Base Chain: The Layer 2 star project with the highest TVL, a comprehensive analysis of ecological development

Introduction

Base chain is a Layer 2 project built on the Optimism tech stack, aimed at becoming an important part of the Optimism super chain. As part of Coinbase's long-term strategic planning, Base chain has developed rapidly since its launch. According to data, its TVL has surpassed established Layer 2 projects such as Arbitrum and Optimism, making it the current number one Layer 2 solution in terms of TVL.

Introduction to Base Chain

Base chain is a Layer 2 solution developed based on the standardized, shared, and open-source OP Stack supported by Optimism. It adopts Optimistic Rollups technology, which has high Ethereum compatibility, making it convenient for dApp migration. At the same time, its computational complexity is low, making it more suitable for executing general smart contracts and complex computational tasks. Although Optimistic Rollups still have some areas for improvement, such as decentralization and on-chain governance structure, these issues are expected to be resolved through continuous technological iteration.

To enhance decentralization, the Optimism Rollup plan introduces the OP Stack open-source Layer 2 architecture tool stack to optimize the existing on-chain governance, introduce multiple sorting nodes, and reduce reliance on a single sorting service. Currently, the OP Stack maintained by the Optimism Collective aims to build a superchain (Superchain), achieving seamless integration and interoperability of different Layer 2s. The OP Stack provides standardized modules and interfaces, simplifying the construction process of Layer 2. It consists of a six-layer architecture: data availability layer, sorting layer, derivation layer, execution layer, settlement layer, and governance layer, each layer having customizable open-source modules that facilitate developers in designing blockchain networks according to specific needs.

Base has joined the OP Stack and Superchain development as the second core development team, collaborating with OP Labs and the Optimism Collective to enhance the activity, value, and development of the developer ecosystem of the Superchain. Base is committed to building a highly integrated chain network to provide users with a seamless experience, ensuring that protocols built on Base can be smoothly integrated into the Superchain and interact with multi-chain users. Through close collaboration with the Optimism Collective, Base will help developers more easily build new Layer 2 and Rollups, distributing applications across the entire Superchain.

Base chain data

TVL

The TVL of the Base chain saw significant growth after September, rising from $1.419 billion to $2.388 billion, an increase of 68.28%. As a key indicator of public chains, Base ranks first among all ETH Layer 2 in TVL growth, highlighting its rapid development trend in recent times.

On-chain address count

The number of addresses on the Base chain has significantly increased after August 2024, rising from 24.55 million to 74.88 million, a growth rate of 205.01%. This indicates that the number of users has more than doubled in three months, reflecting users' optimism about the development prospects of Base and the wealth creation effect that may occur on the chain, attracting a large number of users to participate.

By combining the analysis of TVL growth and the growth of the number of addresses, it can be observed that the average funds per new user on the Base chain is only $1.97, mostly consisting of small users. This aligns with Base's strategy of attracting a large number of users through social characteristics and MEME culture after June. It is evident that the propagation effect of MEME culture and enhanced social interaction have made Base a popular social platform, further driving user growth.

Base chain income

Base chain revenue has increased from 19.78 million USD in March 2024 to 76.55 million USD now, with a total increase of 287% from March to October, averaging a monthly increase of 41%. As on-chain users and activities increase, Base revenue maintains a high growth rate.

weekly trading volume

The weekly trading volume on the Base chain has been continuously increasing since May 2024, rising from 13.45 million to 47.06 million, with a total increase of 249% from May to October and an average monthly increase of 49%. This indicates that the trading volume on the Base chain is maintaining rapid and sustained growth.

On-chain performance

The TPS of Base reached 66.28, exceeding other chains, making it the best-performing in the Ethereum ecosystem.

Weekly Active Addresses

The number of active users on the Base chain has continued to grow last week, which is an important indicator for assessing the healthy development of public chains.

In summary, the Base ecosystem is showing a vigorous upward development trend. From the perspective of the two key factors, funding and traffic, Base performs best in ETH Layer 2. In terms of funding, TVL, trading volume, and chain revenue are all experiencing rapid growth, with a monthly growth rate exceeding 40%, indicating a continuous influx of funds into the Base ecosystem. In terms of traffic, the number of on-chain addresses and weekly active addresses continue to rise. Combined with Base's superior on-chain performance, it can be anticipated that it will have a promising development prospect in the ETH Layer 2 sector.

Circle(USDC)'s support for Base

The number of stablecoins on the Base chain has grown rapidly since March this year, increasing from $319 million to $3.771 billion, with a total increase of 1082.13% from March to October, averaging a monthly increase of 216.42%. Although the number of various stablecoins, including USDT and USDC, has increased, the increase in USDC can be seen as an increase in funds from American users. Considering that the US SEC recently approved spot ETFs for BTC and ETH, as well as US asset management firms and listed companies actively purchasing BTC, it can be seen that the focus of the cryptocurrency market is shifting towards the US market. Given that Base mainly relies on support from Coinbase, which is the first publicly listed cryptocurrency exchange in the US, we pay close attention to USDC's support for Base.

