DeFi indicators revealed! How Base made the jump to the top Layer 2 ranks

According to L2 Beat , among Ethereum Layer 2, the TVL of the Base chain has ranked second. It accounts for an overall 18% share among the 74 active Layer 2, while Arbitrum, which ranks first in TVL, accounts for about 40%. Base is an Ethereum Layer 2 launched by the US-based compliance exchange Coinbase using OP Stack technology, but now its market share even exceeds Optimism itself.

Pulling the market is justice. How can Base, which does not issue coins, seize the market?

Layer 2 is designed to execute transactions outside the mainnet, and then record the transaction results on the mainnet. Although in detail, we should adopt Optimistic Rollup or ZK Rollup. There is even a lot of disagreement about whether sorters are centralized or not. But in fact, just like many industries, perhaps users don't really care about the so-called technical details. Competition for market share depends largely on marketing strategies.

As a Layer 2 supported by Coinbase, Base has seized many opportunities. For example, in the recently concluded Onchain Summit , Base spent two million US dollars to activate on-chain activities. According to reports , Onchain Summer added two million independent addresses to the Base chain within the three-month event period, and Base will add 268,000 independent addresses in 2023. This craze has brought great benefits to creators. Five million dollars in coinage revenue.

A Coinbase spokesperson said: "The results really surprised us. The 2.2 million unique wallets participating were approximately 8 times the number we saw last year and more than double our internal expectations."

We can observe the effectiveness of this strategy from on-chain data. The latest chart from on-chain data provider Token Terminal shows that the number of active users of Base is accelerating in recent months, while other Layer 2 is declining.

The only Layer 2 to capture the meme craze: Base’s counterattack

Since Coinbase is a US-listed company, we can find some clues from its latest quarterly report . The cryptocurrency exchange spent more than $165 million on sales and marketing in the second quarter of 2024, more than double the amount spent in the same period last year. In the first quarter of 2024, Coinbase reported $52.5 million in "other" trading revenue, which includes so-called sequencer fees charged by Base.

But besides the marketing part, Base has other secret weapons. That is the convenience of transferring tokens from Coinbase. This is done through smart contracts, without the need for relatively complicated operations such as tokens and private keys. Currently, the issues that are of great concern to blockchain startups are chain abstraction and account abstraction. In short, it is user-friendliness. Base is moving users to the chain by simplifying the entrance to the blockchain.

Finally, since the beginning of the year, Solana, TRON, BNB and other chains have experienced a meme craze. Users are keen to participate in the so-called Dogecoin on the chain, which also brings vitality to on-chain transactions. In addition to some hype on the Ethereum mainnet, Base is the only Layer 2 with meme craze. It can even be said that Base is one of the most popular meme chains this year.

After studying Base's largest DeFi protocol, Aerodrome Finance, we can find that the most popular trading pairs after excluding stablecoins are all related to meme coins.

Rob Hadrick, a co-partner of the well-known venture capital firm Dragonfly, said: "Looking at Uniswap on Base, the situation is also the same. Two of the top five tokens by trading volume are memecoin." He also said: "It has nothing to do with Solana. Differently, their competition in these long-tail token trading markets is quite fierce because more and more young users are starting to speculate on memecoins.”

"Base has surpassed other Layer 2s in terms of daily active addresses (DAU) and daily transactions, and the project has entered the top five for many important DeFi metrics (such as TVL, sorter fees, etc.)." Rob Hadrick added.