Base Chain: TVL surpasses Layer 2 first, ecosystem is thriving comprehensively

Base chain is a project incubated by a certain trading platform, aiming to become part of the Optimism superchain. This is an important component of the long-term planning of the trading platform. The development speed of Base chain is astonishing, and according to data, its TVL has already surpassed that of old Layer 2 projects like Arbitrum and Optimism, making it the current number one Layer 2 project in TVL rankings.

Overview of Base Chain

Base chain is a Layer 2 solution built on the standardized, shared, open-source OP Stack tool stack supported by Optimism. Optimistic Rollups are more compatible with Ethereum, allowing many decentralized applications to migrate directly, while having lower computational complexity, making them more suitable for executing general smart contracts and complex computational tasks. However, Optimistic Rollups still have some areas that need improvement, such as further enhancing the degree of decentralization and optimizing on-chain governance structures. With ongoing technological iterations, these shortcomings will be addressed.

To improve decentralization, the Optimism Rollup plans to enhance the existing on-chain governance by adopting the OP Stack, an open-source Layer 2 architecture toolkit, which introduces multiple ordering nodes to reduce reliance on a single ordering service. Currently, the ultimate goal of the OP Stack maintained by the Optimism Collective is to build a Superchain that can easily integrate different Layer 2s and achieve an interoperable system. To this end, OP Stack provides a series of standardized modules and interfaces that simplify the construction process of Layer 2 programs. The OP Stack is divided into six layers: data availability layer, ordering layer, derivation layer, execution layer, settlement layer, and governance layer. Each layer has customizable open-source modules that facilitate developers in designing custom blockchain networks according to specific scenarios.

Base has joined the development of the OP Stack and Superchain as the second core development team, working alongside OP Labs and the Optimism Collective to enhance the activity of the superchain, add value to it, and promote the growth of the developer ecosystem. Base aims to create a highly integrated chain network that provides users with a seamless experience, ensuring that protocols built on Base can be smoothly integrated into the final superchain and interact with users across multiple chains. Close cooperation with the Optimism Collective on its projects will help developers more easily build new Layer 2 and Rollups, and distribute applications seamlessly across the entire superchain.

Base Chain Data Analysis

TVL

According to data statistics, the TVL of the Base chain saw a significant increase after September, rising from $1.419 billion to $2.388 billion, an increase of 68.28%. As the most critical analytical indicator for public chains, Base's TVL growth rate ranks first among all ETH-Layer 2s, indicating its rapid development recently.

On-chain address count

The number of on-chain addresses for Base will significantly 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, as well as a potential wealth effect on-chain that has attracted more users to participate in Base chain activities.

Analyzing the growth of TVL in conjunction with the increase in the number of addresses reveals that the average new funds per household on the Base chain is only $1.97, mostly consisting of small users. Considering the situation after June where Base successfully attracted a large number of users by leveraging social characteristics and the popularity of MEME culture, it can be inferred that the propagation effect of Meme culture and enhanced social interactions have made Base a popular social platform, further driving user growth.

Base chain income

Base chain revenue increased from $19.78 million in March 2024 to $76.55 million, with a total increase of 287% from March to October and an average monthly growth rate of 41%. As the number of on-chain users and activities increases, Base's revenue maintains a high growth rate.

weekly trading volume

The weekly transaction volume on the Base chain increased from 13.45 million in May 2024 to 47.06 million, with a total increase of 249% from May to October, and an average monthly increase of 49%. This indicates a continued rapid growth in transaction volume on the Base chain.

On-chain performance

Base's TPS reached 66.28, surpassing the performance of other chains, making it the best performer in the Ethereum ecosystem.

Weekly Active Addresses

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

In summary, the above data indicates that the Base ecosystem is currently in a phase of vigorous development. Two key factors for assessing the sustainable health of the ecosystem are funding and traffic, with the Base chain performing best in ETH-Layer 2. Funding is reflected in TVL, trading volume, and chain revenue, all of which show a rapid growth trend, with a monthly average growth rate exceeding 40%, indicating a significant influx of funds into the Base ecosystem. Traffic is mainly reflected in the number of on-chain addresses and weekly active addresses, both of which show a continuous upward trend. Combined with the superior on-chain performance of the Base chain, the Base chain has a promising development outlook in the ETH-Layer 2 track.

Circle (USDC) Support for Base

The number of stablecoins on the Base chain increased from $319 million in March 2024 to $3.771 billion, with a total increase of 1082.13% from March to October, averaging a monthly increase of 216.42%, showing a rapid and sustained growth trend.

Although the overall amount of stablecoins on the Base chain has increased, including USDT and USDC, USDC users are mostly from the United States, and the increase in USDC can be viewed as an increase in funds from American users. Considering the recent approval of BTC and ETH spot ETFs by the U.S. Securities and Exchange Commission, as well as the active purchase of BTC by U.S. asset management institutions and listed companies, it can be seen that the current focus of the cryptocurrency market has shifted to the U.S. market. The Base chain mainly relies on a certain trading platform for support, which is the first listed cryptocurrency exchange in the U.S., so special attention should be paid to USDC's support for the Base chain.

