Galaxy Digital: It’s not too late to adjust Base’s direction after abandoning creator tokens

Author: Lucas Tcheyan, Deputy Research Vice President at Galaxy Digital; Compiled by: Shaw, Jinse Finance

Last Wednesday, Base project head Jesse Pollak announced that he would no longer lead the Base client application business under Coinbase and would instead focus on building the underlying layer of the public chain; the application was handed over to Jordan Fish (better known in the community by the nickname Cobie), and Base has reaffirmed three core development directions: trading, payments, and AI smart agents.

On X, Pollak published a long, candid post, describing Q1 2026 as “a rude awakening,” and admitting that of the two tracks he bet on over the past two years, half have already been declared failures. He had previously judged that the developer ecosystem and native on-chain social experience would usher in the next wave of mass adoption in crypto. The developer track has indeed delivered results—stablecoins, prediction markets, and perpetual contracts have all flourished; but the social track fell far short of expectations. In his own words, Farcaster, Zora, on-chain mini programs, and creator tokens “all collapsed across the board.” By shifting the focus toward social business earlier, Base fell behind in the core tracks. Its own native perpetual contract app Avantis and the prediction market project Limitless both lagged behind competitors in scale; meanwhile, in the asset tokenization and payment tooling track that enterprises truly need, Base is also behind schedule.

Two days before Pollak’s post, Coinbase CEO Brian Armstrong voiced his position first. Last Monday, Armstrong replied to skeptics on X, acknowledging that the creator token business “doesn’t work,” and it was time to turn the page; but he also pushed back against the view that “AI smart agents are just the next round of hype.” He said that Base’s long-standing priority order has always been trading, payments, and smart agents, with the vast majority of R&D resources going to trading.

Cobie (full name Crypto Cobain) joined the company last year after Coinbase acquired its fundraising platform Echo for about $375 million. Pollak said this handover is effectively returning the client application business to the Coinbase group, and he will devote himself entirely to building Base into “a public chain that serves global finance.”

Our view

It’s hard to say whether the timing of this announcement is coincidental—just two weeks after Robinhood Chain went live. Even if Robinhood Chain’s current hype comes only from meme coin trading volume, that momentum has made market criticism of Base grow louder. Coinbase now faces a direct competitor with a massive retail user base and highly overlapping products; and Base previously poured large amounts of R&D resources into completely wrong tracks—especially social and creator tokens—wasting the first-mover advantage.

Social trading itself is not a dead end. We hold the opposite view: social trading tracks are one of the fastest-growing sub-segments in the crypto industry; the recent valuation of the social trading app FOMO reaching $550 million is proof. The real failure was a narrow and detached-from-reality logic: believing that content itself can serve as an asset, and that users publishing content can mint their own dedicated tokens. This model disperses capital and attention across thousands of tokens without any tangible value support; most of it can only sustain frantic speculation for just a few minutes, after which the market moves on quickly, leaving many ordinary investors who piled in blindly to suffer losses. Jesse Pollak himself also issued his personal creator token $JESSE in November 2025, with a listing market cap of $6.5 million, and the largest subsequent drop reached as much as 94%.

Besides harming ordinary users, this business experiment also diverted team resources and market attention, while competitors are continuously executing in core growth tracks. At present, Base’s total open interest in perpetual contracts across the entire network accounts for less than 0.1% of the combined total across all public chains, and it also has no prediction market project with truly active usage under its banner. Objectively speaking, while Robinhood Chain is still not yet formed in these two areas, it has only just launched. **In today’s crypto growth core tracks—perpetual contracts, prediction markets, and asset tokenization, which are also the most hotly contested tracks—every public chain is going all in.**Base missed out on the first-mover dividend, and now it only has its own traffic channel left as an advantage.

Even in the area of stock tokenization, Base also faces regulatory compliance risks: under the proposed CLARITY Act that it is pushing forward, Base will most likely not receive any relevant exemption provisions. If that public chain cannot further improve its degree of decentralization, Section 301 of the act may classify it as a non-decentralized financial trading protocol. Once that classification is finalized, Base would struggle to capture incremental business from U.S.-compliant tokenized securities, or it would violate related securities registration regulatory requirements.

But that doesn’t mean Base is a complete failure. Coinbase’s integration of Morpho to build a lending business has achieved real success, with cumulative loan volume approaching $3 billion. While the scale is smaller, the on-chain AI ecosystem that keeps expanding—where projects like Venice are involved—belongs to the industry’s first tier: by using private reasoning and tokenized new inference compute, it drives on-chain activity. Facing past strategic mistakes head-on, the team’s first step is adjusting course and incubating more high-quality businesses.

For exchange-backed public chains, the long-standing unresolved core question has been: how to create performance growth for the parent company. BSC is the most successful example in this space, but it benefits from a first-mover advantage and has a platform-native token (whether Coinbase will issue its own token is still a huge unknown), and it operates under a completely different regulatory environment. In our view, the best path for teams of this kind of public chain is to build an ecosystem by leveraging the parent company’s centralized exchange’s inherent traffic, rather than relying solely on short-term incentives to attract profit-seeking capital—because once those incentives fade, such capital will leave immediately.

At present, the mainstream market logic is DeFi’s “mixed business model”: when users use the products, they cannot perceive the underlying on-chain layer (the frontend is Coinbase’s compliant retail business, and the backend is a DeFi ecosystem). Once users become deeply bound to the ecosystem, the large user base naturally attracts developers to onboard; building new products on a permissionless public chain drives the next wave of growth. Of course, the creator token track may still see a turnaround in the future, but there’s no need to hold overly high expectations.

In any case, at least for now, Cobie is fully responsible for the Base client application.