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 developed based on the Optimism Superchain and incubated by a well-known trading platform. As part of the platform's long-term plan, Base chain has developed rapidly. According to data platforms, its total locked value ( TVL ) has surpassed established Layer 2 projects like Arbitrum and Optimism, becoming the current number one Layer 2 project in terms of TVL.

Introduction to Base Chain

Base chain is a Layer 2 solution built on the standardized, shared, open-source OP Stack development toolkit supported by Optimism. Optimistic Rollups are highly compatible with Ethereum, making it easy for decentralized applications (dApp) to migrate, and they have low computational complexity, suitable for executing general smart contracts and complex computational tasks. However, Optimistic Rollups still need optimization in terms of decentralization and on-chain governance architecture, and users have high demands for the availability of sorting services. These issues are expected to be improved through continuous technical iterations.

To enhance decentralization, the Optimism Rollup plans to adopt the OP Stack open-source Layer 2 architecture toolkit to improve on-chain governance, introduce multiple sequencers, and reduce reliance on a single sequencing service. Currently, the OP Stack is maintained by the Optimism Collective, with the aim of building a superchain (Superchain) to achieve seamless integration of different Layer 2s. The OP Stack provides standardized modules and interfaces, simplifying the Layer 2 development process. It consists of a six-layer architecture: data availability layer, sequencing layer, derivation layer, execution layer, settlement layer, and governance layer, each with customizable open-source modules, allowing developers to design blockchain networks according to their needs.

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

Base chain data

TVL

According to data statistics, the TVL of the Base chain has surged significantly after September, increasing from 1.419 billion USD to 2.388 billion USD, with a growth rate of 68.28%. Among all ETH-Layer 2s, Base's TVL growth rate ranks first, demonstrating its rapid recent development.

on-chain address count

The number of on-chain addresses for Base saw a significant increase after August 2024, rising from 24.55 million to 74.88 million, an increase of 205.01%. This indicates that the number of on-chain users has more than doubled in the past three months, reflecting users' optimism about the development of Base and the potential wealth creation effect that may emerge on-chain.

Analyzing the growth of TVL on the Base chain in conjunction with the growth of on-chain addresses reveals that the average new funds added per user on the Base chain is only $1.97, primarily consisting of small-scale users. Considering the situation after June, where the Base chain leveraged social characteristics and MEME culture to attract a large number of users, it can be inferred that the propagation effect of Meme culture and the enhancement of social interaction have made the Base chain a popular social platform, further driving user growth.

Base chain income

From the revenue data, the total revenue growth of the Base chain from March to October 2024 is 287%, with an average monthly growth of 41%. As on-chain users and activities increase, Base's revenue maintains a high growth rate.

weekly trading volume

The weekly trading volume of the Base chain has been continuously growing since May 2024. From May to October, the total weekly trading volume increased by 249%, with an average monthly increase of 49%, indicating that on-chain trading volume is maintaining rapid and sustained growth.

on-chain performance

The per second transaction volume of Base ( TPS ) is 66.28, surpassing the performance of other chains, making it the best performing in the Ethereum ecosystem.

Weekly Active Address Count

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

In summary, the Base ecosystem is currently showing a vigorous development trend. From the perspective of two key factors, capital and traffic, the Base chain performs the best among ETH-Layer2. In terms of capital, TVL, trading volume, and chain revenue are all showing a rapid growth trend, with a monthly average growth rate exceeding 40%. In terms of traffic, the number of on-chain addresses and weekly active addresses continues to rise. With the superior performance of the Base chain, it is expected to have good development in the ETH-Layer2 track.

Circle(USDC)'s support for Base

The number of stablecoins on the Base chain has rapidly increased from March 2024, rising from $319 million to $3.771 billion, a total increase of 1082.13% with an average monthly increase of 216.42%. Although the overall number of stablecoins has increased, the growth of USDC can be seen as an increase in funds from American users. Considering that the SEC( recently approved spot ETFs for BTC and ETH, and that American asset management firms and publicly listed companies are actively purchasing BTC, the focus of the current crypto market has shifted to the United States. The Base chain mainly relies on support from a well-known trading platform, which is the first publicly listed cryptocurrency exchange in the US, thus placing emphasis on USDC's support for the Base chain.

In September 2023, Circle officially announced support for the Base chain, natively issuing USDC on it. Users and developers can use USDC without the need for bridging, greatly simplifying operations and improving efficiency. Circle accounts and APIs fully support USDC on Base, facilitating the movement of funds. The CCTP tool developed by Circle enables the secure transfer of USDC between different blockchains, providing more convenience and accessibility for the platform.

