Base activated its Cobalt upgrade on Wednesday, the Ethereum layer-2 network's third major protocol release, expanding its B20 token standard with compliance checks, forced-transfer mechanisms and condition-bound transactions built for tokenized finance.

What does Cobalt change in the B20 standard?

Cobalt lets issuers stack multiple compliance rules onto a single asset issued under B20, according to Base. An issuer can now require recipients to pass identity checks, qualify as accredited investors and clear sanctions screening at the same time, eliminating the need to redeploy under separate tokens.

Issuers can also schedule corporate actions such as stock splits. The system updates share counts as displayed in wallets and applications without minting or burning tokens, leaving underlying supply and holder balances intact.

The release adds a forced-transfer function. Issuers can grant authorized administrators the right to move tokens out of a holder's wallet without the holder's consent and attach a public note to the transfer. Base said administrators cannot initiate such transfers without issuer authorization, and Base itself cannot execute them — a design the source compares to powers common in regulated securities administration.

How do Validity Transactions work?

Cobalt introduces Validity Transactions, a system that holds user-submitted transactions until specified onchain conditions clear before a set block deadline. A trader could queue a swap that becomes eligible for inclusion only if an asset reaches a defined price. Base evaluates the conditions against chain state as each block is built.

The platform said transactions submitted through the system can remain private until they validate and land in a block, reducing the market impact that pre-signed trades in public mempools typically attract.

Why is Base pivoting toward finance?

The upgrade accelerates a deliberate shift by Base toward onchain capital markets. On July 8, Base activated B20 as a native token standard for stablecoins, tokenized real-world assets and other fungible tokens, letting issuers launch compliant instruments without building custom contracts.

A week later, on July 16, Base creator Jesse Pollak said the network had made a "wrong bet" by prioritizing creator, content and messaging applications, conceding Base had fallen behind in prediction markets and perpetual futures. Pollak said trading and payments would now absorb greater engineering focus as Base courts financial issuers.

The B20 standard has already produced a flagship deployment. On Aug. 25, Coinbase — Base's parent — launched tokenized U.S. equities on Base, issuing B20 tokens representing shares in Apple, Nvidia, Meta and Alphabet. Coinbase separately worked with fund administrator Apex Group to tokenize a Bitcoin Yield Fund on the network.

What's next for Base?

Base plans to compress block times from two seconds to 200 milliseconds over the coming months, introduce protocol-level support for sponsored transaction fees and bundled transactions, and adopt technical changes slated for Ethereum's Glamsterdam upgrade.