What is Base: the Ethereum Layer-2 challenger

Layer-2 (L2) solutions help to enhance Ethereum's scalability, making it more accessible to a larger audience. Two notable L2 options are Optimistic Rollups (OP) and Plasma (POL). OP allows fast off-chain transactions by assuming their validity unless challenged.

At the same time, Plasma boosts scalability via child chains (which are smaller copies of the Ethereum mainnet) linked to the main Ethereum chain, batching transactions offchain and committing them periodically to the primary chain. Both aim to augment Ethereum's capacity while maintaining its inherent security.

Another option that's attracted plenty of attention is Base, an advanced L2 solution designed to provide a secure, economical, and developer-centric platform for onchain construction. It's been developed in collaboration with Optimism on the OP Stack framework.

TL;DR

  • Built on Ethereum's OP Stack, Base is an L2 that offers a faster, cheaper, and more secure transaction environment for DApps.

  • Base addresses Ethereum's scaling challenges of high fees and slow speeds. Its popularity is largely due to its association with the crypto exchange Coinbase, whose backing instills user confidence and fosters adoption since Base integrates seamlessly with Coinbase products and its user base.

  • By adopting the inherent security of Ethereum while remaining open-source and developer-friendly, Base L2 offers significantly lower gas fees compared to Ethereum's mainnet.

  • Financially backed by Coinbase, the Base Ecosystem Fund specifically targets early-stage DeFi projects with promising ideas. This focus encourages innovation by incubating DApps in areas like DEXs, lending platforms, and flatcoins (stablecoins pegged to inflation).

  • Base has quickly gained traction, ranking second in total value locked despite only being launched in July 2023. Its mainnet already boasts over 100 integrated DApps and the ongoing "onchain summer" campaign incentivizes user engagement with the network's DeFi platform.

What's Base?

Imagine a bustling city that only has a single main highway. As more people move to the city and buy cars, this highway becomes congested. That's Ethereum Layer-1 (L1) – the main Ethereum blockchain.

To deal with the traffic, the city constructs overhead express lanes that are faster and can accommodate more cars, but they're still part of the city's road network. These express lanes are what we refer to as Ethereum L2.

What is Ethereum Layer-2?

Ethereum L2 refers to a secondary framework or protocol built on the existing Ethereum blockchain (L1). The purpose of this layer is to increase the network's capacity, thereby allowing for more transactions per second, reducing fees, and alleviating congestion on the primary layer.

How does Base fit into this?

Using our highway analogy, Base is like a newly constructed express lane. It's built to be fast, secure, and efficient. Since Base is built as an Ethereum L2, it operates on top of the main Ethereum network, benefiting from its underlying security while providing multiple advantages:

  • Increased transaction throughput

  • Increased scalability

  • Lower gas fees

  • Improved privacy and security

Base launched its testnet back in February of this year, and with the 'on-chain summer' event in full swing, the mainnet has recently launched. There are currently over 100+ decentralized applications (DApps) and service providers in the Base ecosystem.

However, be aware of potential scammers. Base doesn't have its own network token and there are no intentions to release one in the future. While some L2s have their own tokens, Base stands out with its tokenless design, made possible largely due to backing from Coinbase. Always stay vigilant and avoid falling for fraudulent claims or schemes related to a so-called Base token.

What are Base's main features?

Now that we've explored Base's role in the L2 ecosystem, here's a breakdown of the advantages Base brings.

Leveraging Ethereum's robustness

Base is meticulously engineered to align seamlessly with Ethereum's primary network. This allows developers to deploy any Ethereum Virtual Machine (EVM) codebase onto Base, paving the way for existing DApps to transition or work in tandem without hitches.

Collaborative spirit

With its open-source DNA, Base isn't just a platform — it's a collaborative endeavor. Its partnership with Optimism underscores its commitment to pushing the boundaries of what's possible in DApps.

Economical and efficient

Just like express lanes designed for rapid cross-city commuting, Base offers the extensive capabilities of Ethereum but without the hefty price tag. It serves as a haven for DApps, delivering a full EVM experience at a fraction of the customary Ethereum fees.

