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U.S. crypto exchange Coinbase launched a memecoin. Or rather, its subsidiary issued a “content coin.” Or maybe it just posted “on-chain” content? The distinctions are slippery but, however one defines Coinbase's actions, the response from the crypto industry has been withering—and put the publicly traded company on the defensive.
The controversy began on Wednesday when the social media team for Base, Coinbase’s blockchain, posted a picture that read, “Base is for everyone,” on Zora, an NFT platform that has pivoted to memecoins. When Base posted the image, Zora created a linked cryptocurrency, which soon rocketed to a market capitalization above $14 million before crashing to $1 million. It’s since rebounded to more than $12 million as of Friday evening, according to Dexscreener.
Crypto industry commentators alleged that the token launch was a “pump-and-dump” scheme, or when influencers push—or ”pump”—up a cryptocurrency’s price only to sell—or ”dump”—the token for profit. “Base will never sell these tokens, and these are not official network tokens for Base, Coinbase, or any other related product,” Coinbase said in a statement. So what exactly happened—did Coinbase actually launch a memecoin? And why are folks so angry? Here's a guide to the controversy:
What is Zora?
Founded in 2020, Zora was originally conceived as an NFT platform where users could turn images into non-fungible tokens others could buy and sell. But, as the NFT market dried up, Zora pivoted to memecoins, or cryptocurrencies that have no utility and have been traditionally based on online jokes.
Memecoins have become all the rage in crypto, so the pivot, which occurred in late February, made sense. “Zora is a social network where every post is a memecoin,” Dee Goens, the cofounder and COO of the startup, told Fortune in a statement.
The company issues its memecoins on Base, a layer-two blockchain built on top of Ethereum that Coinbase has promoted and developed. So, Jesse Pollak, a member of the Coinbase executive team who heads the company’s Base division, began to experiment with the platform.
He made a series of posts on Zora over the past six weeks that generated their own cryptocurrencies, including a picture of granola and an AI-generated image of a baby. “I totally agreed with that change,” Pollak told Fortune, in reference to Zora’s transition from NFTs to memecoins, “because it lets creators monetize better and lets them go viral faster.”