Coinbase Increases USDC Reserves as TVL Surpasses $1 Billion

Coinbase plans to store more USDC on its Layer 2 solution Base, aiming for lower fees and faster transaction times.

Man sitting on Coinbase BASE, in natural habitat.
Created by Kornelija Poderskytė from DailyCoin
  • Coinbase has begun storing more USDC on Base to enable faster transactions and lower fees.
  • The USDC landscape has changed as Circle has halted issuance on the Tron blockchain.
  • Binance has delisted Tron-based USDC deposits and withdrawals, although USDC trading remains unaffected.

In a move aimed at streamlining customer fund management, Coinbase announced plans to increase its storage of USDC, a popular stablecoin, on Base. This Ethereum Layer 2 solution, built by Coinbase and powered by the OP Stack, promises significant advantages including lower fees, faster transaction times, and enhanced security.

Coinbase Leverages Base Layer 2 

Max Branzburg, Coinbase’s Vice President and Head of Consumer Products, revealed the decision, highlighting user benefits. He encouraged other companies to adopt a similar approach and transition their business on-chain.

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"This enables us to manage and secure customer funds with lower fees and faster settlement times, with no impact to the Coinbase user experience," he stated in a recent post.

He further encouraged other companies to adopt a similar approach and transition their business on-chain. The crypto community has responded positively to the announcement. Jesse Pollak, a contributor to Base, expressed his support and excitement for Coinbase’s move. 

He described the decision as “based” and pledged continued assistance for Coinbase’s on-chain endeavors. This development comes amidst a period of rapid growth for Base. According to Defi Llama, user deposits on the platform have surpassed a staggering $1 billion, doubling since the beginning of March. 

This surge is largely attributed to the decentralized exchange Aerodrome, which has contributed a significant portion of the locked value since its rise in February. Additionally, Base has witnessed a notable increase in transaction counts, surpassing other optimistic rollup solutions in growth.

Circle Announces Changes to Token Creation

Meanwhile, the landscape surrounding USDC is undergoing further changes. Boston-based Circle, the firm behind USDC, has announced plans to discontinue the creation of USDC tokens on the Tron blockchain. 

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Citing a focus on transparency, trustworthiness, and safety, Circle stated that the decision stemmed from a company-wide evaluation. This move was followed by a similar announcement by Binance, which will no longer facilitate Tron-based USDC deposits and withdrawals.

Importantly, Binance emphasized that USDC trading remains unaffected on its platform, and deposits and withdrawals through other supported networks will continue as usual. With a current circulation of approximately $32.1 billion, USDC remains the second-largest stablecoin globally after Tether and ranks as the seventh-largest cryptocurrency overall. 

While most USDC tokens reside on the Ethereum blockchain, Coinbase’s decision to leverage Base for its USDC reserves signifies a potential shift towards a more efficient and secure future for the stablecoin.

On the Flipside

  • While Base promises security, Layer 2 solutions inherently introduce additional security risks compared to the base layer (Ethereum in this case).
  • Coinbase storing a significant amount of USDC on Base, a network they built, raises centralization concerns.

Why This Matters

Coinbase’s move to store USDC on Base, an Ethereum Layer 2 solution, could set a precedent for wider adoption of Layer 2 technologies. This shift can potentially improve transaction speeds, reduce fees, and enhance security for USDC and other cryptocurrencies within the Ethereum ecosystem.

Curious about the recent boom in Coinbase’s Base metrics? This article explores the reasons behind the surge in active users and TVL on the network. Read more here:

Here’s Why Coinbase’s Base Metrics Are Booming Post-Dencun

Wondering why Coinbase isn’t offering XRP futures trading? This article dives into the reasons behind this decision and the XRP community’s reaction. Read more here:

Coinbase Snubs XRP for Futures Trading: Why Was It Left Out?

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Kyle Calvert

Kyle Calvert is a cryptocurrency news reporter for DailyCoin, specializing in Ripple, stablecoins, as well as price and market analysis news. Before his current role, Kyle worked as a student researcher in the cryptocurrency industry, gaining an understanding of how digital currencies work, their potential uses, and their impact on the economy and society. He completed his Masters and Honors degrees in Blockchain Technology within Esports and Business and Event management within Esports at Staffordshire University.