How the Layer2 landscape is quietly shifting: What to watch in the Base ecosystem?
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How the Layer2 landscape is quietly shifting: What to watch in the Base ecosystem?
Whoever captures the next breakout consumer application in Web3 holds the key to Web3's explosive growth and mass adoption.
Navigating Web3 tides with focused insightsAuthor: Terry
In the fiercely competitive L2 landscape, Arbitrum and Optimism, once comfortably dominant, now face an unprecedented challenger.
According to L2BEAT data below, as of July 23, Base's TVL has surged to nearly $7.5 billion, surpassing Optimism’s $6.87 billion to claim second place—making it the second-largest L2 network after Arbitrum.
Considering that Base itself is a superchain built on the OP Stack, this case of “the student surpassing the master” feels almost fated.
So how did Base rise so rapidly? What connections and behind-the-scenes dynamics link it with Web3 giants like Coinbase? And which projects within the current Base ecosystem deserve attention?
Base: The New L2 Contender Built on OP Stack
In one sentence, Base can be summarized as follows: a Coinbase-backed, OP Stack-based L2 that rose to prominence through meme-driven wealth creation and social application traffic.
Forbes previously highlighted seven influential figures at Coinbase, among them Jesse Pollak, founder of Base (the PUNK avatar in the image below). He joined Coinbase in 2017 and is a true veteran.
As revealed in a Fortune magazine interview, in 2021, while leading consumer products at Coinbase, Jesse conceived a startup idea. To retain him, CEO Brian Armstrong (center in the image below) tasked him with bringing Coinbase on-chain—this became the initial spark for Base (and perhaps explains its inherent consumer application DNA).
Source: Forbes
On August 9, 2023, Coinbase officially launched the Base mainnet. Technically, Base leverages Optimism’s open-source modular toolkit, the OP Stack—which allows developers and teams to customize Layer 2 networks based on their specific use cases, enabling them to connect to Ethereum while sharing its security and resources.
Because of this, Base and Optimism jointly established a governance and revenue-sharing framework:
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The larger of either 2.5% of Base’s sequencer revenue or 15% of Base’s net sequencer revenue (L2 transaction fees minus L1 data submission costs) goes to the Optimism Collective governance system;
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The Optimism Foundation also granted Base the opportunity to earn up to approximately 118 million OP tokens over the next six years;
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In less than a year, Base has not only emerged as the standout performer within the OP Superchain ecosystem but has surpassed even Optimism and other major Ethereum L2s to become the runner-up—an undeniable success.
Although Jesse currently holds no executive title at Coinbase, the success of Base—arguably one of Coinbase’s most successful crypto ventures in recent years—grants him significant influence within the company.
Coinbase, as the sole sequencer on Base, has also profited handsomely. For example, in Q1 2024, users paid $27.4 million in transaction fees on Base (all-inclusive), of which Coinbase received $15.5 million.
According to Coin98 data, Base not only ranks second in TVL just behind Arbitrum but has also outpaced Arbitrum in daily transactions, pulling far ahead—as of July 22, Base set a new record with over 4 million daily transactions, nearly double that of second-place Arbitrum!
Source: Coin98 Analytics
This highly active on-chain performance isn’t built on air. A closer look reveals Base’s mature consumer DNA—its unique competitiveness forged through memes and SocialFi has made it one of the most powerful L2 networks despite having no token launch in sight.
Dual Engines: Memes and SocialFi
First, there's Base’s strategic focus on the meme space. If we review key events on Base over the past year, recurring meme-fueled wealth stories have served as the primary driver attracting capital and users—a clever ‘marketing and user acquisition’ strategy by Base.
Simply put, from TYBG and Degen to Brett, Base sees a new high-return "miracle coin" emerge every few weeks, drawing massive short-term traffic surges. So much so that many meme projects on Ethereum mainnet are even migrating their contracts to Base.
With successive breakout meme coins generating eye-popping returns in the hundreds or thousands of percent, they capture community attention. This has led much of the capital flowing into Base to revolve around movements in MemeCoins, creating a self-reinforcing cycle.
Source: OneKey
Beyond memes as a consistent operational strategy, Base’s other defining label is “SocialFi.”
