You can be at the top without issuing coins - what does Base rely on?

Author: Kaori; Source: BlockBeats 

Base’s TVL increased significantly in March, thanks to yesterday’s meme craze. Base TVL exceeded US$700 million. As of writing, the total TVL volume was US$743 million, reaching a record high. Backed by Coinbase, Base seems to be becoming a new dynamic growth point for the Ethereum ecosystem.

The increased activity on the Base chain has been questioned by the community as a robot. There are not many real active users. The answer may not be that, because no chain needs authenticity more than Base. User and on-chain activity.

Base launched the mainnet in August last year. Jesse Pollak, the head of the protocol, made it clear in the Bankless podcast that Base will not issue tokens and has no plans to issue tokens. . As a chain built by Coinbase, the only listed crypto trading platform, Base's currency issuance expectations are indeed very low, so it requires real users to contribute fee income as the source of income for the entire ecosystem.

As we all know, the encryption market is a place of extreme speculation and pursuit of capital efficiency. Why do users on the chain enter Base, and what does Base rely on to obtain more users? And how much room does Base have for growth?

Base’s ecological logic

There is no expectation of currency issuance, which makes Base become the Ethereum Layer 2, and it seems that divine disks will appear on Base every once in a while, bringing real income and traffic to the entire ecosystem. It can be seen from the TVL trend chart that Base has experienced three sharp increases in TVL since its launch.

The first time was that the social application Friend Tech became popular and was driven by its own efforts. Base TVL has risen sharply; the second time was in February this year, when the social protocol Farcaster launched new function frames, the community meme currency DEGEN and a series of expected comprehensive reactions from airdrops; the third time was the recent Cancun upgrade, with the help of Coinbase The Base ecological DeFi project promotes the synergistic effect of increasing on-chain liquidity and increasing hot money in the market.

These three increases also illustrate that Base’s genes carry different development factors from other Layer 2.

Focus on user growth "VC chain"

Also Do you remember the market enthusiasm brought about by the sudden emergence of Friend Tech last year? Although it seems a bit confusing now, the market was still in a bear market cycle at that time, and the emergence of Friend Tech, a social protocol built on the Base chain, was nothing short of thunder.

From the product launch in early August to mid-October, Friend Tech’s protocol revenue accumulated US$21 million, with the highest daily cumulative revenue of approximately US$1 million, far exceeding the mainstream at the time Defi protocol or NFT market. Solve industry sharing pain points through social fission, achieve a cold start through speculative effects at the right time, and rely on rapid iteration and bundling of Paradigm to consolidate development expectations. In addition, releasing airdrop expectations will deepen user stickiness. It can be said that Friend Tech taught the Web3 market at that time a good product manager lesson.

In this spiraling chain, the early stage relied on invitation codes and well-known KOLs to win over people for social fission, but the emergence of Paradigm is the key factor. A research report from Folius Ventures stated that Friend.Tech refused to contact all VCs except Paradigm, which shows that it is highly bound to the paradigm. But to say who has benefited the most from this SocialFi craze, I think it is undoubtedly Base.

In addition to Friend Tech, Base also has FrenPets focusing on the electronic pet market, Web3 live streaming platform Unlongly, sound.xyz focusing on collecting music, and a fundraising platform PartyDAO, Zora for collecting art, Drakula for Web3 Tiktok, etc.

After the Base meme smoke filled the air, many people asked what else is on Base. Jesse Pollak, the head of the Base protocol, made a long list of projects. These projects are all It is a consumer application focused on serving Web3 users. Jesse said Base is currently brewing a trend called build2earn, or “building impactful new on-chain products and earning respect, admiration, and financial rewards.”

Standing behind these consumer applications are Paradigm, a16z, Multicoin, and DragonFly , Variant Funds, 1confirmation and a number of well-known VC institutions in the encryption market. Due to their different investment styles, these VC institutions have differentiated into two characteristics in the Base ecology. On one side are the "gambler culture" players headed by Paradigm, and on the other side are the long-termists centered on a16z. But they all have only one purpose - to bring more real users to Base and create an active and prosperous on-chain ecosystem.

