After Bitcoin rebounded and stabilized, the market heated up rapidly. The most eye-catching ecosystem in recent times must be Base. The most intuitive data is that it took Base's TVL 203 days to reach US$1 billion, 23 days to reach US$2 billion, and 5 days to reach US$3 billion.
However, in the existing impression, from Friend.Tech to Farcaster, the popularity of Base ecology always comes and goes like a tornado. But this time it seems different, the fundamentals of Base seem to be changing.
What happened to Base?
Someone once took a screenshot of the bar chart of active users on the Base chain to show that the Base chain has always been very active, but the answer given by Jesse, the head of the Base protocol, was "September and October don't count, the ecosystem was not ready at that time." It can be seen that Jesse believes that the timing of Friend Tech's appearance is not the most appropriate, and the traffic it brought to Base was too advanced for the entire ecosystem at that time.
But after the Cancun upgrade was officially completed, Base was ready. The most obvious change was that there were more people, more projects, and more money on Base.
Data Don’t Lie
According to Dune data, the number of high-quality developers on Base has increased sixfold since the beginning of this year, based on the criteria of contract complexity and interaction volume. According to Artemis data, the number of unique contracts deployed on Base and the number of unique wallets that have deployed contracts on its network far exceed Arbitrum and Optimism.
In addition, the number of projects in the Base ecosystem is also increasing. The following figure is a chart of the number of new tokens appearing on DEX made by Variant Fund data analyst J. Hackworth. It can be found that Base has become the most dynamic L2 in the Ethereum ecosystem and its growth rate is comparable to that of Solana. According to DeFillama data, Base's protocol revenue now exceeds US$2 million a day, a significant increase compared to early March.
Last weekend, due to the hype of DINO, MFER and Degen Chain, DEX trading volume increased by 100% in 24 hours. At the same time, Solana's DEX trading volume dropped by nearly 50%. This shows that the market's attention has been attracted by Base.
The "head of the base" is expanding
“Give me $1 billion and 60 employees and I’ll turn Coinbase into a DAO.”
Jesse, the founder of Base, is a rare leader among the founders who is keen on participating in the launch of the project. He pays attention to early alpha, participates in pre-sales and even gets rugged. He also publicly posts his passion and thoughts on the project on social media, creating a very friendly image. This is undoubtedly a good image management for a startup project that emerged from a large enterprise.
Hiring people means that a company is in its growth phase; looking at a company's recruitment can also give us a glimpse into its current business needs. For Base, the most important missions to be accomplished at present are, first, expanding the chain to meet demand; second, expanding the team and system to support developers on a large scale.
On Coinbase’s official recruitment website, Base is currently recruiting for the following positions: DeFi Ecosystem Director, Consumer Ecosystem Director, Developer Ecosystem Director, and Marketing Manager.
These recruitments reflect Base's current on-chain ecological construction needs. Correspondingly, 7 months ago, Base's recruitment needs were product managers and creative directors. The different development stages of the ecology determined that Base did not have a very strong on-chain financial ecology at the beginning. Instead, it was inclined towards the consumer end such as creator economy, social networking, and games, which gradually became part of Base's genes. Now, starting DeFi construction and enhancing developer ecological maintenance will bring another encryption force to Base.
Expectation Management of "Coinbase Rich Second Generation"
The inflow of money is Base's hard power. Figuring out where Base's money comes from may help us better grasp Base's development rhythm.
Coinbase's support for Base is Base's biggest confidence. Jeese, head of Base, once said, "Base's structure is a startup within Coinbase, and I have gained tremendous trust and room for execution. We have a small, highly capable team, and we also benefit from leveraging the parent company's larger infrastructure and talent, which can help us grow rapidly."
This benefit has become more evident since the beginning of this year.
First, Coinbase launched the smart wallet, whose core function Magic Spend allows users to transfer funds on the chain "in a timely manner". When signing/paying a transaction, users can choose to withdraw funds from their Coinbase account, and the funds are only withdrawn when the transaction is signed/paid. In addition to having funds in the Coinbase account, users do not need to perform any other operations, download wallet extensions, or bridge.
This is crucial for converting Coinbase users to Base. If you are a user of OKX Web3 wallet, you should be able to feel the importance of the wallet as an entry point to the chain. With the Cancun upgrade to reduce the Layer2 fee, Base may be able to smoothly take on this wave of traffic.
In addition to bringing more people, Coinbase also brought more money to Base. A few days ago, Max Branzburg, vice president of Coinbase, posted on social media that "In the future, Coinbase will store more corporate and customer USDC balances on Base. This enables Coinbase to manage and protect customer funds with lower fees and faster settlement times without affecting the Coinbase user experience."
The institutional-level USDC inflow is the highlight of the capital inflow indicator for Base. The amount of USDC inflow is strongly correlated with the TVL explosion of a chain. Take Solana as an example. On March 11, Circle minted 250 million USDC on the Solana chain, which injected more powerful vitality into the Solana ecosystem and had a very positive impact.
“What if?” is how some people react to the fact that Base has no plan to issue coins, and this is also how Base attracts users and funds.
The support of Coinbase for Base mentioned above is an inherent aura of Base, and the market's expectations for this have been partially verified. Although the Base official account clearly stated in the introduction that it will not issue coins, for an Ethereum Layer2, issuing coins is the biggest expectation of users. If the protocol does not issue coins, it has to rely on on-chain activity to maintain revenue. From Friend Tech to Warpcast, Base always attracts groups of airdrop hunters, and this is the charm of Base.