Pioneering additions

Base doesn't just emulate Ethereum's capabilities — it elevates them. Developers are equipped with new and inventive Ethereum tools such as Account Abstraction (ERC4337), gasless transaction APIs, and sophisticated smart contract wallets.

Solidifying ties with Coinbase

Base is uniquely positioned to streamline the transition of users and assets from traditional finance to Ethereum's decentralized realm. This integration offers unparalleled access to Coinbase's products, user base, and tools.

A commitment to decentralization

True to the core values of the crypto sphere, Base champions the cause of decentralization. While tied to Coinbase, Base is charting a course towards a progressively decentralized architecture, underscoring its dedication to trust, transparency, and inclusivity.

Security as a priority

Drawing strength from Ethereum's impeccable security features, coupled with the tried and tested best practices of Coinbase, Base stands as a fortress in decentralized applications.

Cost-effective evolution

By achieving full EVM equivalence, Base offers the richness of Ethereum's environment but in a more cost-effective manner — a testament to its commitment to accessibility and affordability.

Why Base?

For some, the crypto and blockchain ecosystems can be daunting, hindering widespread adoption of DApps for daily use. With Base, as an L2 solution, DApps can become both user-friendly and economical. It makes sure of lower transaction fees, especially compared to the high fees seen during peak periods on their L1 counterparts.

Users can start their journey into the cryptoeconomy through Base, which acts as a bridge to various blockchain ecosystems. The platform offers a default on-chain experience and the ability to interact with multiple chains' products. For broad accessibility, Base emphasizes interoperability with different chains and, aligned to this, Coinbase aims to support multiple chains across its product range.

Collaborative efforts often bolster decentralization. In conjunction with OP Labs, the Base is pooling its engineering expertise to devise features that potentially enhance decentralization. It's anticipated that external contributions will play a pivotal role in augmenting the decentralization of the broader cryptoeconomic platform.

Working collaboratively has profound implications for decentralization. Institutions such as Coinbase, Base, OP Labs, and the Optimism Collective actively pursue avenues to decentralize decision-making and control within the OP Stack and the Superchain.

By jointly establishing key governance structures, the intention is to integrate decentralization into vital segments of the OP Stack architecture, which could influence the decentralization level of associated rollups.

What's the Base ecosystem?

The Base Ecosystem Fund, with financial backing from Coinbase, can help secure a growing commitment towards advancing the DeFi ecosystem. This fund is specifically designed to propel early-stage innovations aiming to blossom on the Base platform.

While there's no shortage of promising ideas in the crypto space, Base has strategically positioned itself as an incubator for those crypto-native visionaries who are in the nascent stages of their project development, particularly those focusing on decentralized exchanges (DEXs), lending, NFTs, and more.

Base is keenly exploring an interesting niche — flatcoins, which is a type of stablecoin tethered to inflation rates. These digital assets aim to provide users with both stability in purchasing power and resilience against economic fluctuations. This need has become ever more crucial in light of the current global banking challenges.

Base recognizes the importance of forging trust in an on-chain environment. The fund encourages projects working on decentralized identity and reputation and those crafting advanced decentralized exchanges with the potential for high throughput.

As DeFi continues to scale, ensuring the security and reliability of platforms and protocols becomes crucial. The Base Ecosystem Fund, therefore, also champions builders crafting tools and systems to make DeFi more secure, aiming to make on-chain storage safer for everyone.

The rise of Base

Base total value locked
Source: L2Beat

Despite L2 solutions being common these days with newer projects like Blast and Merlin arriving, Base has managed to emerge victorious among the crowd of newer L2 solutions. According to L2Beat, we can see Base being ranked second in terms of total value locked (TVL). With a total TVL of $7.84 billion at the time of writing, Base stands shoulders above L2 competition despite only being launched in July 2023. The L2 holds an overall market share of about 16%, at the time of writing.