Contrary to the Friend Tech model is Farcaster, a social protocol that has been working in a low-key manner for a long time. With $30 million in financing from VCs such as a16z and 1confirmation, Farcaster was recognized as the ceiling for decentralized social protocols after its launch. It was not in a hurry to grow users at the beginning. It was not until February this year that the frames function was launched and it was introduced through articles by major institutions or KOLs and achieved large-scale breakthroughs. DAU hit a record high, which also briefly brought a wave of excitement to Base. Trading boom.

Currently, Farcaster and its largest front-end protocol Warpcast have become the back garden of the Base ecosystem, and ecological assets represented by DEGEN are also becoming part of the Base chain The main subject of speculation. Although there is still a certain threshold for entering Warpcast, the Base ecosystem and even the Ethereum ecosystem have established their own social circle and culture on it. This may seem a bit elitist, but as the project continues to break through the circle and gain wider user adoption, these "elites" seem to be compromising with the gambler culture.

Ecological linkage, exchange with OP

Therefore, Base's good fortune lies not only in the VC's dedicated growth plan, but also in its full cooperation with the Ethereum ecosystem. The most representative one is joining the OP super chain vision.

In August last year, Base and Optimism jointly announced a governance and revenue sharing agreement. The agreement stipulates the different short-term and long-term conditions between Optimism and Base. Governance collaboration model, and the economic interaction between the two parties. In other words, two Ethereum Layer 2s that were originally competing have joined forces to build the ecosystem.

In addition to reaching agreement on the strategic route, Base and OP also have good cooperation in the development of specific ecological projects. Many people think that since Base has so many consumer applications, perhaps no one pays attention to DeFi, the core configuration of most blockchains. But Base, which has top-level resources, tells you that it can not only create a real consumer application chain, but also manage liquidity and create excellent DeFi applications, and this also relies on the synergy brought about by ecological linkage.

Currently, the liquidity protocol Aerodrome occupies half of Base TVL. It is a fork protocol deployed on Base by the OP head protocol Velodrome Finance. Its native token is AERO, distributed to liquidity providers through emissions. After Base was launched at the end of August last year, it attracted nearly 200 million US dollars in TVL in just 24 hours, and its liquidity mining income annualized without compound interest was close to 1000%.

On January 25, Coinbase added Aerodrome Finance (AERO) to the currency listing roadmap. On February 27, Aerodrome announced that it had received investment from the Base Ecological Fund led by Coinbase Ventures. The specific amount was not disclosed. The investment was through the purchase of Aerodrome’s native token AERO tokens. As of writing, AERO briefly broke through $0.83,

List coins from Coinbase Then to the series of investment operations, Aerodrome, which is the liquidity center of Base, once again took advantage of the east wind, and the currency price continued to rise, with a monthly increase of nearly 700%. As of the time of writing, Aerodrome’s TVL has reached US$317 million, transaction fees have reached US$14.52 million, and it has more than 33,000 active users

Backed by Coinbase Big trees are good for shade

But Coinbase is the key to Base becoming a naturally good Layer 2.

As mentioned earlier, Coinbase is the best trading place after some projects on Base deploy tokens. As the saying goes, it is easy to enjoy the shade against a big tree. In fact, it is not only from The flow from Base to CEX and from Coinbase to Base are also worthy of attention.

Recently, Coinbase launched a new smart wallet. The core function Magic Spend allows users to transfer funds on the chain "in a timely manner". Users have the option to withdraw funds from their Coinbase account when a transaction is signed/paid, and funds are only withdrawn when a transaction is signed/paid. Users don’t need to do anything other than have funds in their Coinbase account, there’s no wallet extension to download, and there’s no need to bridge.

Smart wallets further open up the obstacles between the on-chain and off-chain, and Base is undoubtedly the chain that benefits most from this. This not only attracts the Base chain on a large scale Users and funds have laid the foundation, and also made existing consumer applications on Base more likely to be adopted.

