- Base sends sequencer fees to Coinbase, citing security and audit needs.
- Critics question transparency and Ethereum alignment.
Base, Coinbase’s Ethereum Layer 2 network, is facing scrutiny for transferring its sequencer fee earnings to Coinbase. Critics argue the move lacks transparency and raises questions about fund usage.
Santisa, Lucidity’s chief investment officer, first flagged the issue on X. He shared Etherscan data showing regular ETH transfers from the “Base sequencer” wallet to Coinbase. The most recent transaction involved 240 ETH. He noted that Base had sent nearly all its sequencer fees to Coinbase since its launch.
Sequencer fees come from transaction processing on Base. These funds typically support network maintenance and development. However, blockchain figures like Andre Cronje criticized Base’s approach. He questioned how Base aligns with Ethereum when it redirects revenue to Coinbase instead of keeping it on-chain.
Cronje also highlighted Base’s revenue versus costs. He noted that the network generated $120 million in fees but paid only $10 million for Ethereum’s security and data availability. He argued that most of Base’s profits were not reinvested into Ethereum’s ecosystem.
Base Dismisses ETH Sale Claims
“We earn and spend as much as we can in ETH,” Sadarangani wrote on X. He stated that the network pays Ethereum Layer 1 fees in ETH and denominates external grants in ETH. He assured that the network aims to increase on-chain operations over time.
Concerns over ETH sales surfaced as well. Some speculated that Base may have liquidated its holdings. Sonic The Assistant pointed to Coinbase’s financial reports. He noted that despite generating over $100 million in fees, Coinbase’s ETH holdings had increased by only 772 ETH.
Sadarangani denied any significant ETH sales. He reiterated that Coinbase and Base hold over 100,000 ETH, making them the largest public company holders of ETH. He stressed that it remains committed to the Ethereum ecosystem.
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