Conversation with Coinbase Protocol Director: How is Base, as a highly anticipated new Layer2, building its ecosystem step by step?

Coinbase Protocol Director on Base's Ecosystem Development

Original: “Building Base: Coinbase Engineer Jesse Pollak on Ecosystem Growth” by Medha Kothari

Translated by MarsBit, MK

I recently interviewed Jesse Pollak, the protocol lead at Coinbase, who is leading the company’s latest incubation project, an open Ethereum layer 2 network called Base.

At this Variant Network event, leaders from our investment portfolio discussed everything from Jesse’s beginnings as an engineer at Coinbase to the technical considerations around using the OP stack that underpins Base’s open-source framework. But our conversation always came back to the topic of growth.

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Below is the video of our conversation, along with my understanding of some of Jesse’s most important points about building engineering teams, expanding crypto companies, and growing the web3 movement.

Scaling is a job in itself

When Jesse joined Coinbase as an engineer in 2017, he managed a team of four people. Over the next half-decade, that team grew to 200 people, as Coinbase also grew to a Fortune 500-level scale.

But more hands doesn’t necessarily make a manager’s job easier. In fact, it added a lot of work for him. “In those periods of really rapid growth,” Jesse said, “it’s both a people challenge, because we need to figure out how to get people in and make them successful, and then it’s also a technical challenge: How do we get more users onboarded and keep the site running? That’s an important part of my job.”

Ordered growth, not rapid growth

While Coinbase chose the path of rapid growth, Jesse said it’s usually better to take a slower approach: “There’s always the temptation to grow numbers really quickly, but almost always it’s a bad idea to grow your numbers too quickly.”

Instead, he said, “Don’t grow until you have to” — and then do it as “orderly as possible from a people perspective.” His rule of thumb is to avoid doubling in size within a year unless you’re starting from single-digit employee numbers.

And don’t just consider growth from a numbers perspective. It also involves roles. Jesse encourages maintaining a “healthy, good ratio of engineers to product and design.” For example, Coinbase’s push for a high ratio — 30% to 40% — of engineers in the company.

Scaling on-chain is easier

So what do you do if you’re trying to avoid growing too fast but have a growing to-do list? Turn to on-chain. “One thing I’ve seen is if you are building with the native tools on-chain, you can have 10 times the impact and leverage,” Jesse said.

He continued: “If you’re writing smart contracts and you’re building applications for financial smart contracts and you’re using infrastructure around smart contracts, you can actually launch products with one-tenth of the engineers that you would need and reach 10 times the global population. We have an unfair advantage in this room compared to people around the world, in that if you’re rigorous and thoughtful and put yourself into this new technology trend, you can outscale anyone.”

As evidence, he pointed to Base. The layer two scaling solution was developed inside a crypto company with 4,000 employees, which isn’t surprising. What is surprising is that it primarily came from Jesse and a team of four engineers.

On-chain vs. off-chain is the new centralization vs. decentralization

Coinbase is the largest crypto company in the U.S. It’s also a centralized participant pushing for decentralized technology. This ideological conflict often draws criticism. But Jesse doesn’t think the framework is helpful.

“I’ve actually started to use on-chain and off-chain instead of centralized and decentralized because I find it’s a better descriptor,” he said.

In reality, both crypto and non-crypto products will have on-chain and off-chain components, with both branches having some degree of decentralization. Or, as Jesse put it, “You can actually have off-chain systems that are centralized and decentralized, and on-chain systems that are centralized and decentralized.”

Focusing on user experience will create more use cases for crypto

Jesse believes Coinbase’s business model is essentially “making it easy for people to use crypto.” However, the problem is, most people don’t have a convincing reason to do so.

“Cryptocurrency has had one use case for the past 10 years, which is speculation. So we’re just really making it easier for people to do one thing with cryptocurrency, which is buy and sell cryptocurrency.”

Base’s goal is to apply Coinbase’s simplification spirit to the developer platform so that it can “create more innovation, which will further create more use cases and create more things for Coinbase’s products downstream.”

In Jesse’s view, “having a chain-native developer platform built by a company that cares about user experience” will bring certainty to the internal Coinbase team and attract third-party developers to build on it, knowing that “it will just work.”

Open source adds options

Jesse’s argument is that Coinbase using open-source technology (rather than keeping it proprietary) will expand the options available to developers.

Base uses an OP stack, which is intentionally designed to be modular so that different parts of the stack can be swapped out as technology evolves. After all, Jesse sees a not-too-distant future where the scaling landscape looks very different: “Over time, we’ll see more optimistic validators being developed, we will see zk validators or validity proofs become mature and more of them being developed. We will, basically, be able to choose what we want to use to secure our chain.”

There’s more than one way to build on-chain

Jesse hopes to intersect Coinbase’s interest in on-chain with the drive to attract developers to make the apps users want. When Coinbase began exploring how to bring its business on-chain, it explored a few ideas. But the teams working on these issues got “stuck” on simple questions: “How do we build on-chain, i.e., what smart contract language are we using?”

Each decision led to more questions: “Where do we build on-chain? Okay, now that we have these contracts. Where do we put them? Does it play nicely with our other products? Does it make the Coinbase ecosystem stronger? Is it helpful for our business?”

By 2022, Coinbase decided to put its energy into incubating Ethereum L2. “It became a no-brainer, like, of course, we want to contribute to scaling Ethereum…of course, we want to put our resources into these critical public goods.”

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