Coinbase CEO Brian Armstrong has drawn a line under the Base network's experiments with content coins. The executive directly stated that this strategy did not pay off, and the team shifted to a new development model earlier this year. As an analyst, I believe this admission is an important signal for the market: even the largest players are not immune to mistakes in the search for the "holy grail" of on-chain activity.
To recall, Base is a Layer 2 network on Ethereum, launched by Coinbase in 2023. Developers spent most of last year trying to ride popular on-chain trends. These experiments did attract new users, but for many participants, they resulted in serious financial losses. Among all the initiatives, four failed directions stand out.
Four Failed On-Chain Bets
The Base network actively promoted an app with content coins (Zora). Users could turn their social media posts into tokens and trade them freely. On the wave of hype, activity surged, but as practice showed, the project never gained a permanent and stable audience.
Creator coins became another controversial initiative. The network offered fans the chance to buy tokens tied to specific authors and fund special "creator indexes." In my opinion, many of these authors had highly questionable achievements. When prices began to fall, it was ordinary users who ended up in the red.
Team-backed tokens also failed to meet expectations. Initially, assets linked to former Coinbase CTO Balaji Srinivasan and Base creator Jesse Pollak generated a buzz, but then brought only disappointment to holders. Essentially, the same people systematically lost money on coins promoted by the team.
The socially-oriented Base app was promoted as a universal hub, but developers added features that users simply did not need. Armstrong later reformatted this product. Currently, the platform operates as a trading app with self-custodial storage, featuring all tokens from the network.
Armstrong Admits the Mistake
Armstrong directly responded to criticism and agreed that the era of content coins has come to an end.
"I agree with the first part and your opinion on content coins. The experiment did not pay off; we changed course at the beginning of the year. We were wrong, time to move on," he wrote.
The abandonment of the previous concept 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. The $1.4 billion drop occurred precisely during the period of disagreements over Base's new strategy. At the time of publication, the network's TVL reached $4.37 billion.
According to the executive, current resources are primarily 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, 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.
My analysis: 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 remains open. Armstrong has already offered to personally hear the opinions of all dissatisfied community members, but this may not be enough to restore its reputation. The market does not forgive systemic errors, especially when they hit the wallets of retail investors.