In addition to empowering the Base ecosystem, Coinbase's compliance management also allows Base to reduce risks in the longer term.

On March 19, Coinbase CEO Brian Armstrong issued an article stating that "authoritative sources have stated that cryptocurrencies have no practical use other than speculation and illegal activities. However, , 400 million people around the world (including more than 50 million Americans) have purchased cryptocurrency, and third-party data shows that illegal activities account for less than 0.5% of transaction volume.” As the CEO of CEX, Armstrong often speaks out not only for Coinbase Speaking out is also a way to defend the Base platform or the encryption market.

What targets are worthy of attention

With the support of VCs and Coinbase, Base It will undoubtedly become the most Alpha-intensive place in the Ethereum ecosystem. Because of Coinbase's compliance attributes, Base has the innate attribute of not issuing coins. This reason also means that if users want to speculate on Base's targets, they can only focus on Base's ecological projects.

The native token of Aerodrome mentioned above rose from a bottom of $0.04 to $0.8 after being listed on Coinbase, an increase of 1900%. There are still many projects in the Base ecosystem, and the community is also increasing its expectations to be listed on Coinbase.

Moonwell (WELL)

Moonwell is a The open lending protocol on Base is launched simultaneously with the Base mainnet. On February 15, Moonwell launched a tool called “USDC Anywhere” that enables individuals to lend Circle’s USDC stablecoin to Moonwell through various Ethereum networks. The tool supports detection of USDC in user wallets on networks such as Arbitrum, Avalanche, Base, Ethereum, Optimism, and Polygon, and leverages Circle's cross-chain protocol to transfer stablecoins onto the platform without the need to manually bridge assets, allowing users to leverage Digital assets on Moonwell send USDC within the Ethereum ecosystem.

As the Base ecosystem heats up, Moonwell’s users are also gradually growing. Its native token WELL is currently priced at $0.032, with an increase of 333% on the 30th.

Avantis

On February 4, the oracle-based synthetic derivatives protocol Avantis has completed its mainnet release on the Base chain. Its protocol allows users to trade cryptocurrencies and real-world assets using leverage.

In September 2023, Avantis Labs completed a US$4 million seed round of financing, led by Pantera Capital, Founders Fund, Coinbase's Base Ecosystem Fund and Modular Capital participated in the investment.

Currently, Avantis has not issued coins, but will launch transaction volume rewards on March 12.

Infusion

Infusion is a new one on Base The AMM protocol, launched on Base on March 15, is the new star of the Base liquidity protocol. Infusion Protocol solidifies on-chain liquidity with a new timelock component called Timefuse. When liquidity is "time-fused," the pool allocates the majority of fees to liquidity providers and locks the liquidity for a period of time, thus incentivizing the long-term stability required for DeFi.

Infusion Protocol is a community-driven project made up of contributors and advisors from various DeFi and infrastructure projects. Core contributors and advisors come from 1inch, Pendle Finance, Harmony, LI.FI and Thorchain.

Infusion has not issued coins yet.

BSX

BSX is an emerging DEX on Base , one of the six crypto projects invested in the first round by Coinbase Ventures’ Base Ecological Fund. A non-custodial system that adopts "off-chain execution and on-chain settlement" will also support commodity and foreign exchange transactions in the future. BSX’s core members come from institutions such as Coinbase, Kraken, FalconX and Jump.

BSX is currently in the public testnet stage and will launch the mainnet at the end of the month.

Deakula

On March 14, social application Drakula .app stated on the social platform that it has launched the on-chain short video social application Drakula. Users can get 250 BLOOD points by logging in with Farcaster. They can also earn points by publishing and watching short videos. Creators can also earn points from every Earn commission income from each token transaction. In addition, Drakula also cooperated with Degen to use DEGEN as the main transaction token, and Degen also provided Drakula with 10 million DEGEN grants.

In Drakula's official introduction, the project team stated that this is a social project invested by Paradigm and DragonFly. Reminiscent of the craze of Friend Tech, we may be able to look forward to it. Drakula's performance in the future.