Olivia Capozzalo & Camila Russo
September 23, 2025

gm, Defiers!

Today’s big story:

With a potential token launch in the works, Base critics are now arguing it should be regulated like an exchange

In other news:

HYPE price drops as token unlock fears intensify
Bitmine now holds over 2% of ETH supply as DATs expand stockpiles
Keeta token rallies on mainnet launch
Polkadot’s top DeFi protocol launches USD stablecoin
1inch leads the way for cross-chain DeFi [SPONSORED]

Read more below! But first, please give our sponsors some love; they make this newsletter possible.

Stellar Core Upgrades Pave Path to 5000 TPS and 2.5 Second Block Time

The Stellar network has always been one of the cheapest, but now it looks like the network upgrades will halve block time and increase throughput by parallelizing Stellar core. With planned upgrades, the Stellar network will incorporate new core advancement protocols that bring this performance even closer to reality.

We’re back! Here’s what you need to know in web3 today

📈 Markets in the Past 24 Hours

TICKER	VALUE	24H
Bitcoin	$112,949	0.27 %
Ethereum	$4,189.89	0.10 %
XRP	$2.86	1.51 %
BNB	$1,004.28	-1.84 %
Solana	$218.95	-1.25 %

Today’s Big Story

It’s a Stretch (and Low Move) to Call Base an Exchange

Critics of Base, Ethereum’s second-largest Layer 2, are coming out of the woodwork ahead of a possible native token launch, but the claims they’re making—that Coinbase’s Layer 2 should be regulated as an exchange—are a stretch.

The latest flare-up on Crypto Twitter began after Coinbase Chief Legal Officer Paul Grewal pushed back against the idea that Base is functionally an exchange. In a post, Grewal argued that Base is closer to cloud infrastructure, like AWS, than a trading venue: it batches transactions, it doesn’t match buyers and sellers, and it doesn’t hold custody of assets.

Still, a wave of critics seized on the idea that because Base’s sequencer controls transaction ordering, it should be seen as exchange-like. Solana-tied researcher Max Resnick wrote on X that “a centralized sequencer that can change the matching/execution of orders obviously must be regulated.” The underlying worry: if one entity has control over transaction ordering, it could tilt the playing field for traders, an argument that echoes the SEC’s expansive definition of “exchange.”

Exchange Claims Don’t Hold Up

But the “Base is an exchange” claim doesn’t hold up to closer scrutiny. Base’s is an Ethereum Layer 2 built on the OP Stack, providing infrastructure for applications to deploy on top of. It does not run a matching engine or pair off buyers and sellers; those functions are performed by decentralized applications like Uniswap, according to Base docs.

Independent monitors back this up. L2BEAT, the go-to tracker for rollups, shows that in April 2025, Base advanced to Stage 1 security status after establishing a Security Council, which is a multisig of external parties with a high threshold to approve upgrades. That means Coinbase no longer has unilateral control over the network’s core contracts. Far from looking like an exchange, Base is moving along a well-defined path toward greater decentralization, with checks and balances designed to prevent discretionary control.

The role of the sequencer is also narrower than critics imply. Sequencers order and bundle transactions before submitting them to Ethereum, but they don’t decide whether or not trades get executed. Execution is governed by the smart contracts users interact with, like Uniswap, Aave, or whatever else is deployed on Base. That’s a far cry from an exchange’s role under U.S. securities law, which involves bringing together orders of multiple buyers and sellers and providing a non-discretionary method to match them.

Vitalik: “Doing Things Right”

While critics have jumped on Base, it has also attracted a prominent fan.

Ethereum creator Vitalik Buterin said the chain is “doing things the right way:” it’s non-custodial, users are always protected by Ethereum’s Layer 1 security. In his words, and uses centralized features to proide stronger UX. Base is “doing things right” by progressively decentralizing and strengthening user guarantees.

Why It Matters Now

The timing of this debate is no coincidence. Last week, Base teased that it may soon launch a native token. Suddenly, whether Base looks like a neutral infrastructure network or like Coinbase’s captive exchange platform has major consequences. A token framed as infrastructure-level governance and sequencing (similar to OP or ARB) is one thing. A token that regulators view as an “exchange coin” like BNB or FTT would be an entirely different, riskier proposition.

That explains the sudden uptick in regulatory FUD: the framing today could shape how policymakers and investors perceive a Base token tomorrow.

The Bigger Picture

There’s also a broader angle worth mentioning. I have to agree with crypto lawyer Jake Chervinsky and Paradigm’s Dan Robinson here, when they argue that attacking competitors on regulatory grounds is shortsighted: all of crypto loses when the industry invites regulators to crack down harder. Calling Base an exchange might feel like a clever dunk, but if that line of reasoning were ever embraced in Washington, it could put every chain at risk.

This is pretty straightforward when you look at how Base works: the chain is infrastructure, not an exchange. Sometimes, CT tribalism makes people forget that while competition is stiff among chains, in the end, everyone is in the same industry, trying to rebuild finance. That’s already a tall order; no need to try to make it harder.

With love,

Cami, founder of The Defiant

Forwarded this newsletter? Subscribe for daily insights and curated news from The Defiant team, Monday-Saturday. It’s free.

Subscribe to Defiant Daily

🎬WATCH

$100 Million DeFi DAT Chooses ETH | Ryan Zurrer

On the latest episode of The Defiant Podcast, Vinny sat down with crypto pioneer Ryan Zurrer to explore the strategy behind Game Square, the Jerry Jones-backed media powerhouse that bet $100 million on Ethereum instead of Bitcoin.

Ryan, who co-wrote the MakerDAO whitepaper and now leads Dialectic, shares why Ethereum dominates 5 out of 6 real-world crypto use cases, from stablecoins to DeFi, and how it’s emerging as the financial substrate of the future. The conversation dives deep into the evolution of DeFi, the lessons learned from past crypto cycles, and the importance of decentralization and fair launches in building sustainable ecosystems.

Top News Since Friday

HYPE Drops Below $50 as Unlock Fears Intensify As competition intensifies in the perpetuals trading sector, investors are starting to feel the pressure of the upcoming HYPE unlocks in November. Arthur Hayes recently sold all of his HYPE, while his firm stated that, alongside competution, HYPE DATs and buybacks can’t offset the team’s token unlocks.Why it matters: Hyperliquid, the leading perps DEX by trade volume, is facing increased competition from entrants like Lighter and Aster.
Crypto Treasury Activity Surges as DATs Expand Holdings New digital asset treasury companies continue to emerge, while existing DATs expand their holdings. Notable, this week, Tom Lee’s BitMine Immersion announced it now holds more than 2% of ETH’s total circulating supply. Why it matters: DATs continue to be one of 2025’s biggest trends, attracting massive captial, despite growing concerns around compressing mNAVs.
Keeta Token Rallies on Mainnet Launch Keeta’s native token KTA rallied 50% over the weekend, ahead of the Layer 1 blockchain’s official mainnet launch. Why it matters: Keeta is currently valued at $75 million, has processed over 28.7 billion testnet transactions, and aims to outpace high-performance chains like Solana, as well as TradFi payment systems.
Polkadot's Largest DeFi Protocol Hydration Launches Decentralized Stablecoin Polkadot’s top DeFi platform Hydration is launching HOLLAR, a decentralized, USD-pegged, over-collateralized stablecoin backed by DOT, ETH, and BTC. Why it matters: The stablecoin sector continues to grow, pushed forward by regulatory clarity and mainstream financial adoption. HOLLAR represents a DeFi-native option in a market dominated by more centralized, fiat-integrated options, namely USDT and USDC.