In September 2023, Circle officially announced support for the Base chain, issuing USDC on the Base chain. USDC is now natively available on the Base network, allowing users and developers to use USDC without bridging, simplifying operations and improving efficiency. Circle accounts and the Circle API also fully support USDC on Base, facilitating access to USDC liquidity. The CCTP developed by Circle, as a permissionless on-chain tool, can safely transfer USDC between different blockchains. Through CCTP, USDC can achieve native burning and minting on the Base chain, providing more convenience and accessibility for related platforms.

A trading platform has partnered with Stripe to introduce USDC to the Base platform, enabling faster and cheaper cross-border transfers and quick conversions from US dollars to cryptocurrencies, enhancing transaction speed and reducing costs, further promoting the practicality of cryptocurrencies. The main collaboration details include:

1. Stripe has added USDC to its cryptocurrency payment products, enabling faster and cheaper remittances to over 150 countries/regions on the Stripe platform.

2. Add USDC as a fiat currency to the cryptocurrency gateway on Base, allowing American customers to convert fiat currency to cryptocurrency more quickly.

3. A trading platform adds a fiat currency purchase entry for cryptocurrencies using Stripe in its wallet, allowing users to purchase cryptocurrencies instantly with credit cards and Apple Pay.

This collaboration mainly focuses on integrating the USDC stablecoin onto the Base chain and promoting the global adoption of cryptocurrencies. Adding support for USDC on the Base chain to Stripe's crypto payment functionality enables faster international fund transfers. A trading platform has integrated Stripe's fiat-to-crypto gateway into its wallet, further simplifying the purchasing process for users. This collaboration is beneficial for expanding the acceptance and use of USDC globally. USDC plays an important role in the Base chain, and as of October 2024, the trading volume of USDC on the Base chain DEX 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 continuous growth trend since March of this year, with a growth rate of 5275%, which is astonishing. At the same time, the popularity of USDC on the Base chain continues to increase, and more and more users are choosing to use USDC as an on-chain stablecoin.

In summary, Circle and Base have launched a comprehensive collaboration. The implementation of native USDC issuance and the CCTP cross-chain transfer protocol has significantly simplified the user operation process. At the same time, a strategic partnership between a trading platform and Stripe further expands the application scenarios of USDC in the Base ecosystem, including support for cross-border payments in over 150 countries, convenient fiat entry points, and diversified payment methods (such as credit cards and Apple Pay). These initiatives not only propelled the DEX trading volume of USDC on the Base chain to surpass $20 billion, but more importantly, they established a bridge connecting traditional finance and the crypto economy, laying a solid foundation for the future development of digital payments.

Overview of the Base Chain Ecosystem

According to data from the Base chain's official website, the Base chain ecosystem is very well-developed, covering multiple sectors including Wallet, Bridge, Defi, Gaming, Onramp, Dao, Infra, Social, Security, NFT, Other, X-chain, and X-cross, with a total of 323 Dapps.

From the perspective of healthy development of public chains, the main focus is on two aspects: funding and traffic. Funding can be analyzed from a traditional DeFi perspective; in terms of traffic, market trends in 2024 indicate that users are mainly focused on Meme coins and the SocialFi track. The Meme coin track attracts widespread participation from users through wealth creation effects, while the SocialFi track can absorb and convert traffic users from traditional Web2.

DeFi track

In the DeFi space, TVL is the most direct observation tool. According to the data, projects on the Base chain with a TVL exceeding $200 million include Aerodrome, a certain DEX, and Morpho Blue. Among them, a certain DEX is a well-established DEX in the Ethereum ecosystem, which will not be discussed in detail here.

Aerodrome

Aerodrome was launched in 2023 and is the first DEX on the Base chain, utilizing the Ve(3,3) model. This model is based on Curve's veCRV model and OlympusDAO's 3v3 mechanism, optimized for ecological development. This mechanism provides a unique reward model that incentivizes long-term holders and active governance users, promoting the stable development of the ecosystem. Aerodrome also helps users optimize asset management and participate in liquidity mining activities through efficient liquidity management tools.

As the main AMM on the Base chain, Aerodrome provides users with a more efficient and cost-effective trading experience. Its innovative incentive mechanism encourages more users to participate in governance and liquidity mining. Under this mechanism, participants can not only earn protocol trading fees but also have the opportunity to receive additional voting incentive rewards proportional to the number of AERO Tokens they lock. This design not only encourages active participation from liquidity providers but also grants governance power to the community, making the entire ecosystem healthier and more sustainable.

The uniqueness of this incentive and governance strategy lies in its comprehensiveness and inclusiveness, closely linking the interests of liquidity providers, voters, and the entire community, creating a favorable environment for the development of the ecosystem. Notably, 90% of veAERO is locked, providing a strong incentive and governance mechanism for the entire ecosystem, stimulating demand and fostering a robust Token ecosystem.

Aerodrome's TV