Bases TVL increased significantly in March. Thanks to yesterdays meme craze, Base TVL exceeded US$700 million. As of writing, the total TVL volume is US$743 million, reaching a record high. Backed by Coinbase, Base seems to be becoming a new dynamic growth point for the Ethereum ecosystem.

The increased activity on the Base chain has been questioned by the community as being a robot. There are not many real active users. The answer may not be that, because no chain needs real users and on-chain activity more than Base.

Base launched its mainnet in August last year. Jesse Pollak, the head of the protocol, made it clear on the Bankless podcast that Base would not issue tokens and had no plans to issue tokens. As a chain built by Coinbase, the only listed crypto trading platform, Bases currency issuance expectations are indeed very low, so it requires real users to contribute fee income as the source of income for the entire ecosystem.

As we all know, the encryption market is a place of extreme speculation and the pursuit of capital efficiency. So why do users on the chain enter Base? What does Base rely on to gain more users? And how much room does Base have for growth?

Base’s ecological logic

There is no expectation of currency issuance, which makes Base a unique existence in Ethereum Layer 2, and it seems that a magic disk will appear on Base every once in a while, bringing real income and traffic to the entire ecosystem. It can be seen from the TVL trend chart that Base has experienced three sharp increases in TVL since its launch.

The first time was the explosion of social application Friend Tech, which single-handedly drove Base TVL to skyrocket; the second time was in February this year, when the social protocol Farcaster launched new function frames, the community meme currency DEGEN and a series of expected airdrops. Reaction; The third time is due to the synergistic effect of the recent Cancun upgrade, Coinbases assistance to the Base ecological DeFi project to promote increased liquidity on the chain and the increase in hot money in the market.

These three increases also illustrate that Bases genes carry different development factors from other Layer 2.

Focus on user growth VC chain

Do you still remember the market enthusiasm brought about by the emergence of Friend Tech last year? Although it seems a bit confusing now, the market was still in a bear market cycle at that time, and the emergence of Friend Tech, a social protocol built on the Base chain, was nothing short of thunder.

From the product launch in early August to mid-October, Friend Techs protocol revenue accumulated US$21 million, with the highest daily cumulative revenue of approximately US$1 million, far exceeding the mainstream Defi protocol or NFT market at the time. Solve industry sharing pain points through social fission, achieve a cold start through speculative effects at the right time, and rely on rapid iteration and bundling Paradigm to consolidate development expectations. In addition, releasing airdrop expectations will deepen user stickiness. It can be said that Friend Tech taught the Web3 market at that time a good product manager lesson.

Related Reading:In-depth interpretation of Friend Tech’s outbreak process, project income, top ten risks and death spiral》

In this spiraling chain, the early stage relied on invitation codes and well-known KOLs to win over people for social fission, but the emergence of Paradigm is the key factor. A research report from Folius Ventures stated that Friend.Tech refused to contact all VCs except Paradigm, which shows that it is highly bound to Paradigm. But to say who has benefited the most from this SocialFi craze, I think it is undoubtedly Base.

In addition to Friend Tech, Base also has FrenPets focusing on the electronic pet market, Web3 live streaming platform Unlongly, sound.xyz focusing on collecting music, fundraising platform PartyDAO, Zora for collecting art, Web3 Tiktoks Drakula, etc.

After the smoke of the Base meme was over, many people asked what else is on Base. Jesse Pollak, the head of the Base protocol, listed a long list of projects, which are all consumer applications focused on serving Web3 users. Jesse said that Base is currently brewing a trend called build 2 earn, or “building influential new on-chain products and earning respect, admiration and economic rewards.”

Behind these consumer applications are a number of well-known VC institutions in the encryption market such as Paradigm, a16z, Multicoin, DragonFly, Variant Funds, and 1confirmation. Due to their different investment styles, these VC institutions have differentiated into two characteristics in the Base ecology. On one side are the gambler culture scumbags headed by Paradigm, and on the other side are the long-termists centered on a16z. But they all have only one purpose - to bring more real users to Base and create an active and prosperous on-chain ecosystem.