A well-known trading platform has partnered with Stripe to introduce USDC to the Base platform, enabling faster and cheaper cross-border transfers and quick conversion from dollars to cryptocurrencies. The main aspects of the collaboration include:

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

2. Add USDC as a fiat currency to the cryptocurrency entry on Base, accelerating the conversion of fiat to cryptocurrency for American customers.

3. A well-known trading platform integrates Stripe's fiat-to-crypto gateway in its wallet, allowing users to purchase cryptocurrencies instantly using credit cards and Apple Pay.

This collaboration mainly revolves around integrating USDC into the Base chain to promote global adoption of cryptocurrency. By supporting USDC on the Base chain, it enables faster international fund transfers; integrating fiat-to-cryptocurrency gateways into wallets simplifies the purchasing process for users; and expanding the acceptance and usage of USDC globally. As of October 2024, the trading volume of USDC on DEXs on the Base chain has exceeded $20 billion, making a significant contribution to the prosperity of the Base chain ecosystem.

The trading volume of USDC on the DEX of the Base chain has shown a rapid and sustained growth trend since March, with a growth rate of 5275%. At the same time, the popularity of USDC on the Base chain continues to increase, with more and more users choosing to use USDC as an on-chain stablecoin.

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In summary, Circle has launched a comprehensive collaboration with Base, significantly simplifying the user operation process through the native issuance of USDC and the CCTP cross-chain transmission protocol. A well-known trading platform's strategic partnership with Stripe further expands the application scenarios of USDC within the Base ecosystem, including cross-border payments supporting over 150 countries, convenient fiat entry, and diversified payment methods. These initiatives not only propelled the DEX trading volume of USDC on the Base chain to exceed $20 billion, but more importantly, established a bridge connecting traditional finance and the crypto economy, laying a solid foundation for the future development of digital payments.

The ecological situation of the Base chain

According to the data from the Base chain official website, its ecological environment is very complete, covering multiple tracks including Wallet, Bridge, Defi, Gaming, Onramp, Dao, Infra, Social, Security, NFT, Other, X-chain, and X-cross, with a total of 323 Dapps.

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From the perspective of healthy development of public chains, the main focus is on two aspects: funding and traffic. The funding aspect can be analyzed from a traditional DeFi perspective; regarding traffic, the market trend in 2024 shows that users mainly focus on Meme coins and the SocialFi track, with the former attracting users through wealth creation effects and the latter converting traffic users from Web 2.

) Defi track

In the Defi space, TVL is the most direct observation metric. Projects on the Base chain with a TVL exceeding $200 million include Aerodrome, a certain DEX, and Morpho Blue.

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)# Aerodrome

Aerodrome was launched in 2023 and is the first DEX on the Base chain, utilizing the Ve###3,3( model. This mechanism is based on Curve's veCRV model and OlympusDAO's 3v3 mechanism, providing a unique reward scheme that incentivizes long-term holders and active governance users. Aerodrome optimizes asset management and liquidity mining through efficient liquidity management tools. Its innovative incentive mechanism not only encourages liquidity provision but also empowers community governance. 90% of veAERO is locked, providing strong incentives and governance mechanisms for the ecosystem.

Aerodrome's TVL accounts for more than half of the Base chain and is consistent with the growth trend of the Base chain's TVL, 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. It eliminates the reliance on DAO participants for managing asset handling parameters and introduces a simplified solution based on permissionless risk management. Morpho Blue allows for the permissionless creation of independent markets, adopting a singleton contract design that simplifies the protocol and reduces gas consumption. It provides a permissionless risk management and market creation mechanism, as well as pricing features that are independent of oracles, becoming an efficient lending infrastructure.

The TVL of Morpho Blue is mainly distributed on the Ethereum chain, with rapid growth on the Base chain since July.

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)# Extra Finance

Extra Finance is a decentralized lending and automatic compound leverage yield aggregation protocol based on the Optimism network, offering a variety of financial tools such as leveraged lending and farming strategies with up to 3x leverage. It integrates multiple mainstream DEXs, allowing users to participate in various farming strategies. Extra Finance also embeds the LI.FI widget, making it easy for users to bridge assets to Optimism and start earning yields.

Meme Coin Track

Meme coins frequently create wealth myths in the Crypto industry in 2024, becoming a major force driving funding and user participation, and can almost be seen as a marketing tool for the Base chain. Projects like TYBG, Degen, and Brett often feature highly popular Meme coins on the Base chain, attracting a large amount of market traffic in a short period. Some Meme projects from the Ethereum mainnet have also migrated their contracts to the Base chain.

Meme coin projects showcase in the world of cryptocurrency