Jesse Pollak defends Coinbase from 'badly misplaced' ETH sales criticisms

Jesse Pollak, VP of Engineering at Coinbase, was active on X, fighting accusations that Coinbase has been dumping Ethereum. 

The Base creator has been telling those who care to hear that the exchange is the largest holder of Ethereum in the world.

How a “badly misplaced” comment started the argument 

The argument erupted when chaskin.eth (@jchaskin22) said that the resentment of the Ethereum Twitter community towards Coinbase is “badly misplaced,” and likened the anger to when a business turns on its biggest customers because the customer chose not to buy so much of its stock. 

Pollak agreed with the sentiments, saying it “blows my mind” to see Coinbase getting attacked because of ETH sales.  

This didn’t sit well with everyone. cyp.eth (@0xcyp) responded to venture investor Nick Tomaino’s adulation of Coinbase as “values aligned with Ethereum,” by saying the company’s values include “constantly selling ETH from Base execution fees to USD and BTC.” 

That response encapsulates the whole annoyance with the company: the folks in charge of Base earn in ether, then allegedly sell the proceeds into other assets.

Pollak’s “order of magnitude” defense 

Choosing not to argue about specific transactions, Pollak coined his argument around size. In his opinion, Coinbase is “the largest non-DAT holder of ETH by an order of magnitude,” which means that it holds more ETH than any peer that isn’t a dedicated digital-asset-treasury vehicle. 

He added that “Coinbase literally held 150K ETH for years.” It held them through market cycles and changing narratives about whether layer-2 networks were Ethereum’s future or not.

The public numbers are consistent with Pollak’s argument. Coinbase is listed with ~151,180 ETH, worth ~ $256 million, on the Strategic ETH Reserve tracker. It’s ranked sixth on the list, behind dedicated treasury firms like Bitmine Immersion Tech, which holds over 5.5 million ETH.

Where the sequencer revenue passes to 

The criticism is centered on Base in particular. Coinbase operates the network’s sequencer, the component that is responsible for ordering and processing transactions. The sequencer earns fees in ETH; the fees are then converted to dollars or bitcoin, and outsiders have seen it as Coinbase dragging down the value of Ethereum rather than increasing its value 

Others have noted how the company parks bitcoin on its balance sheet while dealing with ether like an operating asset rather than a long-term conviction. 

Chaskin.eth agreed with the point about priorities and reasoned in the past that approximately 75% of Coinbase’s revenue has come from trading and holding bitcoin, while hoping for a change in that figure.

The ecosystem angle

Pollak’s rebuttal is that treasury math ignores the broader picture. He gave credit to Coinbase for shipping EIP-4844, the upgrade that reduced layer-2 costs by releasing “blob” data, and for playing a part in the creation of USDC, one of the largest stablecoins. 

He went on to highlight the millions of users the exchange has brought into Ethereum, saying that reach trumps any single balance-sheet decision.

Base was launched in 2023 and is now one of Ethereum’s busiest layer-2 networks and just reached Stage 1 decentralization, which reduces Coinbase’s direct control over how the chain operates.

The smartest crypto minds already read our newsletter. Want in? Join them.