What is Base?
Base is a Layer 2 built on Ethereum that utilizes Optimism's OP Stack, offering users high security, scalability, and interoperability.
Key Takeaways
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Base is a decentralized Layer 2 solution built on Ethereum and offers high security, scalability, and interoperability, for fast transactions.
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Developed by Coinbase in collaboration with Optimism, Base has recently launched its mainnet with $160 million in TVL.
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Decentralized applications building on Base will be able to access Coinbase’s existing suite of products and tools and its user base of approximately 110 million verified users, holding over $80 billion worth of assets.
Introduction to Base
Base is a secure, low-cost, and decentralized Layer 2 (L2) built on Ethereum, launched by Coinbase, the largest publicly traded U.S. crypto exchange at time of writing. Base is developed in collaboration with Optimism and utilizes the open-source OP Stack.
Coinbase is the largest publicly traded U.S. crypto exchange, with over 100 million verified users, and Base provides an entry point to introduce these users to DeFi. This in turn incentivizes existing decentralized applications to build on Base, as they can leverage Coinbase's existing products and user base to access a new pool of non-DeFi natives.
To date, the Base ecosystem includes established names like Aave, Compound, Sushiswap, and Uniswap, along with newer protocols like Friend.tech and BaseSwap. As of time of writing, Base has a TVL (total value locked) of over $160 million.
Source: DefiLlama
The Base team launched the Base mainnet on 9th August, 2023. To celebrate the launch, the Base team has also prepared ‘Onchain Summer’, a month-long onchain festival featuring the best builders and attracting prominent names including Coca Cola, Atari and many more. If you're interested to learn more about how you can start minting some of these Onchain Summer NFTs, find out more in our guide to claiming and minting NFTs on Base.
In light of these series of announcements, let’s take a look at what Base is.
Base’s Architecture
By building using the OP Stack, Base is becoming part of the Superchain vision. The Superchain is a network of chains built using the OP Stack, which allows for them to share the same underlying security and have a common communication layer. In addition to making it easier for Base to deploy, the OP Stack allows for a higher level of scalability and interoperability.
Coinbase has also delegated a team to join the Optimism team as core-developers, working on the open-source OP Stack. Together, they’re designing and building a protocol that can sequence multiple L2s, while providing interoperability and composability between the OP Stack.
Given that it is built out to be a L2, Base will be able to benefit from the upcoming EIP-4844, to which Coinbase contributed, which will be included in the Ethereum Dencun upgrade. EIP-4844 reduces the data availability cost significantly by storing the data in a new format known as blobs, instead of the existing structure, known as calldata. Should L2s pass on this cost saving to users, it translates to lower transaction costs across the L2 ecosystem.
Now, let’s take a deeper dive into the key characteristics of Base.
Base’s Characteristics
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High Level of Security | Secured by Ethereum
By building using OP Stack, Base taps on Ethereum’s security layer, which is currently the strongest amongst all chains given the stake weight. Moreover, this security is expected to increase even further with the proportion of staked ETH consistently increasing ever since the ETH Merge and subsequent Shanghai Upgrade which enabled withdrawal of staked ETH.
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Empowered by Coinbase
Decentralized applications (dApps) building on Base will be able to access Coinbase’s existing suite of products and tools. In addition, these dApps will be able to gain access to Coinbase’s existing user base, which is approximately 100 million verified users, accounting for an estimated $80 billion worth of assets. Given the potential for users to easily onramp from Coinbase onto Base, dApps on Base might be able to benefit significantly from the liquidity.
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EVM-Equivalent
Various developer toolings are already available for Base, including the very commonly used Foundry, Hard Hat and Truffle. This allows developers to deploy their existing Ethereum code onto Base without having to make any code changes, retaining the functionalities and preventing the need for additional effort.
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Low fees
Base’s fees are 10x lower than Ethereum according to the 90 days average.
How Will Base Make Money?
At its current stage, Base will be monetized through sequencer fees, which are earned when any transaction is executed on Base. However, the team has stated that that is only a small part of it, with their focus being on increasing utility.
“What we're really focused on is increasing utility, which increases the number of use cases that folks can do through Coinbase and increases the opportunity for Coinbase to provide easy-to-use, trusted experiences that we can monetize. We're not running the sequencer to make a bunch of profit. We're running the sequencer to enable innovation. And we're gonna be reinvesting that money in innovation. And we're going to be focusing monetization efforts where we've always monetized, which is the user experience.”
- Jesse Pollak, Coinbase’s Head of Protocols and Creator of Base
Base's Roadmap
As of launch, Base is a Stage 0 rollup, where while all rollup transactions go on-chain, the on-chain mechanism for posting new state roots can be a multisig with no active fraud proof or validity proof. The Base team plans to progress Base to a Stage 1 rollup, with higher levels of decentralization and trustlessness. This includes:
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Launching at least one fault prover for the OP Stack that will secure Base and the Optimism Mainnet by leveraging validators to identify and challenge faults.
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Launching a version of the Superchain that can sequence transactions for Base, Optimism and any other OP Stack rollups, protecting the rights for any user to participate in these ecosystems.
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Progressing Base and Optimism to Stage 2 rollups, with levels of decentralization and security comparable to Ethereum.
Conclusion
While Base is still in its early stages, it occupies a unique position in the Layer 2 space due to its strategic synergy of Coinbase, one of the largest crypto exchanges, and Optimism, one of the top L2 technology stacks. With its focus on user experience and adding more beginner-friendly features like ratings and reviews around dApps and tokens, it has the potential to introduce DeFi to more conservative and newer investors, which will in turn drive mass adoption and fulfill its vision of bringing a billion people on chain.
CJ is a business graduate that has been involved in crypto for 4 years and specializes in DeFi protocols. He is also interested in TradFi becoming DeFi, and has written for ByBit, SwitcheoLabs, and others. Follow the author on Twitter @fishmarketacad
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