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News/Coinbase Base Chain Launch: A Blockchain Oasis or Mirage in the Crypto Desert?

Coinbase Base Chain Launch: A Blockchain Oasis or Mirage in the Crypto Desert?

Aug 10 2023

11 months ago3 minutes read
a robot enjoying the onchain summer event on base mainnet

Coinbase's Base Mainnet Launch and the Intriguing Onchain Summer Event

Written by Van

Coinbase's Base mainnet took its first public step on August 9, 2023, solidifying a development timeline that began as a testnet launch in February of the same year, proceeded with a developers-only rendition in July. 

This launch of the Coinbase Base chain triggered a unique multi-week "Onchain Summer" event, resonating beyond the boundaries of the blockchain.

The Base Mainnet, backed by Optimism’s OP Stack, strategically eliminates native tokens—a shrewd move, likely designed to swerve regulatory restraints. Instead, it presents a flourishing ecosystem with over 100 DApps and service providers, enabled by seamless integration with DeFi protocols, wallets, bridges, oracles, analytics, and infrastructure suppliers.

Developers and growing users have made their trust tangible, transferring assets loaded with a value of over $100 million to the network.

Onchain Summer: A Global Web3 Carnival

the Onchain Summer event held on Coinbase Base (1).webp

The Onchain Summer event echoed from August 9 through August 31, marking a hotspot of an ever-evolving Web3 platform. Beneath the virtual sky of Base Mainnet, over 50 significant brands, platforms, artists, creators weaved their digital magic in niches of art, music, culture, and gaming. Coca-Cola was among the influential presences to grace the event.

Notably, the event witnessed a surge in NFTs, as 131,763 holders successfully minted almost 31 million tokens. Ripples of commitment were made through a partnership with Prop House, where developers building on Base were encouraged with over 100 ETH given out as grants.

Also, a strong emphasis on learning heralded daily opportunities for participants to achieve a fluent understanding of projects innovating across Base Mainnet.

Armstrong's Special Earmark: Bidding for Base Song

Attesting his active participation in the Onchain Summer was Coinbase's co-founder Brian Armstrong, who committed 0.88 ETH — approximately $1,600 — to procure a YouTube song echoing the summer event on Base. This reveal showcases both the festive essence of the event and the avid interest carried by key stakeholders.

brian armstrong bid for base mainnet song.webp
Source: songaday.world

The Early Base Whales and Their Fondness for Meme Tokens

Enriching the Base landscape are high-profile participants known as Base Whales. Since the layer 2 network opened to the public, these 22 high-rollers have traded high-risk tokens on the Base network.

They command substantial positions in variety of tokens including Arbitrum's governance token ARB, casino token RLB, and an assortment of memecoins, BALD, TOSHI, PEPE, and an eccentrically named meme coin HarryPotterObamaSonic10Inu, aptly acronymed BITCOIN.

Deciphering the Whales' Trading Patterns

An abstract background with cryptocurrency coins and tokens floating (1).webp

Since Base opened its doors for direct interaction on July 31, the whales have managed to bridge a hefty 100 ETH, amounting to a value of $185,100.

Looking deeper into their wallet origins, an intriguing find is that a solitary wallet takes its roots back to 2017, while the rest of the Base Whales emerged on the network with fresh wallets generated in the current year.

This set of whales is also found dynamically exploring competing Ethereum scaling solutions, displaying active involvement in networks like Arbitrum, Optimism, zkSync Era, and Polygon zkEVM.

The Meme Tokens Magnetism

Tracking the network's dynamics, Nansen's report shines a spotlight on the heavy memecoin bias among Base Whales.

A seemingly evident reason for this skew is the limited variety of activities on Base, focusing largely on trading meme coins, a fact that has effectively drawn a whopping $68 million in Ether within a scant 48 hours post-launch.

Navigating Towards a More Comprehensive Ecosystem 

As the Coinbase Base chain evolves, Base Mainnet anticipates welcoming more decentralized exchanges (DEXs) and lending platforms. This development frames a vision of a more mature Base ecosystem, expanding beyond the current fascination with memecoins.

As these various platforms become functional, they promise to generate a more diversified stream of activities and services on Base Mainnet.


Coinbase's Base Mainnet Launch Metrics

Coinbase's Base mainnet launch signals a key shift in the digital finance landscape. With the network's unveiling has emerged an illuminating set of performance metrics, presenting the success story in stark numbers. 

Base's Performance At A Glance

The total value bridged since the network's inception towers over $160 million, illustrating the substantial trust and commitment to Base’s potential for scaling Ethereum. Consequentially, nearly 31 million NFTs were minted, governed by an impressive figure of over 133,300 holders.

Despite a relatively subdued start with just over $11 million bridged on the first day, Base attracted 15,000 new users, a clear hallmark of its anticipated appeal. Interestingly, past 24-hour transactions saw a 40% dip compared to the preceding day, demonstrating the usual volatility in a newly launched marketplace.

base netflow bridged (1).webp
Source: TK Research/ Dune

A noteworthy transaction unfolded from wallet "0xcc...1763," which transferred tokens worth a substantial $17 million. Precursing the official launch, a robust pre-launch activity witnessed $66 million being routed through a one-way bridge to Base.

These signals of trust and adoption have effectively manifested in Base's trading volume, boasting over $200 million, a feat that highlights more transactions than rival networks like Arbitrum.

