Coinbase has launched its new Layer 2 solution, Base, which aims to provide the same security and scalability as Ethereum at a lower cost. Base is built using OP Stack and has strong support from Coinbase, including its 110 million+ user base and huge financial resources. Multiple protocols have been launched on Base, heralding its great potential in the DeFi field. With the upcoming Ethereum EIP-4844 upgrade, it is expected that the cost of L2 usage will be further reduced, bringing more opportunities for Base and the entire DeFi space.

OP Stack and its friends: Base🔵

Base - Coinbase's new Layer 2 is finally here.

This is one of the most exciting crypto product launches of the year and will be home to countless new opportunities.

🧵: Here's everything you need to know about Base and how you can profit as an investor. 👇

In this article, I will introduce:

• What is Base?
• Will it work?
• Impact on the overall DeFi/crypto market
• How do you profit?

Let's dig deeper. 👇

What is BASE?

Base is an Ethereum Layer 2 scaling solution built using the Optimism technology stack (OP Stack).

It aims to provide Ethereum-level security and scalability at a fraction of the cost of Ethereum.

Coinbase describes it as a product that "brings the next billion users to Web3".

Core Principles of Base

Base has 4 core principles, they are:

• Security provided by Ethereum
• Powered by Coinbase
• low cost
• open source

Base utilizes OP Stack (Optimism technology stack) to build its L2.

Base believes that by following Superchain 's vision, they can work towards increasing the interoperability of the L2 ecosystem to help "scale Ethereum together."

Base vs Optimism

It is not new for a centralized enterprise to launch a decentralized chain . But it's definitely becoming an increasingly popular trend.

Why? From a business perspective, Rollup offers a new way to generate revenue from fees — and reach a whole new user base.

Layer 2 First

Remember, Coinbase has been in the crypto space for a long time.

They could have rushed a chain+token in the last bull run, but they didn't.

Base is a well thought out move executed by an experienced team.

BASE ecology can be expected

Many protocols have announced their official launch on Base.

Now there are 30+ outstanding projects online.

There are many more projects to come.

Base Early Ecology

In a tweet from the official Twitter account, @BuildOnBase revealed some of their new partners.

Base ecology can be expected

Of these partnerships, @CocaCola stands out as very special.

Because of @coinbase's positioning in the industry, they have an advantage in attracting big name partners (I expect this is just the first of many).

Coinbase is a large company (valued at $20 billion), so has huge financial backing to invest in the ecosystem and technology development. This is the biggest attraction of Base.

Coinbase has over $5 billion in cash on hand, so they have good cash flow to invest in new product development.

Coinbase has deep pockets

We've already seen a 100+ $ETH grant program for developers building on Base this summer.

Coinbase Phase 1 Funding Program

Also, because of Coinbase's reputation (hopefully helped by a positive SEC ruling), new protocols may feel safer building there.

I've been talking to a group of protocol developers recently, and they're all excited about the proposal to build on Base.

Base's earning potential

It's ironic that Base launches with "BALD's sudden event" as this is so far from the image @brian_armstrong and @coinbase hope to project for their new chain.

Shockingly, however, even in that "unofficial" launch, Base made $700,000 in profit ($85 million annualized) in just 3 days.

Imagine the revenue potential when the chain goes live.

Coinbase Revenue

However, Base still faces stiff competition.

We currently have L2 solutions like MATIC, ARB, OP and IMX.

Not to mention the upcoming zkSync , Starknet , Scroll , Linea and more .

This is probably the most competitive race track in the crypto space.

However, Coinbase is uniquely positioned as a top-tier business. It already has 110 million+ users and $80 billion worth of assets on the Coinbase platform.

This gives Base a huge advantage, as Base can leverage Coinbase's existing user base.

Coinbase’s user base

When Coinbase users choose to exit, Base will be given priority (lower fees/access). Coinbase can even integrate Base chain-based DeFi directly from Coinbase trading products.

This is a bullish thing not only for Base, but also for dApps (and subsequently the DeFi space) built on-chain - meaning there will be a constant influx of liquidity on-chain.

How should investors take advantage?

As an investor, how do you take advantage?

Well, since Base has no tokens, there is no way to directly invest in the chain itself.

So let's explore the remaining options.

Leverage on-chain incentives

There will be a lot of hype on the Base chain.

There are hundreds of projects all vying for their slice of the pie.

So I expect some enticing airdrops/incentives early on.

Keep an eye on these, as there may be some easy gains on the table.

Excellent Protocol Investing in Base

As with any new chain, protocols that gain market share early have great potential to capitalize on Base's success.

Once Base is released, it is recommended that you take some time to actively monitor new projects starting on Base.

I'll be updating as I find opportunities, so if you're not already following me, make sure to follow me @milesdeutscher . :)

Base's time of day

Interestingly, the release of Base came before the most important Ethereum upgrade of Layer 2s: EIP-4844 .

The upgrade, which is expected to go live later in the fourth quarter of this year, aims to reduce L2s gas fees by an order of magnitude.

EIP-4844 will introduce a new transaction format for "blob-carrying transactions" - which will result in a significantly lower gas fee for L2s.

See the gas fee estimation effect below:

EIP-4844 Gas fee comparison before and after upgrade

Overall, I think this upgrade is a huge positive for the L2 space, as it will lower the barrier to entry for retail users by lowering costs, while making L2s more attractive relative to ETH and other chains.

So overall, I'm excited for the future of Base and the opportunities it may bring.

I think this is an undeniable positive impact on the entire DeFi space, and I look forward to seeing how the Base chain develops.