Base Team Rejects Reports of ETH Sales by Coinbase’s Sequencer

Base Team Member Denies Allegations That Coinbase Is Liquidating ETH Earned from Sequencer Fees

A team member from Base has responded to recent allegations suggesting that Coinbase, as the blockchain’s exclusive sequencer, has been selling ETH accumulated through transaction fees.

Kabir.base.eth, a contributor to the Layer 2 network, took to X on Sunday to refute claims that Coinbase had been offloading ether (ETH) gained from Base’s operations. He clarified that instead of selling the asset, Coinbase holds substantial ETH reserves, which have reached a value of over $300 million, more than double the amount earned by Base since it went live.

“The reality is that Coinbase holds well over 100,000 ETH, which amounts to over $300 million, as part of Base’s operational model,” Kabir stated in his post.

He explained that while the platform does transfer ETH to Coinbase for secure storage and management purposes, this does not signify any liquidation of the digital asset. Kabir further emphasized that ETH is primarily used for transaction fees, protocol incentives, and to support costs on Layer 1, ensuring the health of the network.

The statement was issued in response to allegations by a user known as Santisa, who had claimed that Coinbase was selling ETH collected from Base’s sequencer activities.

Base, which currently operates with Coinbase as its only sequencer, processes transactions and collects ETH as fees, a system that has drawn attention within the Ethereum community. Some have expressed concern over the impact of centralized entities like Coinbase on the decentralized nature of the ecosystem.

In addition to the refutation, Andre Cronje, founder of Sonic Labs, criticized the role of Layer 2 networks in Ethereum’s current inflationary trend, arguing that such platforms are exacerbating the inflation issue by retaining or liquidating ETH rather than fully supporting Ethereum’s deflationary mechanics.

Cronje noted on X, “The issue with Layer 2s is that they keep or sell ETH, which adds to Ethereum’s inflation.” He called for these networks to focus on improving scalability while maintaining Ethereum’s long-term value proposition.

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