Quick Take:

• Anniversary: Base’s genesis block was created one year ago.
• Achievement: Second in activity among Ethereum Layer 2 networks, only behind Arbitrum.
• Contributors to Success: SocialFi apps like Friend.tech, decentralized exchange Aerodrome, and lending protocol Moonwell.
• Adoption Driver: Franklin Templeton credits SocialFi for Base’s high adoption rate.
• Cost Reduction: Ethereum’s Dencun upgrade reduced transaction fees, boosting Base’s activity.

On June 15, 2023, Base, the Coinbase-incubated Ethereum Layer 2 network, mined its genesis block with an embedded reference to a classic internet meme: “all your base are belong to you.” Fast forward one year, and Base has established itself as a formidable player in the Ethereum rollup ecosystem, trailing only Arbitrum in activity.

The Genesis and Early Growth

Base’s journey began with its genesis block and accelerated with its public launch in August 2023. This Coinbase-built network quickly attracted a substantial user base, particularly through its integration with popular SocialFi apps. SocialFi, a combination of social media and decentralized finance, has played a crucial role in Base’s rapid adoption.

SocialFi’s Impact

One of the standout SocialFi applications on Base is Friend.tech. This app, alongside other platforms like the decentralized exchange Aerodrome and lending protocol Moonwell, has been instrumental in driving user engagement and transaction volumes. Base even supports its own sub-networks, such as the meme-coin-centric Degen Chain, which powers Farcaster’s community currency.

Franklin Templeton, a major asset manager, recently highlighted Base’s success with SocialFi, describing it as a “home run” for Coinbase. The firm’s analysis shows that nearly half of all SocialFi transactions in the crypto sphere occur on Base, a testament to the platform’s popularity and ease of use for Coinbase customers.

Transaction Surge and Cost Reduction

The influence of Friend.tech on Base is evident in transaction data. A significant spike in activity was observed in mid-September 2023, coinciding with a peak in Friend.tech transactions. This early surge was a precursor to another wave of activity following Ethereum’s Dencun upgrade in April.

The Dencun upgrade, aimed at reducing transaction costs across Ethereum and its Layer 2 rollups, had a notable impact on Base. Median gas fees on Base plummeted from approximately $0.5 on March 13 to around $0.003 post-upgrade. This reduction in fees made Base one of the most affordable Layer 2 networks, further attracting users and increasing transaction volumes.

Total Value Locked (TVL) Milestones

In terms of Total Value Locked (TVL), Base has made significant strides. Recently, it surpassed Optimism to become the largest network within the OP-Stack based “Superchain.” Despite this achievement, Base still ranks behind Arbitrum and Blast in overall TVL, according to DefiLlama data.

Aerodrome, Base’s leading decentralized exchange, boasts the highest TVL on the network. It is followed by the Base implementation of Uniswap, a prominent decentralized exchange protocol, and Moonwell, a decentralized lending protocol that ranks third in TVL on Base.

The Role of Coinbase and Future Prospects

Coinbase’s role in fostering Base’s development cannot be overstated. By leveraging its extensive customer base and reputation, Coinbase has facilitated the onboarding process for new users, making it easier for them to engage with Base’s ecosystem. This seamless integration has been a key factor in Base’s rapid growth and widespread adoption.

Looking ahead, Base is well-positioned to continue its upward trajectory. The network’s low transaction costs and robust ecosystem of decentralized applications (dApps) provide a strong foundation for future growth. Additionally, as more developers and projects migrate to Layer 2 solutions to benefit from improved scalability and reduced fees, Base stands to attract even more activity and investment.

Challenges and Considerations

Despite its success, Base faces several challenges. Competition in the Layer 2 space is fierce, with networks like Arbitrum and Optimism constantly innovating and expanding their offerings. To maintain its competitive edge, Base will need to continue enhancing its platform, ensuring it remains user-friendly, secure, and efficient.

Regulatory scrutiny is another potential hurdle. As cryptocurrencies and blockchain technologies gain mainstream attention, regulatory bodies worldwide are increasingly focusing on these areas. Base, like other networks, will need to navigate this evolving regulatory landscape carefully to avoid potential pitfalls and ensure compliance.

Community and Developer Engagement

Base’s success is also heavily dependent on its community and developer engagement. By fostering a vibrant and active community, Base can drive innovation and attract new projects to its platform. Initiatives such as developer grants, hackathons, and community events can play a crucial role in maintaining and expanding this engagement.

The network’s ability to support a wide range of dApps, from SocialFi platforms to decentralized exchanges and lending protocols, is a testament to its versatility. As the blockchain space continues to evolve, Base’s adaptability will be key to its long-term success.

Conclusion

As Base celebrates its one-year anniversary, the network has much to be proud of. From its genesis block to becoming the second most active Ethereum Layer 2 network, Base’s journey has been marked by rapid growth and significant achievements. With the continued support of Coinbase, a thriving ecosystem of dApps, and a strong focus on community and developer engagement, Base is well-positioned to remain a leader in the Layer 2 space.

The coming years will undoubtedly bring new challenges and opportunities, but if Base’s first year is any indication, the network is more than capable of navigating them and continuing its impressive trajectory. As the blockchain and cryptocurrency landscape evolves, Base’s commitment to innovation and user-centric development will be crucial in securing its place at the forefront of the industry.