Understanding the phenomenon of Base Understanding the phenomenon of Base
Base's explosive growth offers a lesson on ecosystem investment and market resilience in the bear season.
6 min read
Updated: Oct. 25, 2023 at 1:48 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Base publicly launched its mainnet just over two months ago, and the launch was phenomenal. Despite the bear market, it demonstrated exponential growth in just over two weeks. Now that the hype around Base has cooled down, it is time to examine the state of the network.
Let’s explore the key stats of the blockchain’s performance and uncover the reasons behind its popularity.
Key Takeaways:
- Base garnered much attention from the community right after the public launch.
- This led to exponential growth in the number of users and transactions for some time.
- One of the key elements of Base’s popularity is its strong ecosystem and promotional campaigns.
- More Layer 2 blockchains are expected to be launched in 2024, increasing competition in the industry.
What Is Base?
Base is an Ethereum layer 2 blockchain developed by Coinbase, a leading crypto exchange. It is one of the most recently launched Optimistic rollups compatible with the Ethereum Virtual Machine (EVM).
Base focuses on offering advanced features such as Account Abstraction (ERC-4337) and low fees. Its goal is to become a “Superchain” that prioritizes a secure and innovative environment for developers and users in the blockchain space.
Record Breaking Blockchain
Base public mainnet went live on August 9, 2023. Shortly after its launch, it garnered significant attention from the community and builders, positioning itself as a leading Layer 2 network among others.
Although applications on Ethereum continue to enjoy high popularity and face limited competition from other ecosystems, Layer 2 networks are attracting users effortlessly. Base stands out with its affordable and speedy transactions, along with its strong EVM compatibility. Developers were able to swiftly port their applications, contributing to the rapid growth of the blockchain’s user base.
Transactions
Historically, only Arbitrum and zkSync Era have shown a number of transactions higher than 1 million. However, in less than 2 weeks after its launch, Base has also surpassed that level, aiming for even higher numbers, above 1.5 million.
For a short period of time, Base became the leader in daily transactions, surpassing even very popular zkSync Era. However, it is important to note that the number of transactions on zkSync Era remains consistent near the same level each day, which raises some suspicions. The activity on zkSync may be largely driven by sybil accounts expecting an airdrop, while Base’s activity is more of a temporary surge in popularity.
Daily Active Addresses
Despite the high number of transactions, Base did not hold a leading position regarding the number of active addresses on the network. The network maintained a stable 5th place, roughly on par with Optimism. It is worth noting that Base significantly outperformed the user count of previously launched platforms such as Linea, Mantle, and Polygon zkEVM.
In just over 2 months, Base has surpassed Optimism and Arbitrum in terms of total accounts created. However, it still remains significantly behind Ethereum. The native application, friend.tech, has played a key role in this achievement and has garnered attention not only from web3 users. However, it is important to consider the possibility of a significant number of bots and sybil accounts within this application.
Friend.tech remains the most popular app on Base. It is similar to GMX on Arbitrum in early 2023. Stargate holds the second place by 30-day active dApp users on Base, followed by other projects with a huge gap.
It is worth noting that Uniswap V3 has surpassed the first base-native DEXs, BaseSwap and SwapBased. It has also surpassed Aerodrome, the leading DEX on Base by TVL (Total Value Locked).
Total Value Locked
In just under a month since the public mainnet launch, Base has surpassed $400 million in total value locked (TVL), earning it a spot in the Top 10 blockchains by TVL. This achievement was largely driven by the launch of the native DEX Aerodrome (a fork of Velodrome) and the success of friend.tech. However, the funds have recently started to flow into other projects, bringing a more balanced distribution.
Aerodrome and friend.tech are leading in terms of Total Value Locked (TVL), followed by other projects. The distribution of TVL among dApps on Base includes many different projects, which indicates significant interest in the ecosystem from the community.
Base Native dApps
Undoubtedly, Onchain Summer and friend.tech have made significant contributions to the popularity of Base.
Onchain Summer is a promotional project launched by Base to increase the adoption of native applications and the blockchain itself. As part of this promotion, users had the opportunity to mint NFTs from Base’s partners and familiarize themselves with the Base ecosystem.
However, the true breakthrough in the Base ecosystem came from friend.tech. Friend Tech is a SocialFi application that enables users to trade keys for private chats with X (formerly Twitter) influencers. Given X’s popularity within the crypto community, the app quickly gained attention from many users. Furthermore, it extended its reach beyond the web3 community, attracting bloggers from outside the crypto space.
The success of friend.tech went far beyond Base and sparked a whole SocialFi trend. Developers started actively creating analogues of this application, and users recalled earlier projects. However, the Base ecosystem is not limited to these two campaigns.
In the early days of Base, the memecoin BALD gained significant attention, with its holders later falling victim to the rag pull. However, this event demonstrated the immense interest in blockchain and the loyalty of the web3 community towards Coinbase. It also introduced them to several DEXs on Base.
Coinbase is actively investing in the development of the Base ecosystem. Base Ecosystem Fund has previously announced investments in 6 projects that are building on this blockchain. We can anticipate further investments from this fund in the future.
Reasons for Base’s Growth
Base is a prime example of a successful product launch in a bearish market. The team not only executed a high-profile launch, but also established a comprehensive ecosystem. A simplified introduction to the ecosystem, along with unique native apps and dedicated time for developers to prepare, undoubtedly contributed to its success.
The network’s performance, specifically the price and speed of transactions, has played a significant role. This can be attributed to the OP Stack, which is currently a more efficient solution when compared to zero knowledge rollup. For comparison, below are the costs of sending a transaction in several popular Layer 2 blockchains.
The popularity of numerous new blockchains is often influenced by rumors of airdrops and token launches. However, in the case of Base, the situation is less clear. Currently, the network is controlled by Coinbase, which operates under United States jurisdiction. Although there are expectations for blockchain governance to become more decentralized, it would be challenging for Coinbase to legally issue any tokens. Nonetheless, many individuals continue to conduct transactions on the network in the hopes of a retrodrop. However, Base lags significantly behind zkSync Era and StarkNet, which are more likely to distribute tokens to the community.
The Competition Among L2s Increases
Two months after the mainnet launch, activity on Base started to decline. This decline was observed in other blockchains as well, except for Mantle and Linea. However, overall market activity is decreasing due to increasing uncertainty.
In the future, we anticipate the launch of more Ethereum Layer 2 networks. However, only a few of them will establish themselves as leaders. Base has already demonstrated its ability to handle significant loads, with over 1.5 million daily transactions, and has received positive feedback from users.
Currently, it appears that a strong ecosystem is crucial for successful blockchain launches. Both L2s launched in 2023 (zkSync Era and Base) had unique dApps that attracted a large user base. Arbitrum also had GMX as a key dApp prior to the airdrop. Other blockchains have not achieved the same level of popularity, except for StarkNet, which has been flooded by sybils expecting an airdrop. This is mainly due to a lack of unique projects. However, their time to shine may still come again.
Closing Thoughts
Base is a great example of how good branding and investments in ecosystem development can help launch a successful product, even in difficult times. The bear market is a time to build, and Coinbase’s team working on Base used it perfectly. They also did a great job launching it.
Base has already secured a decent position among Ethereum and others, and it will likely maintain that position until the current paradigm shifts towards other blockchains with higher performance. As other Layer 2 blockchains are inevitably launched, Base will face increasing competition. Therefore, it is necessary for the development team to introduce new features and continue attracting tier 1 projects.
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