Contrary to the Friend Tech model is Farcaster, a social protocol that has been working quietly for a long time. With $30 million in financing from VCs such as a16z and 1confirmation, Farcaster was recognized as the ceiling for decentralized social protocols after its launch. It was not in a hurry to grow users at the beginning. It was not until February this year that the frames function was launched and it was introduced through articles by major institutions or KOLs and achieved large-scale breakthroughs. DAU hit a record high, which also briefly brought a wave of excitement to Base. Trading boom.

At present, Farcaster and its largest front-end protocol Warpcast have become the back garden of the Base ecosystem, and ecological assets represented by DEGEN are also becoming the main targets of speculation on the Base chain. Although there is still a certain threshold for entering Warpcast, the Base ecosystem and even the Ethereum ecosystem have established their own social circle and culture on it. This may seem a bit elitist, but as the project continues to break through the circle and gain wider user adoption, these elites seem to be compromising with the gambler culture.

Ecological linkage, exchange needs with OP

The reason why Base has a good life is not only because of the VCs dedicated growth plan, but also because of its full cooperation with the Ethereum ecosystem. The most representative one is joining the OP super chain vision.

In August last year, Base and Optimism jointly announced a governance and revenue sharing agreement, which stipulates the different governance collaboration models between Optimism and Base in the short and long term, as well as the economic interaction between the two parties. In other words, two Ethereum Layer 2s that were originally competing have joined forces to build the ecosystem.

Related Reading:Governance and income are deeply bound, Base and Optimism become one family》

In addition to reaching agreement on the strategic route, Base and OP also have good cooperation on the development of specific ecological projects. Many people think that since Base has so many consumer applications, perhaps no one pays attention to DeFi, the core configuration of most blockchains. But Base, which has top-level resources, tells you that it can not only build a real consumer application chain, but also manage liquidity and create excellent DeFi applications, and this also relies on the synergy brought about by ecological linkage.

Currently, the one that occupies half of Base TVL is the liquidity protocol Aerodrome, a fork protocol deployed on Base by the OP head protocol Velodrome Finance. Its native token is AERO, which is distributed to liquidity providers through emissions. After Base was launched at the end of August last year, it attracted nearly 200 million US dollars in TVL in just 24 hours, and its liquidity mining income annualized without compound interest was close to 1000%.

On January 25, Coinbase added Aerodrome Finance (AERO) to the currency listing roadmap. On February 27, Aerodrome announced that it had received investment from the Base Ecological Fund led by Coinbase Ventures. The specific amount was not disclosed. The investment was through the purchase of Aerodrome’s native token AERO tokens. As of writing, AERO briefly broke through $0.83,

The series of operations from Coinbase listing to investment allowed Aerodrome, which was already the liquidity center of Base, to once again take advantage of the east wind. The currency price continued to rise, with a monthly increase of nearly 700%. As of the time of writing, Aerodrome’s TVL has reached US$317 million, transaction fees have reached US$14.52 million, and it has more than 33,000 active users

With the Coinbase tree at your back, you can enjoy the shade

But Coinbase is the key to Base becoming a naturally good Layer 2.

As mentioned earlier, Coinbase is the best trading place after some projects on Base deploy tokens. As the saying goes, it is easy to enjoy the shade against a big tree. In fact, it is not only the flow from Base to CEX, but also the flow from Coinbase to Base that is worthy of attention.

Recently, Coinbase launched a new smart wallet. The core function Magic Spend allows users to transfer funds on the chain in a timely manner. Users can choose to withdraw funds from their Coinbase account when a transaction is signed/paid, and funds are only withdrawn when a transaction is signed/paid. Aside from having funds in their Coinbase account, users don’t need to do anything else, download a wallet extension, or bridge.

Smart wallets further open up the obstacles between the on-chain and off-chain, and Base is undoubtedly the chain that benefits most from this. This not only lays the foundation for the Base chain to attract users and funds on a large scale, but also allows existing consumer applications on Base to have Wider adoption possibilities.

