Comprehending the concept of Base

Base publicly launched its mainnet a little over two months ago, and the debut was remarkable. In spite of the ongoing bear market, it exhibited rapid growth within just over two weeks. With the initial excitement surrounding Base now subsiding, it is an appropriate moment to assess the current status of the network.

Let’s delve into the essential statistics of the blockchain’s performance and uncover the factors contributing to its appeal.

Key Takeaways:

• Base attracted considerable interest from the community immediately following its public launch.
• This resulted in significant growth in both user numbers and transactions for a period.
• A major factor in Base’s popularity is its robust ecosystem and marketing initiatives.
• Additional Layer 2 blockchains are anticipated to launch in 2024, heightening competition within the sector.

What Is Base?

Base is an Ethereum layer 2 blockchain created by Coinbase, a prominent cryptocurrency exchange. It is among the latest Optimistic rollups that are compatible with the Ethereum Virtual Machine (EVM).

Base aims to provide advanced features such as Account Abstraction (ERC-4337) and low transaction fees. Its objective is to evolve into a “Superchain” that emphasizes a secure and innovative environment for developers and users within the blockchain ecosystem.

Record Breaking Blockchain

The Base public mainnet was launched on August 9, 2023. Shortly after its introduction, it attracted substantial attention from the community and developers, establishing itself as a prominent Layer 2 network among its peers.

While applications on Ethereum continue to enjoy significant popularity and encounter limited competition from other ecosystems, Layer 2 networks are effortlessly drawing in users. Base distinguishes itself with its cost-effective and rapid transactions, along with strong EVM compatibility. Developers were able to quickly migrate their applications, contributing to the swift expansion of the blockchain’s user base.

Transactions

Historically, only Arbitrum and zkSync Era have recorded transaction numbers exceeding 1 million. However, within less than two weeks post-launch, Base also surpassed this threshold, targeting even higher figures, above 1.5 million.

For a brief period, Base became the leader in daily transactions, even surpassing the well-known zkSync Era. However, it is crucial to note that the transaction volume on zkSync Era remains stable at a consistent level each day, which raises some questions. The activity on zkSync may largely be influenced by sybil accounts anticipating an airdrop, while Base’s activity appears to be more of a temporary spike in interest.

Daily Active Addresses

Despite the high transaction volume, Base did not secure a leading position in terms of the number of active addresses on the network. The network consistently held 5th place, roughly comparable to Optimism. Notably, Base significantly outperformed the user counts of previously launched platforms such as Linea, Mantle, and Polygon zkEVM.

In just over two months, Base has surpassed both Optimism and Arbitrum in total accounts created. However, it still lags considerably behind Ethereum. The native application, friend.tech, has been instrumental in this success and has attracted attention not only from web3 users. Nonetheless, it is essential to consider the potential presence of numerous bots and sybil accounts within this application.

Friend.tech remains the most utilized app on Base. It is akin to GMX on Arbitrum in early 2023. Stargate ranks second in terms of 30-day active dApp users on Base, followed by other projects with a significant gap.

It is noteworthy that Uniswap V3 has outperformed the initial base-native DEXs, BaseSwap and SwapBased. It has also surpassed Aerodrome, the leading DEX on Base by Total Value Locked (TVL).

Total Value Locked

In less than a month following the public mainnet launch, Base exceeded $400 million in total value locked (TVL), securing a position in the Top 10 blockchains by TVL. This milestone was primarily driven by the launch of the native DEX Aerodrome (a fork of Velodrome) and the success of friend.tech. However, funds have recently begun to flow into other projects, leading to a more balanced distribution.

Aerodrome and friend.tech are at the forefront in terms of Total Value Locked (TVL), followed by other projects. The distribution of TVL among dApps on Base encompasses a variety of projects, indicating considerable interest in the ecosystem from the community.

Base Native dApps

Undoubtedly, Onchain Summer and friend.tech have significantly contributed to the popularity of Base.

Onchain Summer is a promotional initiative launched by Base to enhance the adoption of native applications and the blockchain itself. As part of this initiative, users had the chance to mint NFTs from Base’s partners and explore the Base ecosystem.

However, the true breakthrough in the Base ecosystem originated from friend.tech. Friend Tech is a SocialFi application that allows users to trade keys for private chats with X (formerly Twitter) influencers. Given X’s prominence within the crypto community, the app quickly attracted attention from numerous users. Additionally, it expanded its reach beyond the web3 community, drawing in bloggers from outside the crypto realm.

The success of friend.tech extended well beyond Base and initiated a broader SocialFi trend. Developers began actively creating alternatives to this application, and users reminisced about earlier projects. Nevertheless, the Base ecosystem is not confined to these two initiatives.

In the early days of Base, the memecoin BALD gained considerable attention, although its holders later fell victim to a rug pull. This incident highlighted the immense interest in the 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 growth of the Base ecosystem. The Base Ecosystem Fund has previously announced investments in six projects that are developing on this blockchain. Further investments from this fund can be anticipated in the future.

Reasons for Base’s Growth

Base exemplifies a successful product launch in a bearish market. The team not only executed a high-profile launch but also established a comprehensive ecosystem. A streamlined introduction to the ecosystem, along with distinctive native applications and dedicated time for developers to prepare, undoubtedly contributed to its success.

The network’s performance, particularly the cost and speed of transactions, has been a significant factor. This can be attributed to the OP Stack, which is currently a more efficient solution compared to zero-knowledge rollups. For comparison, below are the transaction costs for several popular Layer 2 blockchains.

The popularity of various new blockchains is often influenced by speculation regarding airdrops and token launches. However, in the case of Base, the situation is less straightforward. Currently, the network is governed by Coinbase, which operates under U.S. jurisdiction. While there are expectations for blockchain governance to become more decentralized, it would be challenging for Coinbase to legally issue any tokens. Nonetheless, many users continue to transact on the network in anticipation of a retrodrop. However, Base significantly trails behind zkSync Era and StarkNet, which are more likely to distribute tokens to the community.

The Competition Among L2s Increases

Two months following the mainnet launch, activity on Base began to decline. This trend was also observed in other blockchains, with the exception of Mantle and Linea. However, overall market activity is diminishing due to rising uncertainty.

In the future, we expect the introduction of more Ethereum Layer 2 networks. However, only a select few will establish themselves as leaders. Base has already demonstrated its capacity to manage substantial loads, with over 1.5 million daily transactions, and has received favorable feedback from users.

At present, it seems that a robust ecosystem is essential for successful blockchain launches. Both L2s introduced in 2023 (zkSync Era and Base) featured unique dApps that attracted a large user base. Arbitrum also had GMX as a key dApp prior to its airdrop. Other blockchains have not achieved the same level of popularity, except for StarkNet, which has been inundated with sybils anticipating an airdrop. This is primarily due to a lack of unique projects. However, their opportunity for resurgence may still arise.

Closing Thoughts

Base serves as an excellent illustration of how effective branding and investments in ecosystem development can facilitate the launch of a successful product, even in challenging times. The bear market is a period for building, and Coinbase’s team working on Base has utilized it effectively. They also executed a commendable launch.

Base has already secured a solid position among Ethereum and others, and it is likely to maintain that standing until the current paradigm shifts towards other blockchains with superior performance. As additional Layer 2 blockchains are inevitably launched, Base will encounter heightened competition. Therefore, it is crucial for the development team to introduce new features and continue attracting tier 1 projects.

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