Coinbase CEO Brian Armstrong has officially acknowledged that the development strategy for the second-layer network Base, based on promoting content coins, proved to be a mistake. In a recent statement, he drew a line under this experiment, noting that the team had already shifted to an alternative development model earlier this year.
As a reminder, Base is an L2 solution built on Ethereum, launched by Coinbase in 2023. For most of last year, developers actively tried to ride the wave of popularity of on-chain trends related to content tokenization. These initiatives did attract new users, but for many participants, they resulted in serious financial losses. Four key areas deserve special attention, which, in my opinion, became the main catalysts for disappointment.
Four Failed On-Chain Bets
For over a year, Base actively supported the Zora application, which allowed turning social media posts into tokens and freely trading them. Amid the hype around token issuance, network activity surged. However, as I have repeatedly noted in my analyses, the project never formed a permanent and stable audience—it was only temporary euphoria.
Creator coins became another controversial initiative. Fans were offered to buy tokens tied to specific authors and fund creator content indices. Critics rightly pointed out the questionable achievements of some authors, and when prices collapsed, it was ordinary users who ended up at a loss.
Team-backed tokens, tied to former Coinbase CTO Balaji Srinivasan and Base creator Jesse Pollak, initially generated excitement. However, as expected, these assets brought only disappointment to their holders. Essentially, the same people systematically lost money on coins promoted by the team itself.
The socially-oriented Base application was promoted by Coinbase as a universal hub. Contrary to expectations, developers added features that turned out to be completely unnecessary for users. Later, Armstrong reformatted the product, and now the platform operates as a trading application with self-custodial storage, featuring all network tokens.
Acknowledgment of the Mistake and Change of Course
Armstrong directly responded to criticism, agreeing that the era of content coins has come to an end. He stated that the experiment did not pay off and that the course was changed earlier this year. This acknowledgment coincided with a sharp decline in network activity: the total value locked (TVL) in Base fell from approximately $5.3 billion in January to $3.9 billion by mid-February. At the time of publication, the network's TVL stands at $4.37 billion.
According to the CEO, main resources are now directed toward developing trading. Payments and the artificial intelligence sector are taking a back seat. Armstrong denies that Base is trying to carve out a niche for AI agents. However, as I believe, this focus did not protect the core business from a downturn: Coinbase's revenue for the last quarter fell by 31% to $1.41 billion due to a 37% decline in spot trading.
Whether the new bet on trading will prove successful remains to be seen. The question of whether the platform can regain the trust of affected users is still open. Armstrong has already offered to personally listen to the opinions of all dissatisfied community members, which, in my view, is a correct but belated step.
Expert opinion: Acknowledging mistakes is the first step toward restoring trust, but it does not erase the financial consequences for thousands of users. The strategy of "chasing hype" rarely leads to sustainable growth, and Base is a vivid example of this. Now, the team must prove that the new focus on trading is not another experiment but a well-thought-out long-term strategy.