Vitalik Buterin defends Base’s decentralization, says Layer 2 network ‘cannot steal funds’

Ethereum co-founder Vitalik Buterin waded into the debate over the Coinbase-incubated Base network, arguing that the Layer 2 should not be dismissed as a centralized custodian.

“Base is doing things the right way: an L2 on top of Ethereum, that uses its centralized features to provide stronger UX features, while still being tied into Ethereum’s decentralized base layer for security,” Buterin posted to X late Monday.

“Base does not have custody over your funds, they cannot steal funds or stop you from withdrawing,” he said, pointing to Ethereum contract logic that guarantees exits even if a Layer 2 operator fails. Buterin stressed that frameworks like L2Beat’s staging system aren’t ideological purity tests, but concrete measures of user protection.

“This is what we mean when we say that L2s are non-custodial; they are extensions of Ethereum, not glorified servers that happen to submit hashes,” he said. “There are concrete pathways implemented in smart contract logic on Ethereum L1, that have been successfully used in the wild, that ensure that the L2 users’ funds are ultimately controlled by L1, they cannot be stolen or blocked by the L2 operator.”

In April, Base advanced to Stage 1 in Buterin’s rollup decentralization model, introducing a security council that reduces Coinbase’s unilateral control by requiring independent members, though centralized elements remain.

Neutral ‘traffic controllers’

Buterin’s comments on Monday were made in response to Coinbase’s Head of Base, Jesse Pollak, who defended centralized Layer 2 sequencers — which collect transactions, order and batch them, then send them to Ethereum for faster and cheaper final settlement — as neutral “traffic controllers” rather than exchange-like matching engines.

“At any point, a user can also transact on Base through Ethereum directly,” Pollak said, adding that this design anchors Base’s transactions to Ethereum’s validator set, providing decentralization and censorship resistance while allowing Layer 2s to scale Ethereum without undermining its neutrality. “So no, Base isn’t an unlicensed securities exchange. It’s a critical piece of infrastructure that is scaling the global onchain economy,” he said. “Today, we’re actively working towards Stage 2 and investing in further decentralizing block building.”

Earlier, Coinbase Chief Legal Officer Paul Grewal had also bristled at framing sequencers as securities exchanges, likening them instead to AWS-style infrastructure. “[The SEC] defines an ‘exchange’ as providing a marketplace for bringing together buyers and sellers of securities. But L2s are general-purpose blockchains that operate as infrastructure,” he said. “Just like Base, infrastructure like AWS runs code that developers provide. This code can include all kinds of things — payments, calls, messages, exchanges — but the code is run deterministically. If an exchange runs on AWS, is AWS an exchange? Obviously not.”

Buterin later acknowledged that Base remains at Stage 1 decentralization, where a supermajority of a security council can override contracts, but noted quorum-blocking rules prevent Coinbase from unilaterally censoring or stealing funds. He argued that the pathway to Stage 2 — where even councils cannot override functioning onchain code — is already laid out and achievable as demand scales.

Skeptics push back

Skeptics pushed back on Vitalik’s comments, however. Taproot Wizards co-founder Eric Wall insisted Base is a “custodial system, as far as security of funds are concerned,” citing that Base’s contracts are still upgradeable through governance, meaning the operator and associated entities — via the security council — retain significant discretionary power. In his view, this makes Base functionally closer to a custodial system than a fully trust-minimized extension of Ethereum. 

Former Ethereum core developer Lane Rettig added that coercion risks — such as governments pressuring Coinbase — also remain plausible. Others, like Galaxy Head of Research Alex Thorn, argued that Vitalik’s defense of security sidesteps the real question of whether securities on Layer 2s should trigger exchange-style oversight.

The debate comes just as Base signals plans for a native token, with Pollak announcing last week that the Layer 2 network was “beginning to explore” such an option. Supporters see a token as a way to accelerate decentralization and broaden block-building participation, while critics warn it could entrench Coinbase’s influence under the guise of community governance. Others question whether a token is needed at all, since Layer 2s can already rely on ETH for gas and security — and sequencers could potentially be decentralized through ETH-based staking or bonding mechanisms without introducing a new asset.

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