Base chain is seeing explosive growth –  here’s how traders can capitalize

Written by BTSE

June 19, 2024

Backed by Coinbase and a consortium of top-tier venture capital firms, Base chain’s mainnet officially went live on August 10, 2023. 

Since then it has grown exponentially, with over >100 DApps and service providers on the Base ecosystem, including Aerodrome Finance and ‘Snaky Cat’, built by iCandy and Animoca Brands, respectively.

Now, Base is the most popular layer on Optimism, with a TVL of $1.7 billion and 99.151 million wallet addresses

 

BASE Revenues and TVL Growth(Source: Joe Flynn of Compass Point Research and Trading)

 

But let’s take a deeper look at Base and Optimism – what purpose do they serve? And do we really need so many Layer 2s on Ethereum? 

 

Ethereum’s Problem

 

Ethereum came onto the blockchain scene as an alternative to Bitcoin, in particular with providing smart contracts. However, as it became increasingly popular, issues arose, impacting transaction speeds, fees, and scalability.

Currently, transaction speeds are limited to approximately 15 transactions per second (TPS) due to the necessity of verifying each transaction with a full copy of blockchain ledgers and history; this process is time-consuming.



With new decentralized apps and games requiring more computational resources and near-instant transactions, this poses an ever-increasing challenge for the Ethereum network. This is where Optimism steps in, a Layer 2 scaling solution built on top of Ethereum. Its goals? Improve transaction speeds, reduce costs, and enhance scalability.

 

How does Optimism work?

 

The Optimism mainnet was soft launched in January 2021, with the public version released in December of the same year. Optimism employs a methodology where it assumes transactions are valid and processes them without immediate verification. Instead, computation is delayed until a fraud-proof challenge challenges the validity of the transaction.

This approach allows Optimism to batch transactions and process them on a separate layer, reducing costs and accelerating processing times.

The OP Stack is the core codebase of Optimism, consisting of software components that define layers or serve as modules within them. Managed by The Optimism Collective, it provides a modular development stack for decentralized infrastructure, designed to construct various types of chains.



Until recently, there have been two types of blockchain rollups that are most widely known; Optimistic Rollups assumes all transactions are valid, and ZK (“Zero Knowledge”) Rollups assumes all transactions are false until proven valid.

Optimism, true to its name, is an Optimistic rollup. In comparison to ZK rollups, optimistic rollups achieve faster transaction times due to their assumption-based approach, making them versatile across different use cases.

 

What’s Next for Optimism?

 

Recently, Optimism introduced permissionless fault proofs on its mainnet. This update enhances transaction security on-chain and aligns with Ethereum’s decentralization objectives. Now, any user can contribute to and challenge invalid transactions.

The concept for the Superchain was initially announced in February 2023. It is a network of scalable chains that share security and communication infrastructure, utilizing an open-source development stack. Its revenue model rewards developers based on their chains’ generated fees and incentivizes protocol developers.

This helps developers building applications to target Superchain as a whole. Upgrades from OP stack are reflected across chains, providing continual support for developers, and more.

 

Base visual

Base Chain is Now Bigger than Optimism Itself

 

So, where does the Base chain come into all of this? Introduced in February 2023 by Coinbase, Base is an open, permissionless Ethereum L2 built on the OP Stack in collaboration with Optimism.

Base’s goal is to be an affordable, developer-friendly solution to build on-chain applications, from launching DAOs to payment apps. Like Optimism, Base is an optimistic rollup, meaning that transactions are processed off the Ethereum chain in batches.

This helps reduce cost for users, as well as increased efficiency. Transactions are processed on the Base mainnet, and then settled and confirmed on the Ethereum blockchain.

Major platforms on Base Chain include Moonwell Finance (a lending and borrowing protocol) and Friend.tech (a prominent social app on Base), among others. Native projects on Base have garnered substantial market share, driving its rapid growth.

Supported by Coinbase and numerous Web3 communities, Base has surpassed Optimism’s OP mainnet to become the largest chain within the Optimism Superchain ecosystem, and ranks #3 among all Layer 2 chains in TVL (total value locked) at $1.7 billion, with 99.151 million addresses.

 

Blockchain Profits

(Source: Ethereum L2 On-Chain Profits, Dune)

 

How Traders can Capitalize on Base’s Growth

 

Unfortunately, Base chain does not have a governance token; there is no way for traders to directly capitalize on Base’s growth.

Traders can, however, use Optimism (OP) as a proxy, given that the Base Chain is built on Optimism.

Traders can also trade memecoins DEGEN and BRETT, which claims to be the unofficial mascot of Base chain, as well as SocialFi project FRIEND; all three projects are built on Base chain.

 


Our aim is to create a platform that offers users the most enjoyable trading experience. If you have any feedback, please reach out to us at feedback@btse.com or on X @BTSE_Official.

Note: BTSE blog content is intended solely to provide varying insights and perspectives. Unless otherwise noted, they do not represent the views of BTSE and should in no way be treated as investment advice. Markets are volatile, and trading brings rewards and risks. Trade with caution.

Related Articles

Delisting Tokens for July

Delisting Tokens for July

As part of our ongoing commitment to maintaining the highest quality standards across our range of assets and services, we regularly undertake...

Stay Informed with BTSE

Join Our Newsletter

Never miss a beat with the latest updates and industry insights from BTSE.

Follow Us

Join our rapidly growing community and exclusive events!