Coinbase’s New Strategy Faces Backlash from VC Over Retail Impact

Coinbase faces criticism from Vance Spencer of Framework Ventures for its ‘Just Coin It’ strategy linked to Waka Flocka Flame’s BaseDrop, claiming it harms retail investors. Coinbase defends its approach as innovative, promoting the tokenization of content for better value distribution.

Coinbase is facing criticism from a venture capitalist regarding its latest strategies in the crypto space. This week, Jesse Pollak, a Coinbase executive, touted BaseDrop, a platform linked to memecoin launched by rapper Waka Flocka Flame, calling it the “new creator economy.” He described BaseDrop as an “onchain record label” that promises to channel value back to $FLOCKA token holders.

However, Vance Spencer, co-founder of Framework Ventures, came forward with a contrasting viewpoint, stating that Coinbase’s push for a so-called “content coin” model is harmful, suggesting it’s damaging parts of the crypto industry. He expressed concern that the prevailing notion that everything should have its own token adversely affects retail investors, who face losses on low-cap tokens and meme coins, potentially pushing them away from the crypto sphere altogether.

Spencer also criticized the changes Coinbase made to its wallet, comparing it to Farcaster, and suggested that these modifications aren’t aligned with what users need. Recently, Coinbase reworked its wallet to incorporate various social media-like functions, veering towards a more comprehensive consumer application rather than purely a crypto wallet, though it remains in beta.

There’s a question being raised about whether everyday retail customers are indeed the primary buyers of these tokens. It’s quite likely they are, especially when it comes to celebrity-endorsed cryptocurrencies. But there could also be a larger number of experienced crypto enthusiasts and builders engaging with the “Just Coin It” initiative.

In response to Spencer’s critique, Coinbase’s head of Base and Coinbase Wallet argued that the company is fostering innovation within the crypto sector. Pollak defended the tokenization of content as a valuable means for creating a market-driven valuation model that benefits both creators and consumers. He expressed admiration for Waka Flocka’s efforts in pushing the boundaries of on-chain value creation, despite some backlash.

In the past, Waka Flocka has faced scrutiny over certain tokens he has endorsed, such as his Solana memecoin. Last year, when questions arose regarding whether his FLOCKA coin had a fair launch, considering reports that 40% of its supply was pre-sold, Flame suggested there was a concerted effort to undermine him.

Pollak mentioned that he had spoken with Flame, whose real name is Juaquin James Malphurs, and believes the rapper was initially misled into launching a coin by a team that ultimately exploited him. “Should he have seen through the scammers? Absolutely,” Pollak remarked. “But should we marginalise a sincere, talented creator who had bad luck with a bad team and chose not to back down? Definitely not.”,