Quick Take:

• Franklin Templeton anticipates Base to maintain leadership position on Ethereum layer 2.
• Base attracts memecoins and SocialFi projects, fueled by Coinbase support.
• USDC dominates stablecoin volume on Base, reaching $2.8 billion market cap.

Franklin Templeton, a leading asset manager with $1.5 trillion in assets, expresses confidence in the future trajectory of the Base network within the Ethereum ecosystem. Base, an Ethereum layer 2 blockchain initiated by Coinbase, is expected to solidify its position in the layer 2 market, capturing substantial market share.

With a current deposit volume of $1.6 billion, second only to Arbitrum’s $2.6 billion, Base stands out among Ethereum layer 2 networks, according to DefiLlama data. Franklin Templeton attributes Base’s success to robust support from Coinbase, the entity overseeing Base’s Sequencer, responsible for transaction bundling and verification.

Base’s recent surge in activity is attributed to the burgeoning memecoin trading and the growing interest in SocialFi projects, such as friend.tech. The network’s transaction fees have seen a notable uptick due to heightened activity levels, particularly in memecoin trading.

Despite the absence of decentralization in Base’s Sequencer, the network’s user adoption continues to grow steadily. Notably, SocialFi transactions comprise approximately 46% of all activities on Base, underscoring its significance as a key vertical for adoption and growth.

The surge in memecoin trading on Base coincided with Ethereum’s EIP-4488 upgrade, which drastically reduced transaction fees on layer 2 networks. Popular tokens like TOSHI and BRETT experienced substantial market value growth, with BRETT reaching a peak of $800 million.

Furthermore, Base has emerged as a preferred platform for stablecoin transactions, with a stablecoin market cap of $2.8 billion. Circle’s USDC stablecoin dominates the volume, contrary to the usual dominance of Tether’s USDT in the DeFi space.

Coinbase’s facilitation of free USDC transfers to the Base chain via its wallet since December 2023 has contributed significantly to USDC’s popularity on the network. This strategic move aligns with Base’s objective of fostering seamless and efficient transactions within its ecosystem.

In conclusion, Franklin Templeton’s bullish stance on Base underscores the network’s potential to thrive within the Ethereum landscape, driven by its strong fundamentals, robust support from Coinbase, and growing adoption among users and projects alike.