If we look closer at the underlying data of Base, we'll find that projects like Brett, Aerodrome, and Degen are driving most of the TVL and transaction volume on Base L2. This concentration of activity highlights the importance of these DeFi protocols in bootstrapping the Base L2 ecosystem. The success of these protocols further strengthens Base's position by attracting new users who want to participate in innovative DeFi applications.

However, it's important to consider some potential challenges that Base L2 might face in the future. The dominance of a few DeFi protocols could lead to centralization concerns within the Base L2 ecosystem. Additionally, as competition in the L2 space heats up, Base will need to continuously innovate and attract new DApps to the Base ecosystem to maintain its leading position.

Why is Base popular: understanding the Base hype

From the backing provided by Coinbase to its rapid ecosystem growth, Base's rise in popularity can be attributed to a few key factors, namely:

  • Solving Ethereum's scaling issues: Despite being the leading blockchain platform, Ethereum suffers from slow transaction speeds and high fees. Like other Layer-2 solutions, Base L2 addresses this by processing transactions off the main Ethereum blockchain and then committing them back to the mainnet. This allows for faster and cheaper transactions, attracting users priced out of the Ethereum mainnet.

  • Coinbase backing: Being launched by a major cryptocurrency exchange like Coinbase, Base has largely benefitted from the association with a reputable company that's listed on the U.S. stock market. This has instilled confidence in users and developers, giving Base an advantage over other L2 solutions.

  • EVM compatibility: Base L2 is fully EVM-compatible. This compatibility allows developers to easily port their existing Ethereum applications to Base L2 without needing major modifications. This ease of use and low barrier to entry further accelerated Base L2 adoption.

  • Rapid ecosystem growth: As previously mentioned, the TVL on Base L2 has grown significantly, indicating a thriving ecosystem of DApps built on the platform. This attracts more users and developers, creating a positive feedback loop.

The road ahead for Base

In February 2023, Base took a significant step forward by launching its testnet. This innovative platform has attracted praise from developers across the industry, characterizing it as a secure, economic, and developer-centric Ethereum L2.

Base's mainnet is accessible to all users. Over 100 DApps, protocols, and brands, such as Coca-Cola, OpenSea, and Aave, have been integrated into the network. To mark its launch, Base is initiating an "Onchain Summer" campaign that includes daily NFT distributions and incentives for users engaging with the network's DeFi platform.

If you're a developer looking to build on Base, here are some helpful tools to get you started.

The final word

Base, an L2 solution, makes the crypto and blockchain realms more approachable, paving the way for the mainstream adoption of DApps. Addressing the sometimes high transaction costs of L1s, Base offers lower fees and acts as a bridge to multiple blockchains.

It prioritizes chain interoperability, mirroring Coinbase's multi-chain support ambitions. Collaborating with OP Labs, Base augments decentralization features, with external input deemed crucial for the platform's holistic decentralization.

Institutions like Coinbase, Base, OP Labs, and the Optimism Collective emphasize decentralization in decision-making processes. Together, they aim to embed decentralization deeply within the OP Stack framework and related rollups.

Base is now live on OKX Wallet. Start exploring today.

FAQ

What is Base?

Base is a Layer-2 scaling solution built on top of the Ethereum blockchain using the OP Stack framework. It aims to address Ethereum's limitations of slow transaction speeds and high fees by processing transactions offchain before committing them back to the main Ethereum network.

What are the benefits of using Base?

Base offers several advantages, including faster and cheaper transactions compared to Ethereum's mainnet, increased scalability, security inherited from the underlying Ethereum blockchain, a developer-friendly environment thanks to Base's EVM compatibility, and a growing Base ecosystem with a focus on decentralization.

Is Base a competitor to Ethereum?

No. Since Base is designed to work alongside Ethereum, it won't replace it. Rather, Base helps alleviate congestion on the mainnet by processing transactions offchain, making Ethereum more scalable and accessible.

Is Base compatible with existing Ethereum wallets?

Yes, most Ethereum wallets should be compatible with Base as long as they support the OP stack.

Do I need any special tokens to use Base?

No, Base doesn't have its own token. Transactions are made using ETH, the native token of Ethereum.

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