Launched on August 9, 2023, Base has quickly become the second-largest L2 by TVL. It’s also one of the fastest growing L2s, with a massive uptick in users bridging to Base this year.

Weekly active wallets bridging to Base using Jumper.

The meteoric rise of Base has captured everyone's attention, but what truly sets it apart? Why are some making bold bets on its future?

Let’s try and understand with an analogy.

iPhone prioritized a superior user experience and accessibility, making it stand out from the competition. Base follows a similar approach.

Here's how Base is like the iPhone:

Focus on user experience: Base prioritizes reducing gas fees and speeding up transactions, ultimately creating a smoother user experience.
Onboarding new users to crypto: The team behind Base is clear about its mission: to attract users from the traditional web2 world and make it easier for them to interact with crypto.
Coinbase advantage: Base's strongest advantage is its connection to Coinbase, the world's second-largest centralized crypto exchange. This provides direct access to Coinbase's massive user base of over 8 million monthly active users.

Apple's iPhone completely changed the mobile phone industry. It wasn’t just a phone — it created a platform for a thriving ecosystem of apps and services (App Store), ultimately solidifying Apple's market position.

Similarly, Base aims to create an ecosystem of apps on its L2 and onboard millions of users to crypto. Just as the iPhone became core to Apple's success, Base has the potential to be a key offering for Coinbase.

Let’s explore several other key advantages that position Base well to achieve its ambitious goals in the next section.

Building on the OP Stack

Via Base Insider

Building on the OP Stack provides Base with several key advantages:

Security: Base benefits from Ethereum's security as its transaction data is posted on Ethereum, ensuring security and transparency.
Modular Architecture: The OP Stack’s modular design allows Base to customize its L2 solution with components like sequencers and bridges, making upgrades and technological adaptations easier. For eg. Base and Optimism have agreed on a fee split where Base will contribute the greater of 2.5% of its total sequencer revenue or 15% of its net on-chain sequencer revenue (after subtracting L1 data submission costs) to the Optimism Collective.
Scalability Contributions: Base has improved the OP Stack’s scalability, increasing throughput by up to 5x through improved transaction compression and allowing multiple batcher transactions per L1 block instead of one at a time.
Alignment with Ethereum Ecosystem: Building on the OP Stack aligns Base with the rollup-centric vision for Ethereum L2 scaling, enhancing its credibility and appeal within the broader Ethereum community.

Developer-Friendly Environment

Developers in the crypto space look for two key factors when choosing a chain: scalable, easy-to-build-on infrastructure and access to a large user base. Base offers both, providing a solid infrastructure and access to Coinbase's 8 million monthly active users, making it an attractive platform for developers.

Key features that make Base developer-friendly include:

Full Compatibility with Ethereum Standards: Base is fully compatible with Ethereum's virtual machine standards, allowing developers to build applications that run seamlessly on both Ethereum and Base without modifications.
Lower Costs: Building on Base costs only 10% of what it would cost on Ethereum, making it affordable for developers to build and deploy decentralized apps.
Integration with Coinbase Ecosystem: Developers have direct access to Coinbase's products and tools, including connectivity to other chains through Coinbase Cloud and hosting blockchain infrastructure using Node.

Just like iPhone has varied communities of engineers and developers creating and improving experience across different domains like the App Store, software and hardware, Base is also ripe with different communities building on it.

Base has a strong developer community supported by numerous hackathons and initiatives from the Base Foundation and communities on Farcaster, such as Farcaster Builders India (FBI). These events promote on-chain development and innovation.

Additionally, there are grant program by the Base Foundation and projects like Bounty Caster create financial incentives to build on Base.

Base is also actively trying to partner with more and more local communities with a granular approach. The support for Base is in over 40 languages, all managed by leaders in those specific regions.

A meme geared towards my Indian brethren. (Roughly translates to: “Jesse likes Base”)

Jesse also once famously said in a podcast, “I don't know much about India; rather than researching and trying to do things myself, I'll just support and give a platform to someone from India who is already building in India and catering to Indian builders.”

Easy Onboarding through Smart Wallets

Base recently introduced smart wallets that simplify onboarding and eliminate the need for users to store passphrases or worry about gas fees.

