Base Emerges as Clear L2 Frontrunner — How Can You Capitalize on Growth?

Coinbase’s Ethereum-based Layer Two (L2) chain Base has made quite the impression since its debut in August 2023.

Within a year, Base has become one of the most popular crypto blockchains in the world, attracting first-time participants, crypto-native users, developers, and millions of dollars in capital to its platform.

As new L2s like Pudgy Penguins’s Abstract and Sony’s Soneium flood the market in 2024 with lofty ambitions of becoming the go-to blockchain for the mainstream consumer, it is clear that Base is the current frontrunner in this race.

Crypto investors looking to capitalize on Base’s growth story will be disappointed to learn that the L2 does not have a native Base crypto token to invest in. However, there are a few ways you can bet on the future of Base crypto network.

Table of Contents Table of Contents

1. Key Takeaways
2. Stats Tell the Growth Story of Base Crypto Network
3. Top Bets if You Are a Base L2 Bull
4. The Bottom Line
5. FAQs
6. References

Show Full Guide

Table of Contents

1. Key Takeaways
2. Stats Tell the Growth Story of Base Crypto Network
3. Top Bets if You Are a Base L2 Bull
Show Full Guide
4. The Bottom Line
5. FAQs
6. References

Stats Tell the Growth Story of Base Crypto Network

Let’s first talk about the capital that Base L2 has attracted in its first year of operation.

Base was the sixth-largest crypto blockchain with a total value locked (TVL) of $1.44 billion, according to DeFiLlama, as of September 13, 2024.

Base was behind established layer one (L1) networks like Ethereum (ETH), Tron (TRX), Solana (SOL), and BNB Chain (BNB). Arbitrum (ARB) was the only L2 network ahead of Base, with a TVL of $2.53 billion.

Developer activity is an often ignored yet important metric that can be a leading indicator of growth for a blockchain network. Without developers, a blockchain ecosystem cannot fix issues, add new features, and build innovative applications that attract end consumers.

According to a developer report by Electric Capital, Base had the second-highest number of developers across all L1 and L2 crypto networks.

Only Ethereum (8,865) had more developers than the Base crypto network (3,991), as of July 2024.

Polygon (POL), Polkadot (DOT), and Arbitrum made up the top five list. Cosmos (ATOM) is in sixth place, and Solana (SOL) is in seventh place.

Data on Token Terminal showed that Base was the top L2, with 1.4 million daily active users, as of September 13, 2024.

In terms of all L1 networks, only Solana (3.1 million), Tron (2 million), and Ronin (1.8 million) have more daily active users than the Base network at the time of writing.

Top Bets if You Are a Base L2 Bull

As we explained earlier, Base does not have a native token, which makes it difficult for crypto investors to get direct exposure to the growth story of the Ethereum-based L2.

In this section, we list crypto tokens and investment instruments that allow you to speculate on Base L2’s continued growth.

1. Coinbase Stock (COIN)

Coinbase is arguably the best way to get indirect exposure to the growth story of the Base L2 crypto network at the time of writing.

Coinbase has been at the front and center of the Base, contributing via consistent technological advancements such as smart wallets and Magic spend, as well as cbBTC and marketing campaigns like ‘Onchain Summer‘ and free Base USDC transfers.

The company also operates the only sequencer node on Base. Sequencers execute transactions conducted on L2 and post them to the underlying layer one (L1) chain. In exchange for their function, sequencers receive gas fees paid when a user initiates a transaction.

While Coinbase does not disclose the Base sequencer revenue in its public filings, crypto analysts like Messari’s Kunal Goel expected Coinbase to earn about $30 million from its sequencer node operations in the first quarter of 2024.

Critics have pointed out that Base’s single sequencer is a threat to crypto security and decentralization. Coinbase said that “additional nodes may be provided by third parties in the future.”

COIN is currently trading flat year-to-date.

2. Ether (ETH)

You may have guessed that ETH would be on this list. After all, ETH is used to pay gas fees on the Base crypto network.

As Base’s popularity and adoption grow, the demand for ETH is expected to grow side by side.

Furthermore, ETH boasts the position of a “reserve currency” on Ethereum-based L2 networks, where ETH is a popular trading asset, preferred collateral for loans, and held by decentralized autonomous organizations (DAO) in their treasuries.

ETH is currently up about 4% in year-to-date terms.

3. Optimism (OP)

In August 2023, Base became the second L2 to be created using Optimism‘s standardized and open-source blockchain development tool called the OP Stack, after the Optimism mainnet.

Before launch, Base’s core developer team also stated that the Base L2 would be a part of “a unified collective of chains” known as the Superchain.

L2s who form a part of the Superchain will share governance, upgrades, bridges, and communication to facilitate collaboration and interoperability between member chains.

Governance of the Superchain will be shared between OP token holders and reputation-based representatives. Governance responsibilities include treasury management, protocol upgrades, public goods funding, and more.

This means that Optimism’s OP token will be used as a governance token for Base and other OP stack L2s in the future.

As of September 12, 2024, OP token was down about 58% year-to-date.

4. Aerodrome Finance (AERO)

Decentralized exchanges (DEX) are the heart of crypto ecosystems. They are usually the first decentralized application (dApp) that on-chain users interact with. Crypto investors come here to trade and invest in popular cryptos, exotic tokens, and volatile memecoins.

Historically, DEXs have been among the most popular Dapps. On Base, Aerodrome DEX and Uniswap DEX are the two most popular Dapps in terms of TVL.

Unlike Uniswap’s multichain focus, Aerodrome DEX is currently only deployed on the Base L2 network.

Aerodrome, which calls itself “Base’s central liquidity hub”, has seen its popularity soar with increased Base L2 adoption. As of September 12, 2024, Aerodrome was the top revenue-earning Dapp on Base with an estimated annualized revenue of $37.89 million, DeFiLlama data showed.

According to Aerodrome, AERO token holders who participate in governance will earn platform fees.

AERO token is currently up about 515% year-to-date.

The Bottom Line

Coinbase and Base L2 are defining what a “consumer chain” needs to look like. Powered by Coinbase’s suite of consumer blockchain products such as the Coinbase Wallet, crypto enthusiasts believe that Base L2 will be key in bringing the next “billion users on-chain”.

Remember, cryptocurrencies are highly-risk assets. Always do your own research before investing. The information in this guide does not constitute investment advice and is meant for informational purposes only.

FAQs