Blockchain Startups Face Early Challenges on New Coinbase Layer

Following a series of recent hacks and scams, blockchain startups on Coinbase's new layer two network Base are facing early challenges as they work to bring decentralized finance to mainstream users.

The emerging scandals underscore the risks involved with using experimental technology to handle millions in crypto assets. Critics say Base rushed to market without proper security testing. But Coinbase remains committed to its vision of opening decentralized finance to the masses.

"It's been a wild start," said industry analyst Jane Doe. "Base is only two weeks old, but already there are over 500 scam projects built on it."

The biggest hack so far targeted Exactly Protocol, a lending platform that lost $12 million this week due to vulnerabilities hackers exploited. Another decentralized exchange, RocketSwap, also got hit, losing nearly $500,000.

Even worse, lending startup SwirlLend turned out to be an outright scam. The team disappeared with $277,000 after draining user funds and deleting all their social media.

Despite the chaos, assets on Base have already jumped to over $160 million as developers rush to be first to market. But many projects are clearly not doing proper due diligence.

"The state of security in crypto is just sad," said developer John Smith. "Projects are getting hacked left and right."

Exactly Protocol's token plunged 20% on the news. The lending platform held over $110 million in deposits before the attack, but that figure dropped to just $30 million afterwards.

While more headaches surely lie ahead, Coinbase remains committed to Base and its goal of bringing decentralized apps to the masses. But first, teething problems with security need to be sorted out.

"It's still early days," Doe said. "If Base can overcome these initial stumbles, it has huge potential. But they need to tighten controls before this gets out of hand."

The coming months will prove critical. For now, the DeFi community is left wondering if Base rushed too fast and broke too much in its haste for rapid growth. Time will tell if startups on the platform can turn ideas into secure and sustainable apps. But one thing is clear: explosive growth often comes with equally explosive setbacks.