Key features and benefits of smart wallets include:

Instant Wallet Creation: Users can create a wallet directly from an App without needing extension or managing seed phrases.
Gasless Transactions: With smart wallets, gas fees can be covered by apps or third parties (known as paymasters). This allows users to perform transactions without needing ETH for gas fees, significantly lowering the barrier to entry for new users. The app or paymaster sponsoring the transaction covers the gas fee, making the user experience seamless.
Magic Spend: This feature allows users to spend their Coinbase account balance directly from their smart wallet on-chain. When users initiate a transaction and don’t have enough ETH in their wallet, Magic Spend automatically uses ETH from their Coinbase account to cover the gas fees. This eliminates the need to pre-fund the wallet

Via Coinbase

Account Abstraction: This allows the smart wallet to function as a programmable account on the blockchain, enabling advanced functionalities like gasless transactions and batch transactions.
Batch Transactions: Batch transactions enable users to combine multiple actions into a single transaction. For example, users can approve a token and then swap it in one go, reducing the complexity and cost associated with multiple individual transactions.
Cross-Chain Compatibility: Currently, Base’s smart wallets supports 8 different Layer 2 chains, ensuring easy interactions and asset movements across chains. This unified approach allows users to manage assets across chains.
Gas Sponsorships: Base simplifies the user experience by covering transaction fees through gas sponsorship programs for protocols and developers. Funded by sequencer fees, these sponsorships are part of the Base Gasless Campaign, promoting the use of smart wallets. Projects like Stackup.sh offer up to $1000 in gas credits, while Privy provides up to $50,000 for developers. Additionally, the gasless campaign offers up to $15,000 in gas credits for eligible protocols and apps, reducing user costs and encouraging network activity.

Smart Wallet is free for both developers and users, encouraging adoption and reducing barriers to entry. Users can use the same account and address across all on-chain apps, ensuring consistency and a streamlined experience.

Network Effects

Base and Coinbase’s large user base create a strong network effect. Developers gain immediate access to millions of users, reducing marketing needs and speeding up adoption. This attracts more developers.

For users, interconnected apps offer diverse, seamless services. Lower transaction costs and economic incentives boost engagement and retention. Continuous feedback between users and developers ensures ongoing improvement, improving the ecosystem's value for everyone involved.

This is similar to when the iPhone was launched, its unique user experience attracted a large user base. This, in turn, drew more developers to create apps for the App Store, which further increased the iPhone's appeal and user base, creating a virtuous cycle.

Unique Social Apps

Base has cultivated a unique ecosystem of social apps designed with a mobile-first approach and integrated token incentives, driving significant user engagement and participation. This ecosystem includes a diverse range of social apps, each contributing to the appeal of the chain.

Friend.tech, for example, significantly boosted activity on Base by attracting over 64,000 users and facilitating 42,000 ETH in trading volume shortly after its launch.

Friend.tech launched on August 11, and by August 28 it had reached $6.4 million in TVL with over $1.5 million in fees collected on some days.

Some other unique apps on Base:

Drakula: A short video social media platform where users earn BLOOD points by posting and watching videos. These points are used as currency within the app, offering rewards and privileges. Drakula uses Degen tokens for transactions, creating an incentive for users to engage and produce quality content.
AlfaFrens: A SocialFi app on Farcaster with gated chat subscriptions using the Degen token. Users subscribe to channels in real-time through Superfluid money streams, paying by the second, and earn $ALFA tokens. These tokens can be staked on creators to share in subscription revenue. $ALFA accrues daily and needs to be claimed regularly, creating a dynamic ecosystem of subscribers, creators, and stakers.
Time.fun: A platform where users can buy, sell, or trade minutes of someone's time, minted as tokens. These tokens are redeemable for meetings or messages, effectively monetizing time.
Farcaster: While Farcaster is built on Ethereum, it plays a crucial role in Base's ecosystem. Farcaster supports various community initiatives such as Onchain Summer, Base grants, and OP Weekly grants, contributing to the broader Layer 2 ecosystem and amplifying community engagement on Base.

To summarise, Base's ecosystem of diverse social apps, boosted by significant activity from platforms like Friend.tech and supported by community initiatives on Farcaster, highlights the network’s potential to transform the crypto space.

Closing Thoughts

Base has a promising ecosystem with efforts to develop consumer crypto apps and a focus on localized onboarding, showing great potential. Smart wallets could revolutionize traditional financial products by integrating crypto features. However, their adoption in the current crypto space remains uncertain.

While there is no doubt about the growth aspect of Base, currently the biggest downside is the centralized structure in which it operates. The team has mentioned a progressive approach to decentralizing governance, but currently, decisions are made off-chain by a few key individuals. Base also faces competition from other players working on chain abstraction and lowering entry barriers for new users. Balancing decentralization with efficiency will be crucial for long-term success of the chain.

To summarise, as of writing this, the pros of Base outweigh the cons, and as with any chain that has pros outweighing the cons, there will be people building products and users using them.

At LI.FI, we support bridging to and from Base, helping apps go multi-chain, and enabling users to access liquidity across any chain. This significantly adds value to the Base ecosystem. We will continue to monitor Base's evolution and help apps go cross-chain within its ecosystem.

A huge shoutout to Sitesh, PD, and Saumay for their feedback and Arjun for editing this piece.

Sources:

FAQ: Base's Blueprint for Crypto Adoption

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Disclaimer: This article is only meant for informational purposes. The projects mentioned in the article are our partners, but we encourage you to do your due diligence before using or buying tokens of any protocol mentioned. This is not financial advice.

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