Coinbase’s Layer 2 solution, Base, has established itself as one of the fastest-growing among its peers. In just 226 days after its debut, it achieved the remarkable milestone of reaching $1 billion in total value locked (TVL). In 2024, particularly, it has demonstrated incredible growth.
This rapid rise has firmly positioned Base first on the list of the top DeFi platforms and sparked curiosity about the driving forces behind its success. The speed at which Base captured market share and gained traction among both users and developers is quite astonishing.
What’s Driving Base’s Explosive TVL Growth?
Base’s success in 2024 can be attributed to several key factors that have fueled its rise in user adoption, transaction activity, and developer engagement.
Starting with the obvious, Base’s connection to Coinbase, one of the world’s largest cryptocurrency exchanges, is a major factor driving its success. In addition to lending it credibility and trust, Coinbase’s massive user base of over 100 million people makes it easy to onboard users to the Layer 2 solution. Users can transfer assets directly from Coinbase to Base without relying on third-party services.
Additionally, Coinbase’s experienced development team ensures that Base’s growth is backed by robust technological and operational expertise.
Low-Cost, High-Speed Transactions
However, Base’s appeal lies in its ability to offer near-instant transaction finality at incredibly low costs. With transaction fees as low as $0.01 and processing times under one second, Base has become a preferred solution for users seeking affordability without compromising speed or security.
Although Base faced congestion issues in late 2023, these were largely resolved following Ethereum’s Dencun upgrade in March 2024. This upgrade decoupled gas fees from Ethereum’s mainnet, enabling Base to reduce transaction costs by up to 650 times. The improved scalability allowed Base to handle more transactions concurrently, supporting its exponential growth.
According to Dune Analytics, Base’s daily active users surged after the Dencun upgrade, climbing from below 100,000 to over 200,000. On March 16, 2024, the network reached a peak of 850,000 daily active users, marking a staggering 3,200% increase in daily new users within a short period.
Developer-Friendly Ecosystem
Base has emerged as a hub for developers building innovative blockchain products. Its gas efficiency, high speed, and robust security make it particularly appealing for frequent transactions such as trading memecoins, market-making, and deploying Maximal Extractable Value (MEV) bots. For example, Aerodrome, a decentralized exchange (DEX) built on Base, has gained significant attention for its novel liquidity management strategies.
Notably, the platform also provides support in terms of funds and development resources to attract these new projects.
Shifting Memecoin Market Dynamics
Speaking of memecoin projects, some market analysts predicted in March that the Base would be the next frontier for market activity following Solana’s recent success. For instance, the memecoin BRETT launched in February 2024 and has quickly gained prominence, becoming one of the largest memecoins by market capitalization.
Memecoins are usually seen as gateways for new users entering the Web3 ecosystem. Base’s intuitive interface, easy-to-use, and low transaction fees have made it the preferred network for trading such assets.
Strategic Marketing Campaigns
The success of Coinbase’s Onchain Summer 2024 event underscored Base’s growing traction. The event ran over the course of 3 months and it showcased innovative use cases and incentivized activity on the network, and thus brought significant attention to Base, attracting both users and developers.
According to the project’s team, over 2 million unique wallets (compared to about 268,000 in 2023) participated in the event, and it resulted in over $5 million in on-chain revenue for builders, creators, and projects.
The Impact of Base’s Growth on the Crypto Ecosystem
Base’s meteoric rise reflects the growing adoption of Layer 2 solutions as scalable alternatives to Ethereum’s congested and costly mainnet. Here are some of the broader implications.
Base’s growth supports Ethereum’s rollup-centric roadmap by driving the adoption of Layer 2 solutions. The influx of users and liquidity into Base highlights the potential of rollups to address Ethereum’s scalability challenges, inspiring further investment and innovation in blockchain scaling technologies.
While Base’s dominance demonstrates the success of Layer 2 platforms, it also raises concerns about the centralization of liquidity within a few dominant players. This concentration could limit competition and stifle innovation among smaller protocols, potentially reducing the diversity of the blockchain ecosystem.
Rapid TVL growth amplifies the need for robust security measures. High-profile breaches in the DeFi space, such as the $19.3 million exploit of UwU Lend in June 2024, serve as reminders of the risks associated with scaling too quickly. Any vulnerabilities in Base’s infrastructure could have cascading effects across the broader DeFi market.
Looking Ahead
Base’s explosive TVL growth in 2024 highlights the increasing maturity of Layer 2 solutions and their potential to reshape the DeFi landscape. Though it has established itself as a leader in the Layer 2 space, the battle for dominance is far from over. The platform’s success hinges on its ability to sustain innovation while addressing challenges such as security risks, decentralization, and ecosystem diversity.
If Base continues to prioritize user experience, developer engagement, and technological advancements, it could further cement its position as a cornerstone of the crypto ecosystem. However, maintaining this momentum will require careful navigation of the delicate balance between rapid growth and long-term sustainability.
Disclaimer: This article is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence.
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