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Unpacking the Base Narrative

Why Coinbase's homegrown L2 is an investment narrative we're tracking.
David C David C Jul 5, 20245 min read
Unpacking the Base Narrative

Coinbase’s breakout L2, Base, has quickly become one of the most prominent spots to be onchain this cycle, solidifying itself as one of Ethereum's most innovative corners.

Base's rise and continued development has increasingly become a hot investment narrative that's difficult to ignore.

Launched in July 2023, Base was built on the OP Stack to permit cheaper and faster Ethereum transactions, a critical feature in driving its success. Since its inception, Base has developed a vibrant ecosystem full of DeFi, NFTs, and consumer-friendly apps that’s put it at the forefront of all onchain trends. It partnered with Stripe for their upcoming stablecoin service, became a hub for launching Layer 3 (L3) solutions, and has consistently been the center of liquidity rotations that continually spark calls for “Base Season.” It has even overtaken Optimism in onchain TVL value!

In this article, we’ll examine what makes Base stand out from other L2s, how it draws power from Coinbase, and its rumored token drop — all of which come together to make Base a can’t-miss destination onchain. Let’s begin!

What Makes Base Special?

Base stands out from other L2 chains due to its deep integration with the Coinbase ecosystem and reputation as the consumer chain

Base's integration with Coinbase puts the exchange's massive consumer base closer to the chain and provides a foundation for building a strong community of builders and users.

Ecosystem initiatives like Onchain Summer have helped drive attention to the developers and creators, making the chain an attractive place for user to gather. Base has continually demonstrated a commitment to creators and breeding an atmosphere of experimentation, which has yielded many unique activities onchain, whether it's trading AI songs with Crate, talking behind closed doors in FriendTech, or nuking the competition in WorldPVP.

Further, Coinbase has provided the chain with a wealth of tools for making onchain life more approachable, the most notable being their recent release of smart wallets, which simplifies the login process by abstracting away lengthy recovery phrases and allows dApps to pay gas fees on behalf of their users. 

These innovations combine toward a supportive ecosystem that rewards builders trying new things, in turn keeping users engaged and making for a casual, consumer atmosphere — a rarity in the do-or-die arena of DeFi.

Can Coinbase Push Base to the Top?

The backing of Coinbase brings several key advantages that set Base up for success.

  • Trust: As one of the most recognized and trusted names in the industry, Coinbase lends it credibility to the chain, aiming to ensure prospective users that the chain will be operated with integrity. This is not only essential to attracting Coinbase’s 110 million users by providing them a friendly and safe place to venture onchain, but also in allowing Base to field major partnerships like their most recent one with Stripe.
  • Partnerships: Base’s partnership with the financial services titan will have a twofold effect of making the L2 a highway for payments, potentially rivaling Solana, which has benefited from large stablecoin volume this cycle, and signaling to other Web2 companies that Base is a reliable place for expanding onchain. Having the firepower of an established, global business behind them provides Base with the financial firepower to continue to innovate and offer their community access to a multitude of services like cloud access, institutional gateways, and all-in-one developer platforms.
  • Marketing: Their war chest also serves as a powerful marketing machine, bringing Base and the industry overall one step closer to the public thanks to the backing of a company that regularly runs TV spots, which make your parents stop in their tracks and say, “huh, I never thought about it like that.” 
  • Political Power: Finally, no company has been as proactive as Coinbase in developing relationships with regulators to champion clear and productive regulation. From funding initiatives like Stand With Crypto to regularly meeting with senators and congressmen, the exchange continues to advocate on behalf of the industry. The reputation they have gained from this conduct, even though they themselves are currently under suit, could serve as a bulwark if and when Base has to navigate legal complexity. Furthermore, it implies that the chain will work to be more secure and compliant, an added protection measure if issues arise.

In summary, Coinbase's involvement with Base not only provides credibility and financial support but also enhances its potential for major partnerships, regulatory backing, and broad market reach, making it a formidable player onchain.

What About a Base Token?

Despite its rapid growth and success, Base is still under development. 

The platform’s fraud-proof system is a work in progress, meaning that Base is not yet fully decentralized. However, the team is actively working towards decentralization.

Unlike other major L2s, Base currently doesn't have a native token and hasn't made any official announcements suggesting it will eventually have one. However, many still believe the chain will find a way to launch one. While this means there is no direct way to invest in the network's current success, the future possibility makes using the chain all the more attractive. Further, a more immediate incentive could come from Optimism’s next retroactive airdrop, given that the last one rewarded creators across the Superchain, which includes Base. 

Until then, investing in tokens launched atop the L2 could provide a proxy avenue for exposure to the Base ecosystem.

🔵 The Case for Base

In only a year, Base has grown into a significant onchain player due to its integration with Coinbase, active ecosystem of developers and users, and key partnerships like its recent one with Stripe.

Not only does Coinbase's support provide Base with credibility, financial muscle, and regulatory support, essential for its growth and stability, but it also allows it to run initiatives like Onchain Summer, rewarding activity and experimentation onchain, and in turn ensuring there is always something new to do on the network.

As if this weren’t enough, Coinbase’s potential to launch a future token also adds incentive to operate on Base, an experience increasingly simplified thanks to features like smart wallets.

As Base expands and innovates, its user-focused approach, advanced technology, and strategic partnerships, backed by Coinbase's support, position it to be one of, if not the premiere onchain destination.

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David C

Written by David C

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David is a writer/analyst at Bankless. Prior to joining Bankless, he worked for a series of early-stage crypto startups and on grants from the Ethereum, Solana, and Urbit Foundations. He graduated from Skidmore College in New York. He currently lives in the Midwest and enjoys NFTs, but no longer participates in them.

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