Related reading: " Not issuing coins is Base's weapon "
Is Base really ready?
Although Base’s TVL, DEX transaction volume and other indicators have increased significantly, is Base really ready, facing both new and old “rivals” within the Ethereum ecosystem and Solana’s continued momentum outside the ecosystem?
Liquidity injection has begun
The absolute standard for measuring whether a chain is a short-lived success is liquidity.
In the early morning of March 30, Sartoshi, the founder of the well-known NFT project Mfers, announced on X that he would issue his own meme token mfercoin on the Base chain and airdrop it to mfers holders. MFER’s wealth-creating effect has caused many people who previously disdained Base to change their attitudes, increasing 100 times in 6 hours.
At the same time, Sartoshi's move also made many well-known NFTs in the previous cycle "long-lost" attention at this time. The community even compiled a list, including Official Twitter of NFT projects such as Penguin, RTFKT, and coolcat, as well as the social accounts of founders. Poopie (Jordan Castro), co-founder of doodles, announced yesterday that he would launch an experimental meme project poopcoin on Base and airdrop it to NFT holders. It is foreseeable that if several more meme god disks such as BOME and SLERF on Solana are born on Base, it will surely inject more liquidity into Base.
In addition to memes, don’t forget that there is also Friend Tech on Base, which was once a great project. Although its momentum is much smaller than last year, due to its large user base, if it is airdropped, it will become the second wave of liquidity for Base. On the points trading platform Whales Market, Friend Tech’s points once rose to $5, which also shows that market expectations are increasing. Perhaps capital such as Paradigm will learn the "airdrop liquidity" strategy of the capital behind Solana and continue to inject more liquidity into Base.
"Gas pressure is given to the Base"
After the Cancun upgrade was completed, the transaction fees of Layer2 of the Ethereum ecosystem did decrease, but the cost-saving data packet Blob technology introduced by the upgrade was originally intended to provide more storage space to expand Ethereum and thus reduce the transaction fees of Layer2, but now it is widely used to create "blobscriptions", which runs counter to the original goal. This also squeezed the available share of Layer2, making the fees of Base even higher during peak transaction periods than before the upgrade.
As mentioned earlier, Base’s current daily revenue has exceeded 2 million US dollars. The figure below shows the gas fees of Ethereum’s major Layer2s over the past month. Base’s gas fees at the end of March were far ahead of others.
During Solana’s peak, its transaction fees were kept at a level that users did not notice, so Base still has a lot of room for improvement in this regard.
However, the Base team takes this issue very seriously. Last week, Jesse said that the Gas Limit has been increased by 50% to 3.75 mgas/s, which has reduced the median Gas fee from more than $11 to around $0.02. Although the current average fee is $0.06, the Base team plans to increase it to 5 mgas/s in the coming weeks.
The ecosystem cannot be attacked?
There is no doubt that DEGEN has broken the circle, but the original "Index nature" label has now become L3, leaving the first-tier ecology and grabbing Base's traffic and liquidity, which has made the fomo sentiment of the Base ecology, which does not have many strong labels, even more serious. In addition, some projects in Base still have trading volume brushing behavior. At the time of writing, Base's trading volume has returned to normal levels, but a few days ago, Base's trading volume once exceeded US$15.3 billion.
An ecosystem cannot maintain long-term prosperity with only one or two short-lived out-of-the-box projects. One of the problems Base is currently facing may be that there are not enough mainstream ecosystem projects. Aerodrome occupies half of Base TVL. Although this shows that VELO's DEX is very successful, it also reflects that there are not more competitive projects in the Base ecosystem for users to choose from. Due to excessive FOMO, Aerodrome's market value has even surpassed its native protocol Velodrome by several times.
In addition, most of Base's DeFi facilities are currently derived IPs of other ecological protocols. Aerodrome is the migration of Velodrome from the OP ecosystem, and the lending protocol Moonwell is the Polkadot ecosystem. There are also many other ecological teams chasing the hotspot to migrate to Base. The most noteworthy of these migration projects is the encrypted scientific research platform ResearchHub founded by Coinbase CEO Brian Armstrong. Its foundation said at the weekend that it will migrate to Base soon.
Although more and more projects are beginning to patronize Base, only when the native projects within the ecosystem become strong can a group of loyal users of the ecosystem be gathered. Protocols such as Friend Tech and Farcaster bring users and traffic to Base. Once they settle down and continue to cultivate this ecosystem, Base will take root deeper and have stronger strength to compete with other ecosystems.
In fact, Base has been highly concerned since its birth. The title of Layer2 launched by Coinbase, the only listed crypto trading platform, is enough to attract hot money. However, Base did not start with a high-profile strategy, but chose social networking as a breakthrough strategy, and gradually cultivated the track of culture and creation, which created the soil for the birth and growth of the seed of DEGEN.
Jesse believes that anyone who tries to express that "entering the market is the most important thing" has missed the point. The best GTM (go to market) is to think deeply about technology or product strategy and make it possible. But it is also because of the market's expectations for Base that the seed of DEGEN continues to grow, which is a self-fulfilling prophecy. So, give Base some time, and Stay Based.
