Coinbase's ecosystem "testbed": Based APP and x402

Author: blocmates; Translated by: Felix, PANews

Coinbase acquires Echo and claims it will not hastily deploy the Base token. Coupled with the upcoming launch of the Base app, all of this indicates that the Base ecosystem will gain strong momentum in the coming months.

At the same time, Coinbase is also taking strategic measures in other areas, including applying for a banking license, gradually integrating DeFi into its retail application, and developing a new payment standard called x402.

Coinbase's recent activities have been so frequent that this article will provide a brief report on Coinbase.

What is Base L2?

Base is a Layer 2 network incubated by Coinbase, using the OP Stack to achieve a block time of 200 milliseconds through Flashblocks, processing transactions at a cost of less than one cent.

Base has only been online for two years, but it has quickly become a leading L2 network, maintaining a lead almost daily in metrics such as TVL and trading volume.

The key point is that Base is not just an L2 network: it is Coinbase's testing ground for the future of on-chain. If operated properly, users participating in this “sandbox” may soon receive a substantial “airdrop profit.”

The $BASE token may change the game.

After years of denying token plans, Jesse Pollak announced at the BaseCamp event in September 2025 that they are “beginning to explore network tokens.” Although information is currently limited, it can still be traced.

Almost all other L2 networks usually conduct TGE quickly, but considering Base's direct connection with a publicly listed company (Coinbase), its hesitation is also understandable.

In the keynote speech at BaseCamp, Jesse pointed out that the company will work closely with regulators to ensure compliance with relevant regulations. Given that the tokens are still in the exploratory stage, it is clear that the TGE will not happen in the near future.

But this is also a good thing, as users will have ample time to prepare for it.

Regardless of when the TGE occurs, it is undeniable that the Base token could become a grand “wealth creation” event and significantly boost the development of Base.

To achieve this, Base must link economic activities to tokens, as the true value of L1 assets comes from their role as Gas tokens and as the second token in AMM trading pairs.

ETH and SOL are valuable because they are crucial for providing liquidity to new tokens in AMM. As these ecosystems expand, the demand for quoting currencies increases, creating a positive feedback loop.

By distributing network fees as rewards to pools that use $BASE as the quote currency, holders of $BASE can encourage this activity and link the value of the token to network growth.

It is expected that Base will encourage key protocols and distribute tokens after the token release. But how can users obtain the first round of airdrops?

Since Base aims to completely transform blockchain participation and attract new users through its application, actively using the app will significantly increase the chances of receiving airdrops.

Base App: The front end of the entire Base ecosystem

During this period, wallets have evolved from simple token storage tools to becoming the “frontend of DeFi”. As Phantom and other wallets continue to expand the definition of cryptocurrency frontends—adding features like trading and payments directly within the app—the competition to create the ultimate super app has begun.

In this competition, Base App stands out. It is an all-in-one application that integrates social networking, applications, payments, and finance, allowing users to earn income, trade, and chat with people from around the world anywhere.

The application is scheduled for public release this year and has already achieved success in the testing phase. Test participants have praised it highly, and more than 750,000 people are on the waiting list.

This application includes social features powered by Farcaster, identity verification supported by ens.eth, payment functionalities realized through BasePAY, yield features provided by Morpho, AI agents like Giza's Arma and Moonwell's Mamo, chat functionalities supported by Zora, gamified experiences similar to Dimo, and many other mini-applications powered by Farcaster.

The current task is to find those projects and tokens that are already on the platform or about to go live, which can benefit the most from the distribution and exposure brought by this application. Special attention should be paid to those applications that have been invested in by Coinbase, as they are the direct beneficiaries after the success of the product.

Projects worth paying attention to

In the Base ecosystem, Coinbase typically adopts small-scale strategic investments rather than leading rounds to expand its reach and maintain neutrality among competing protocols.

However, Coinbase made significant investments in a few “stacked” projects on Base, including liquidity (Aerodrome), core DeFi lending (Morpho), and creator participation (Farcaster, Zora).

Regardless of the size of the investment, these portfolio companies can receive preferential treatment on social media, gain more business development contacts, and quickly launch on the Base App.

The following are several of the most promising projects that Coinbase has invested in within the Base ecosystem (in no particular order), which are likely to gain significant momentum:

Giza

Giza's autonomous agent Arma is an AI-driven yield optimizer that has been launched in the Base app. With over $2 billion in agent trading volume and approximately $30 million in total locked value, it can be said that the current token valuation may be undervalued.

Avantis

The leading perpetual contract exchange on Base, Avantis, offers a diverse range of assets, including cryptocurrencies, stocks, indices, and even foreign exchange. Investors and the team hold 40% of the total supply, which will not be unlocked until September 2026.

Share

Share is a social trading application that has not yet been launched, and it recently secured $5 million in funding. This product is remarkably similar in functionality and branding to other social trading applications, and it will clearly be prioritized in terms of integration with the Base App due to support from Coinbase.

