Hey there!

Today, we are looking at the rise of the Base Layer 2 protocol, built by the largest publicly traded U.S. crypto exchange, Coinbase. The protocol has gained significant traction in terms of user growth and number of transactions processed.

The Optimistic Rollup layer 2 solution, Base, was launched in August 2023 and quickly gained a total value locked of $1.5 billion, as per DeFiLlama. What sets Base apart is its design to enhance the scalability and reduce costs associated with developing and transacting on the Ethereum network. Leveraging Ethereum’s security and decentralisation, Base provides faster transactions by integrating with the existing infrastructure, making it an attractive option for developers and users. As a testament to this fact, Base already has more than 250 dApps, and the network has gained more than 12 million users.

One of the main factors contributing to the rapid growth of Base is the strategic partnership with Coinbase. Leveraging Coinbase’s strong user base, resources, and mainstream profile, Base seamlessly integrates with Coinbase’s existing services to more than 110 million users. In addition to offering easy fiat on-ramps and off-ramps, users can interact with the Base ecosystem using the new Coinbase Smart Wallet, offering a streamlined, gasless, on-chain experience. This integration simplifies the DeFi experience and promotes crypto adoption, from purchasing your first crypto to interacting with dApps and the wider Ethereum ecosystem.

As promised, the layer 2 solution processed transactions faster at a reduced cost, but the number of transactions per second (TPS) was still below Ethereum mainnet until the Dencun upgrade. After its implementation in March 2024, transaction costs were further reduced, and TPS went higher, with the network processing approximately 35 transactions per second.

The daily transaction volume on the Base protocol reached more than one million in the initial days of its launch. It slowly consolidated over the next few months and has shot up since the Dencun upgrade in March 2024. It has reached a peak of 3 million daily transactions and has been above 2 million in the last couple of months, demonstrating steady growth.

Similarly, the Base protocol consistently witnessed close to 100,000 daily active users from its inception to earlier this year. The numbers went up exponentially in March, with a record 800,000 daily active users at one point, and since then, the number has consolidated at about 400,000 daily active users.

The Base is making significant progress in addressing Ethereum’s scalability issues through its innovative layer 2 solutions. While the platform has already achieved impressive onchain metrics and user growth, it remains to be seen whether it can overcome the challenges posed by its competitors and the ever-changing crypto landscape. As Coinbase continues to enhance scalability, expand the ecosystem, and improve user experience, Base is well-positioned for a promising future.

Thanks for reading Onchain Lense by Asva Capital! Subscribe for free to receive more data-backed insights.