Base. According to L2Beat data, the network processes around 160 transactions per second, roughly 360 million transactions in the past month. Its total value locked (TVL) is nearing $15 billion, second only to Arbitrum’s $20 billion.
As Coinbase’s layer‑2 solution, Base benefits from the branding and resources of the $85 billion U.S. exchange, accelerating uptake among developers and users.
Outlook
Buterin’s comments, combined with Coinbase’s legal defense and technical clarifications, frame Base as a benchmark for next‑generation scaling networks. Still, regulatory uncertainty remains over how L2s might be classified, particularly if centralized sequencers are deemed to resemble exchange operators.
For now, industry leaders stress that Base’s design ensures Ethereum L1 ultimately secures user funds, allowing it to deliver speed and usability without undermining decentralization.
Disclosure & methodology: This report is based on publicly available primary sources, including direct statements from Vitalik Buterin, SEC Commissioner Hester Peirce, Coinbase CLO Paul Grewal, and Base cofounder Jesse Pollak, as well as blockchain data from L2Beat. No conflicts of interest related to this coverage exist. This content is not investment advice.
Roman Zaika
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