Memory

Memory aims to build a world where digital identities can freely migrate across the internet. Recently, Memory announced the ability to sync your Twitter followers to the Base App. Given Base's focus on SocialFi, Memory plays a key role in the transition from traditional social media to the Base App.

Coop Records

Coop Records is an on-chain record label that has acquired over 175 artists and more than 750 albums since its establishment in August 2023. Songs are purchased in the form of ETH and paid to artists in real-time, which sharply contrasts with the traditional music industry where royalty payments are often delayed by months or even quarters.

IronFish

Brian Armstrong recently stated that he advocates for privacy and revealed that he acquired the Iron Fish team in March of this year. Does this mean that the token will perform well in the long run? It remains unclear.

Backroom

If you believe there is still a narrative for the Internet Capital Market (ICM), then Backroom is a protocol worth paying attention to, especially with its partnership with Aerodrome, the largest decentralized exchange on Base.

Noice

The winner of the first Base Batches Demo Day, Noice, is a social tokenization protocol that integrates Farcaster's programmable social layer and Zora's creator tokens. It enables users to send small payments for social actions such as likes, comments, and follows, thus converting participation into economic value.

The Base Batches program is a great way to keep the Base ecosystem ahead and discover emerging trends or products. The next event will be held on November 19 at DevConnect.

Although interacting with the products listed above does not guarantee eligibility for airdrops, purchasing their tokens does not ensure appreciation, the past record of Base benefiting its portfolio companies indicates that new projects may also benefit.

As Coinbase invests hundreds of millions into the on-chain economy, one can't help but wonder what Brian's ultimate goal is?

DeFi's “Zhu Yu” strategy

As we all know, the general public does not care about on-chain reputation systems or AI agents participating in yield farming. Most people just want to open their Coinbase app and then click on the “Earn” tab.

Due to DeFi providing easier access and higher returns, Coinbase has shown a willingness to introduce these products to a broader audience through its application.

For example, the recently launched on-chain lending feature for USDC, supported by Morpho and Steakhouse Financial, allows users to earn up to 10% on their stablecoins.

This is not the only time Coinbase has integrated with Morpho. Earlier this year, Coinbase launched a Bitcoin-backed on-chain lending service through Morpho, allowing customers to borrow up to $1 million in USDC by holding Bitcoin on Coinbase.

In addition, Coinbase also supports DEX trading, providing users with access to on-chain tokens.

Coinbase is willing to integrate DeFi protocols from Base into its retail application, indicating that the Base application is a key platform for Coinbase to experiment before the wide rollout of new features and protocols.

With the launch of the Base Pay and x402 payment protocols, on-chain payments are rapidly developing. Meanwhile, the company announced on October 3, 2025, that it is applying for a banking license.

The announcement points out:

“This license will continue to open new opportunities for Coinbase, allowing it to launch new products beyond custody in a clearly regulated environment, including payment and related services, thereby promoting broader institutional adoption.”

In fact, this means that Coinbase will be able to offer checking and savings accounts insured by the Federal Deposit Insurance Corporation (FDIC), built-in deposit and withdrawal channels, enable payment functions, and unleash innovative opportunities within the legislative framework.

While Coinbase is working hard to negotiate with lawmakers to support payment functionality in its retail application, Base is steadily advancing the possibility of on-chain payments to achieve a more decentralized future.

X402: Native Internet Payment Protocol

As we all know, online payment has some fundamental issues. Credit cards involve high friction and have a minimum payment amount that is too high. Additionally, they do not meet the programmatic needs of the internet and do not support proxy software systems.

X402 is an HTTP-based protocol used for proxying, context retrieval, APIs, etc. It is Coinbase's solution to this issue, supporting instant and automated stablecoin payments directly via HTTP.

x402 supports multiple use cases, including:

• Pay-per-request API service
• AI agent for self-pay API access fees
• Digital Content Paywall
• Microservices and tools that achieve profitability through small transactions
• Proxy service for aggregating and reselling API functionality

Although the protocol is not restricted by the network, the Base ecosystem is naturally the most suitable for its deployment due to the integration of AgentKit and MiniKit (Farcaster's MiniApp SDK).

Recently, the activity of the protocol has surged, with a total trading volume approaching 200,000 transactions and a transaction amount nearing 150,000 dollars.

Summary

The Base app and Coinbase app serve two different types of customers, with the former acting as a testing ground for the latter. Together, they build a positive feedback loop that few companies in the financial sector can match. After all, the future of finance lies neither solely off-chain nor on-chain, but in a combination of both.

Although Coinbase is focusing on the long term in the TradFi space, gradually seeking banking licenses to make the application closer to a new type of bank rather than just a trading platform, Base acts as an on-chain laboratory, where prototype design is taking place in the future.

Now, with the tokens about to launch, everyone will become a test subject for Coinbase. The main difference lies in who understands the rules of the game better.

In this case, the game involves tracking the flow of funds from Coinbase and determining which projects it has funded.