Coinbase, a well-known cryptocurrency trading company, believes the four “critical” innovations should be implemented on Base, a recently established layer-2 network. Flatcoins, an on-chain reputation system, an on-chain limit order book exchange, and tools that make the DeFi ecosystem safer make up the other three of the four “critical” Innovations.
Coinbase’s Four Critical Innovations
The four “critical” innovations were introduced by Coinbase on March 24. They surfaced around a month after Coinbase launched Base, a network that is protected by Ethereum and powered by a different layer-2 network called Optimist.
Coinbase has emphasized the significance of creating an inflation-tracking stablecoin to counteract central banks’ bad monetary policy decisions in light of the current banking crisis. They have said that “flat coins,” which are stablecoins that track the rate of inflation, are what they are most interested in.
It’s also important to remember that “flat coins” are designed to give customers stable purchasing power and resilience against the economic unpredictability brought on by the outdated financial system. Moreover, Coinbase has stated that they are open to additional concepts that “fill the vacuum” between fiat-pegged stablecoins and unstable cryptocurrencies.
On-Chain Reputation System
Coinbase has also urged the developers to pay attention to the developing on-chain reputation system, which is meant to play a “critical role” in establishing “on-chain trust” between users. This system may include a credit score or a ranking system to verify that certain requirements are met before an on-chain identity may engage with a decentralized finance application.
According to Coinbase, this reputation system is intended to resemble a FICO or Google page rank type score on ENS names, ratings/reviews for merchants, and other factors that aid in the development of trust on-chain.
On-Chain Limit Order Book
Coinbase then highlighted that by utilizing on-chain technology, they will be able to provide professional traders and institutions with a new trading venue in which to execute trading methods that they are already familiar with in the old financial system.
They went on to say that Base’s high throughput opens up considerable new potential for building new mechanisms for spot trading, limit orders, and other applications. Builders, on the other hand, can be used as an open-source toolkit like OP Stack to build L3s, which can offer more speed and control, potentially enabling even deeper liquidity, which is still accessible via L2.
Safer DeFi Ecosystem
Coinbase has also remained committed to making the DeFi ecosystem more secure for users and developers by enabling solutions that protect against smart contract code vulnerabilities and protocol logic mistakes. They went on to say that self-service security testing tools and enhanced auditor services could aid in the mitigation of threat prevention, circuit breakers, and incident response systems.