This suite of early performance metrics reflects an eager embrace of Base amidst crypto enthusiasts and is a promising indication of Base's potential to revolutionize Ethereum’s scalability endeavors.


Coinbase's Blockchain Strategy: Base as a Beacon for Reversing Losses

The announcement of Base, Coinbase's Ethereum layer-2 scaling solution, arrives as a strategic attempt to reverse the somber backdrop of six consecutive quarters of losses. The principal aim is to empower developers to construct their crypto applications, expanding the revenue stream beyond Coinbase's conventional trading activities.

The Role of Base: A Multipurpose Blockchain

a robot is standing in the center of the coinbase base chain (1).webp

Coinbase's Base chain, a layer-two blockchain riding on Ethereum, brings together a synergistic fellowship of investors, offering a platform for money transfers, trades on decentralized exchanges, borrowing and lending cryptocurrencies, and creating NFTs.

If these applications rise to popularity on Base, the transaction fees can be a game-changer for Coinbase, as per Alesia Haas, the chief financial officer of Coinbase. However, the timeline for substantial revenue generation could stretch over several years.

Coinbase's recent losing streak was largely linked to declining trading volumes and a 20% drop in active users. Traditionally reliant on customer trading fees for revenue, Coinbase witnessed a first when non-trading revenue soared above trading revenue in the previous quarter, indicating a potential business model shift.

Navigating the Hurdles: Reputational Risks and Regulatory Scrutiny

Coinbase's Base chain offers open and "permissionless" nature, permitting anonymous participation, and invites potential reputational risk for Coinbase. Recent scams, notably involving the meme coin BALD token, have triggered a wave of investor losses on Base.

To counteract such negative impacts, Coinbase plans to augment Base with tools to evaluate the trustworthiness of products, ensuring the platform's security without compromising its open nature. However, these efforts are shadowed by intense regulatory scrutiny, with the Securities and Exchange Commission (SEC) alleging exchange registration rule violations by Coinbase.

If regulators determine Coinbase could be held liable for illicit activities on its blockchain, it could spur industry-wide apprehensions.

Despite the challenges, the blockchain strategy underpinning Base shines as a beacon of hope for Coinbase to recover from its loss-making quarters and position itself as a pioneer in the crypto landscape.


Base's Surging Adoption and Friend.tech's Role

robot shocked while seeing coinbase base chain adoption (1).webp

The Layer-2 (L2) platform developed by Coinbase, known as Base, is witnessing a significant surge in daily active users (DAUs), with the count surpassing 100,000 for the first time. This spike indicates a solid expansion of the user base, contributing to Base's steady evolution in the crypto landscape. The DAU count has peaking at a record 136,000 users, marking brisk adoption within a short period.

Contributing Factors to Base's Growing Popularity

The sudden surge in new users at Base received a major impetus from the social network platform, friend.tech, attracting early interest. With friend.tech, users can trade "shares" and access diverse content. The platform's connection with Twitter further enhances its appeal to potential users on Base. Friend.tech founder praised Base’s infallible brand reliability as a significant factor in making users feel at ease with the platform.

The Base User Activities

Users on Base can participate in a broad spectrum of activities, including bridging Ether (ETH) to Base, participating in a decentralized cryptocurrency market, launching a decentralized autonomous organization, or registering a ".base" username. Users can also complete payments through a web-based app. Notably, these activities are fostered by friend.tech, reflecting its crucial role in Base’s growing user engagement.

Base's Performance among L2 Networks

Base's performance among other Layer 2 solutions is noteworthy. According to L2Beat data, Base now ranks second regarding daily transactions per second, following the likes of zkSync Era. This performance affirms Base's competent service delivery, catalyzed by its technical infrastructure based on the OP stack and Optimism's collaboration.

eth layer 2 tps (1).webp
Source: L2Beat

The rapid adoption and positive response to Base represent an encouraging era in Ethereum scalability endeavors. The increasing user engagement on Base underlines its functionality and potential, which, if harnessed, can transform Base into a cornerstone of the decentralized finance landscape.


FAQs About Coinbase’s Base Chain

1. When was the Base Mainnet by Coinbase launched?

Coinbase's Base mainnet was launched on August 9, 2023, following successful testnet cycles earlier the same year.

2. What are the features of Base Mainnet?

Base Mainnet provides a vibrant ecosystem boasting of low gas fees, quick transaction speed, and enhanced security.

3. What is the specific technology used in Base Mainnet?

Base operates as a rollup network. It's developed on Optimism's software stack, a scaling solution off the primary Ethereum blockchain.

4. What was the 'Onchain Summer' Event?

Coinbase initiated the multi-week 'Onchain Summer' event celebrating the launch of Base and served as a platform to explore arts, music, culture, and gaming in Web3.

5. Who are 'Base Whales'?

Base Whales are large depositors on Base, holding high positions in volatile tokens. Initially, 22 such whales were present who showed a bias towards meme tokens.


Final Thoughts

The launch of Coinbase Base chain marks a promising advance in the crypto sector. Despite facing regulatory scrutiny and reputational risks, the early adoption and engagement seen in the robust user statistics, coupled with strategic alignments, projects a hopeful horizon.

If Coinbase successfully navigates these challenges, Base could pioneer a significant revolution in Ethereum scalability and significantly revamp Coinbase's financial trajectory.

This article has been refined and enhanced by ChatGPT.

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