Base Team Dismisses Allegations of ETH Sales, Reaffirms Ethereum Commitment

• Base Team said it would continue to support the Ethereum ecosystem amid controversy over sequencer fee handling.
• Andre Cronje shows concern about Layer 2s in general and how they cause Eth inflation.

A representative from Base, coinbase Layer 2 scaling solution, has dismissed ongoing rumours that its sequencer, it has been selling off its Ether (ETH). The network firmly rejected the claims regarding any Ethereum transactions, emphasizing its dedication to the ecosystem.

During the course of the weekend, a post circulated on x claiming that Base Team has been sending all its sequencer fees to Coinbase since it launched. This post raised concerns about Base transparency and dedication to Eth network. However, Kabir Sadaranganithe company strategist replied to the post claiming that the accusations of lack of transparency and potential ETH sales were not true. 

ETH Sales Allegations: Base Team Member Response 

On Saturday 8th, Santisa the CIO of Liquidity Cap claimed that Base Team has been sending sequencer fees to Coinbase since it launched. He said “We don’t know if they sold, but we do know they didn’t deploy those funds on Base or keep them on-chain”

Santisa’s statement sparked concerns for Sonic Labs founder Andre Cronje’s about centralized sequencers in Layer 2 networks, which create ways to make more money which doesn’t fully align with Ethereum’s core values. What he tried to say is a large portion of fees generated from ETH is either kept or sold, lowering fee income and decreasing ETH burning on the mainnet and by doing this, it affects ETH’s overall supply.

Furthermore, Sonic the assistant ran an analysis which showed that there is a almost a 90% profit ($100m+) margin on Base L2 sequencer and 100% of that $ETH was sent from Base to Ethereum and then to Coinbase exchange.

In all of this, Kabir replied by explaining  that Base relies on offchain custody for protection and auditing purposes, which is why assets are transferred to Coinbase. He emphasized that the Ethereum Layer 2 network maximizes earnings and expenditures in ETH, utilizing it for Layer 1 expenses and funding initiatives. He also added that Base will continue growing Ethereum. “We’re investing all of our earnings and resources into doing this and we have gone from zero to millions of new people onchain in 1.5 years”.

Sadarangani on the other hand, supported  Base’s financial practice, emphasizing  that its profits are reinvested into Ethereum’s ecosystem rather than being sold. He noted that Coinbase and Base collectively own over 100,000 ETH, making them the largest public holders, surpassing any Layer 2 DAO or development group.

Sadarangani said “We earn and spend as much as we can in ETH. We spend ETH on L1 costs, we denominate all of our external grants in ETH, our goal is to continue to move more of Base’s costs to function in ETH, and we are working hard to move more of our operations on chain”. 

Related | Lost Bitcoin in Newport Landfill: Could AI Technology Save a $768 Million Fortune?