Hey Edge readers,
This week, we’re diving into a big milestone for Ethereum Layer 2s: Base has officially reached Stage 1 decentralization. This milestone marks a major leap toward making Ethereum’s rollups more secure, permissionless, and future-proof.
If you’ve ever wondered what “decentralization” really means for rollups, or how close we are to truly unstoppable infrastructure, this week’s issue breaks it all down.
Stay sharp. 🫡
- The Exponential team
Base drops the training wheels
Rollups are Ethereum’s main scaling solution. They let users transact faster and cheaper by processing transactions offchain, then posting data to Ethereum for final settlement. But rollups didn’t start out fully decentralized. In fact, most are still run by teams that can pause the chain or block withdrawals.
That’s where Vitalik Buterin’s rollup decentralization framework comes in. It lays out the three stages of decentralization, guiding rollups to become safer, more censorship-resistant, and more trust-minimized over time.
The 3 stages of rollup decentralization
Stage | Description | Who’s in control? |
Stage 0: Full training wheels | Transactions are posted to Ethereum, but the rollup team has full control over the system, including the ability to upgrade contracts or stop withdrawals. | The rollup team |
Stage 1: Limited training wheels | Fault or validity proofs go live, meaning anyone can challenge fraudulent transactions. A decentralized Security Council helps govern upgrades. | A multisig of independent parties |
Stage 2: No training wheels | All logic is enforced by code. Upgrades and withdrawals can happen trustlessly, with no central intervention. | The code itself |
Before this week, Base was at Stage 0. That meant users still had to trust the Base team to behave honestly, especially if something went wrong.
Base has now entered Stage 1, which introduces two major changes:
- Anyone can verify or challenge the state of the rollup, thanks to permissionless fault proofs. This matters because it makes withdrawals trustless. If Base ever goes down or acts maliciously, users can still exit their funds back to Ethereum without needing approval from Base itself.
- A decentralized Security Council controls upgrades, meaning no single party (not even Coinbase) can change the rules alone. Now, any upgrade must be approved by a Security Council made up of 10 independent entities, plus Optimism and Base.
It’s a huge shift away from “just trust us” and toward a more secure, neutral platform for builders and users alike.
Where do other rollups stand?
Base is now one of the very few rollups that have reached Stage 1. Here’s a quick comparison of major Ethereum Layer 2s and their current decentralization progress:
Rollup | Stage | Proofs live? | Who controls upgrades? |
Arbitrum | Stage 1 | Yes (fault proofs can be submitted by anyone) | Arbitrum DAO (but Security Council can override) |
Base | Stage 1 | Yes (fault proofs can be submitted by anyone) | Security Council (independent multisig) |
Optimism | Stage 1 | Yes (fault proofs can be submitted by anyone) | Security Council (independent multisig) |
Unichain | Stage 1 | Yes (fault proofs can be submitted by anyone) | Security Council (independent multisig) |
Scroll | Stage 1 | Yes (ZK proofs verify state but not enforced for user exits) | Core team (upgradeable by multisig) |
zkSync Era | Stage 0 | Yes (ZK proofs verify state but not enforced for user exits) | Core team (upgradeable by multisig) |
Starknet | Stage 0 | Yes (ZK proofs verify state but not enforced for user exits) | Core team (upgradeable by multisig) |
Linea | Stage 0 | Yes (ZK proofs verify state but not enforced for user exits) | Core team (upgradeable by multisig) |
Most rollups today are still in Stage 0, meaning users still rely on the team behind the protocol to act honestly. That’s why Base’s shift to Stage 1 matters as one of the largest rollups today by TVL and active users. It helps to set a precedent for building Ethereum-aligned infrastructure with stronger user guarantees.
What’s next for Base?
Reaching Stage 1 is a major milestone, but it’s not the finish line. Here’s what the Base team has planned next:
- Multiple proof systems: They’re exploring ZK-based fault proofs to strengthen security and redundancy.
- Progress towards Stage 2: Full decentralization, where no single entity or group has the ability to override the system, except in rare, transparent scenarios (like fixing a critical bug).
In the news 🗞️
- Bitcoin DeFi will have 300M users. Alexei Zamyatin, co-founder of Build on Bitcoin, believes the first DeFi protocol to nail user experience on Bitcoin could capture a massive untapped market of 300M users, surpassing the reach of Ethereum and Solana combined. Despite current Bitcoin DeFi TVL sitting at just a fraction of Ethereum’s, interest in BTC yield and stablecoins is accelerating, with Babylon Protocol leading the sector.
- Coinbase introduces Bitcoin Yield Fund. Coinbase is launching a Bitcoin Yield Fund targeting institutional investors, targeting annual returns of 4-8% through a market-neutral cash-and-carry strategy. The fund opens May 1, excludes U.S. investors, and is capped at $1 billion AUM.
- Morpho brings DeFi lending to 25M users on World App. Morpho has launched a Mini App inside the World App, giving 25M users access to self-custodial DeFi lending, borrowing, and vault rewards on World Chain. Users can now earn yield or take out loans using WETH, USDC.e, WBTC, and more.