In a recent X discussion, Ripple CTO David Schwartz weighed the basis for a common misconception of the Layer-2 platform of Coinbase.
Coinbase Clo Paul Grewal pointed to a common misconception about the basic platform. In a tweet, Grewal stated that Framing sequencers on L2s such as exchanges incorrectly display their function as a market. Sequencers act as blockchain’s “air traffic control”, taking unordered transactions and organizing it.
To resolve this misconception, Grewal offers the definition of the SEC of an exchange if what a marketplace offers for bringing buyers and sellers of effects together. Grewal added that L2’s block chains are of general purposes that work as an infrastructure. These process messages such as code (call for smart contracts) and all transactions (payments, calls, messages), while postpone a formal order or interaction/matching rules (AMM, Clob, Auctions) to the smart contracts and frontend of an app.
The Coinbase CLO explains its point with the help of an illustration of an off-chain infrastructure such as AWS. Just like the basis, infrastructure such as AWS code that developers offer. This code can include payments, calls, messages and fairs and performed deterministically. “If an exchange runs on AWS, is AWS an exchange? Of course not,” asked Grewal.
Ripple CTO weighs in
The bottom of the base, for Grewal, is this: L2 sequencers make scalable, safe on-chain transactions that make Ethereum computing scales and a wide range of applications in a new world economy possible. He added that the wrong labeling of L2 sequencers may spread FUD, overlooking the crucial role they play when scaling.
No CPU does AML. Amazon Cloud Hosting does not do KYC or AML on the end points of payments or trades their system process.
– David ‘Jeelkatz’ Schwartz (@joelkatz) September 23, 2025
Ripple CTO David Schwartz joined the conversation on X and supports the point of Coinbase Clo Paul Grewal with an illustration of an off-chain infrastructure.
Schwartz stated: “The argument is that the sequencer is no different than a CPU or cloud hosting. It simply does mathematics in a precisely agreed way without the right or ability to impose other rules on the data it processes.”
In response to an X user, Schwartz added: “No CPU does Aml. Amazon Cloud Hosting does not do KYC or AML on the end points of payments or trades their system process.”
In a recent development, Ripple has given an update on the institutional Defi-route map for the XRP largeer, who recently entered the top of institutional Defi with $ 1 billion monthly Stablecoin volume and top-10 RWA activity.