The well-known friend.tech brought Base its first wave of explosive community traffic in September 2023. By tightly integrating with X, friend.tech allowed users to purchase shares (Shares) of any user on the platform using ETH on Base, gaining direct messaging rights and potential profit opportunities—marking Base’s emergence in the social space.
Later, Farcaster solidified Base’s status as the rising star in L2 social networking—not only leading Web3 social apps by a wide margin in activity but also securing a massive $150 million in funding, backed by top-tier VCs like Paradigm and a16z.
As mentioned in our previous article “Projects and Sectors Frequently Endorsed by Ethereum Co-Founder Vitalik Buterin,” Vitalik expressed strong support—after his X account was hacked via SIM swap in September 2023, he announced on Farcaster that he had uninstalled Twitter and joined Farcaster, a platform where account recovery is controlled via Ethereum addresses.
Indeed, as of this writing, Vitalik has made Farcaster his primary social media hub, making it, in many ways, the preferred social platform among Ethereum OGs.
Spotlight on Leading Projects
Beyond technology and viral hits, ecosystem development is essential for any L2 aiming for long-term sustainability.
So how developed is Base’s ecosystem today? Which exclusive leading projects across various sectors are worth watching? (excluding Uniswap, Aave, and other multi-chain heavyweights, as well as friend.tech and Farcaster)
According to DefiLlama, Base’s current DeFi TVL stands at $1.74 billion, with several (semi-)native DeFi projects dominating—Aerodrome ($650 million), Extra Finance ($106 million), Moonwell ($83.25 million), Morpho Blue ($73.26 million), among others.
Aerodrome
Aerodrome comes first—an undisputed “MetaDEX” and currently the highest TVL DApp on Base, serving as a core engine of the ecosystem—with total locked value exceeding $650 million, more than double that of second-place Uniswap ($282 million).
Aerodrome blends elements from Uniswap V2 and V3, Curve, Convex, and Votium. Its unique architecture restructures incentives among different protocol participants—including traders, LPs, and protocols seeking liquidity—achieved through its ve-governance model.
Participants must lock AERO tokens to earn fees. Locking creates veAERO, allowing users to direct protocol emissions to specific pools where they then receive 100% of fees and rewards. Due to these incentives, voters channel emissions toward the highest-volume pools to maximize rewards, creating a flywheel effect that attracts LPs and provides traders with low-slippage trading on popular token pairs.
Extra Finance
Extra Finance is a decentralized lending and automated compounding yield aggregation protocol built on Optimism, offering users borrowing, up to 3x leveraged farming, long/short positions, neutral strategies, and strategy vaults.
Like Aerodrome, it adopts ve-tokenomics. Holders of veEXTRA unlock privileges such as annual interest rewards, higher leverage in liquidity mining pools, access to high-utilization lending pools, and priority access to upcoming features.
Other live lending protocols like Moonwell and Morpho Blue also reach tens of millions in TVL.
Beyond DeFi, Base hosts notable consumer-focused DApps in social and gaming sectors.
Warpcast
Warpcast is a client for the decentralized social protocol Farcaster. NFTs on Warpcast are supported on Ethereum, Base, and ZORA.
Blackbird
Blackbird is a Web3 platform built specifically for the hotel industry, focused on building direct relationships with guests through loyalty and membership services.
In October 2022, Blackbird raised an $11 million seed round led by Union Square Ventures, Shine Capital, and Multicoin Capital, with participation from Variant, Circle Ventures, and IAC.
Other social networks supporting Base include Friends With Benefits (FWB) and Galxe, a Web3 community engagement platform.
Additionally, according to official Base sources, Animoca Brands, Game7 DAO, ChainSafe Gaming (a Web3 gaming solutions provider), Faraway (a blockchain game studio), Parallel (an NFT sci-fi card game), Pixelmon (an adventure and competitive game), Words3 (a word puzzle game), and Yield Guild Games are all part of its ecosystem.
Conclusion
In under a year, rising from zero to become the second-largest L2 with $7.5 billion in TVL—all without launching a native token—is an extraordinary feat.
From this perspective, Base stands out as a remarkable new L2, underscoring the unique advantages of social and other Web3 consumer applications. Does this mean that whoever captures the next big hit in Web3 consumer apps will hold the key to explosive growth and mass adoption?
What’s past is prologue. For those striving to lead in Web3 mass adoption, Base may serve as a rare and valuable reference case.
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