In September 2023, Circle announced support for the Base chain, issuing USDC on Base. USDC is now natively available on the Base network, allowing users and developers to use it without bridging, simplifying operations and improving efficiency. Circle accounts and APIs also fully support USDC on Base, facilitating access to USDC liquidity. The cross-chain transfer protocol CCTP( developed by Circle enables native burning and minting of USDC on Base, providing greater convenience and accessibility for platforms like ChainPort.

Coinbase partners with Stripe to bring USDC to the Base platform, enabling faster and lower-cost cross-border transfers and quick conversions from dollars to cryptocurrencies. Specifically, it includes:

1. Stripe adds USDC to its crypto payment products, supporting fast, low-cost remittances to over 150 countries/regions.

2. Add USDC as a fiat currency entry point to cryptocurrency on Base, allowing US customers to convert fiat to cryptocurrency more quickly.

3. Coinbase wallet integrates Stripe's fiat currency purchase entry for cryptocurrencies, allowing users to instantly buy cryptocurrencies using credit cards and Apple Pay.

This collaboration focuses on integrating USDC into the Base chain to promote global adoption of cryptocurrency. By adding Base chain USDC support to Stripe's crypto payment functionality, faster international fund transfers are achieved; Coinbase integrates Stripe's fiat-to-crypto gateway into the Coinbase wallet, simplifying the user purchase process; these initiatives are beneficial for expanding the global acceptance and use of USDC. USDC plays an important role in the Base ecosystem, and as of October 2024, the trading volume of USDC on the Base chain DEX exceeds $20 billion, making a significant contribution to the prosperity of the Base ecosystem.

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The trading volume of USDC on DEX in the Base chain has shown rapid and continuous growth since March of this year, with a growth rate of 5275%. At the same time, the number of USDC holders on the Base chain is also increasing, indicating a rising level of adoption as an on-chain stablecoin.

In summary, Circle and Base have launched comprehensive cooperation, significantly simplifying user operation processes through the native issuance of USDC and the CCTP cross-chain transfer protocol. The strategic partnership between Coinbase and Stripe further expands the application scenarios of USDC within the Base ecosystem, including support for cross-border payments in over 150 countries, convenient fiat entry, and diversified payment methods. These initiatives not only drive the DEX trading volume of USDC on the Base chain to surpass $20 billion, but also build a bridge connecting traditional finance and the crypto economy, laying the foundation for the future development of digital payments.

The ecological situation of the Base chain

According to data from the Base official website, its ecosystem is very well-developed, covering multiple tracks such as Wallet, Bridge, Defi, Gaming, Onramp, Dao, Infra, Social, Security, NFT, Other, X-chain, and X-cross, totaling 323 Dapps.

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Analyzing the Base ecosystem from the perspective of healthy development of public chains, mainly observing from the aspects of funds and traffic. In terms of funds, it can be approached from the traditional DeFi perspective; in terms of traffic, the market trend in 2024 shows that users are mainly focused on the Meme coin and SocialFi tracks. The former attracts users to participate through wealth creation effects, while the latter converts traffic users from Web 2.

) DeFi track

Projects on the Base chain with a TVL exceeding $200 million include Aerodrome, Uniswap, and Morpho Blue.

Aerodrome

Aerodrome was launched in 2023 and is the first DEX on the Base chain, adopting the Ve###3,3( model. This mechanism is based on Curve's veCRV model and OlympusDAO's 3v3 mechanism, optimized and adjusted to fit ecological development. It offers a unique reward model that incentivizes long-term holders and active governance users, promoting stable development of the ecosystem. Aerodrome helps users optimize asset management and participate in liquidity mining through efficient liquidity management tools. As the primary AMM on the Base chain, it provides users with an efficient and low-cost trading experience. Its innovative incentive mechanism encourages users to participate in governance and liquidity mining, allowing participants to earn protocol trading fees and additional voting incentive rewards. This design not only encourages liquidity providers to participate actively but also grants governance power to the community, fostering healthy and sustainable ecosystem development. Notably, 90% of veAERO is locked, providing a strong incentive and governance mechanism for the ecosystem, stimulating demand, and nurturing a robust Token ecosystem.

Aerodrome's TVL accounts for more than half of the Base chain, and the growth trend is similar to that of the Base chain's TVL, both rapidly increasing after September 2024. With its economic model and support from the Base chain, Aerodrome has become one of the most important projects on the Base chain.

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Morpho Blue

Morpho Blue is a decentralized lending protocol developed by Morpho Labs, aimed at reshaping the decentralized lending structure. Its core goal is to eliminate the reliance on DAO participants to manage asset handling parameters, introducing a simple alternative based on permissionless risk management. Morpho Blue is a non-custodial lending protocol that provides new trustless primitives for EVM implementations, with efficiency and flexibility superior to existing lending platforms.

Morpho Blue allows for the creation of independent markets without permission, achieved by specifying collateral assets, loan assets, liquidation loan value ) LLTV (, and interest rate models. This makes it an open lending platform where users can choose different markets and risk parameters to suit varying risk preferences and needs. Morpho Blue employs a singleton contract design, with all markets contained within a single smart contract, simplifying the protocol and significantly reducing gas consumption when users interact with multiple markets. It also provides permissionless risk management and market creation.