In addition to empowering the Base ecosystem, Coinbases compliance management also enables Base to reduce risks in the longer term.

On March 19, Coinbase CEO Brian Armstrong posted that “authoritative sources have stated that cryptocurrencies have no practical use other than speculation and illegal activities. However, 400 million people around the world (including more than 50 million Americans) have purchased cryptocurrencies. Currency, third-party data shows that illegal activities account for less than 0.5% of transaction volume. As the CEO of CEX, Armstrong often speaks out not only for Coinbase, but also for the Base platform or to rectify the name of the encryption market.

What targets are worth paying attention to?

With the support of a group of VCs and Coinbase, Base will undoubtedly become the most Alpha-intensive place in the Ethereum ecosystem. Because of Coinbases compliance attributes, Base has the innate attribute of not issuing coins, and this reason also means that if users want to speculate on Bases targets, they can only focus on Bases ecological projects.

The native token of Aerodrome mentioned earlier rose from a bottom of $0.04 to $0.8 after being listed on Coinbase, an increase of 1900%. There are still many projects in the Base ecosystem, and the community is also increasing its expectations to be listed on Coinbase.

Moonwell (WELL)

Moonwell is an open lending protocol deployed on Base and launched simultaneously with the Base mainnet. On February 15, Moonwell launched a tool called USDC Anywhere that allows individuals to lend Circles USDC stablecoin to Moonwell through various Ethereum networks. The tool supports detection of USDC in user wallets on networks such as Arbitrum, Avalanche, Base, Ethereum, Optimism, and Polygon, and leverages Circles cross-chain protocol to transfer stablecoins onto the platform without the need to manually bridge assets, allowing users to leverage Digital assets on Moonwell send USDC within the Ethereum ecosystem.

As the Base ecosystem heats up, Moonwells users are also gradually growing. The current price of its native token WELL is US$0.032, with an increase of 333% on the 30th.

Avantis

On February 4, Avantis, a synthetic derivatives protocol based on oracles, completed its mainnet release on the Base chain. Its protocol allows users to trade cryptocurrencies and real-world assets using leverage.

In September 2023, Avantis Labs completed a US$4 million seed round of financing, led by Pantera Capital, with participation from Founders Fund, Coinbases Base Ecosystem Fund and Modular Capital.

Currently, Avantis has not issued coins, but will launch transaction volume rewards on March 12.

Infusion

Infusion is a new AMM protocol on Base. It was launched on Base on March 15 and is the new star of the Base liquidity protocol. Infusion Protocol consolidates on-chain liquidity with a new timelock component called Timefuse. When liquidity is time-fused, the pool allocates most of the fees to liquidity providers and locks the liquidity for a period of time, thus incentivizing the long-term stability required for DeFi.

Infusion Protocol is a community-driven project comprised of contributors and advisors from various DeFi and infrastructure projects. Core contributors and advisors come from 1inch, Pendle Finance, Harmony, LI.FI and Thorchain.

Infusion has not issued coins yet.

BSX

BSX is an emerging DEX on Base, one of the six crypto projects invested in the first round by the Base Ecological Fund under Coinbase Ventures. A non-custodial system that adopts off-chain execution and on-chain settlement will also support commodity and foreign exchange transactions in the future. The core members of BSX come from institutions such as Coinbase, Kraken, FalconX and Jump.

BSX is currently in the public testnet stage and will launch its mainnet at the end of the month.

Deakula

On March 14, the social application Drakula.app stated on the social platform that it has launched the on-chain short video social application Drakula. Users can get 250 BLOOD points by logging in with Farcaster, and can also earn by publishing and watching short videos. Points, creators also earn commission income from each token transaction. In addition, Drakula also cooperated with Degen to use DEGEN as the main transaction token, and Degen also provided Drakula with 10 million DEGEN grants.

In the official introduction of Drakula, the project team stated that this is a social project invested by Paradigm and DragonFly. Reminiscent of the past craze of Friend Tech, we may be able to look forward to Drakulas performance in the future.