Coinbase's Layer-2 scaling solution, Base, now leads in daily transactions over Arbitrum and Ethereum. Let's take a look at this BASE L2 news in more detail.
What is Coinbase Base L2?
"Base" is a safe, affordable platform that's easy for developers to use. It's part of Ethereum's Layer 2 (L2) system, designed to make blockchain technology more accessible to everyone. Base is created to improve Ethereum by making transactions faster and cheaper. Its goal is to help more people use Ethereum by enhancing its efficiency and scalability.
The Base layer-two blockchain works by handling transactions away from the main Ethereum chain (Layer-One) and then updating the main chain with the outcomes.
Base manages the majority of transactions and computations off the Ethereum main chain. This allows it to handle multiple transactions at once, reducing congestion and improving processing speed on the Ethereum network.
Once Base processes transactions off-chain, it combines or groups several transactions together before returning them to the Ethereum main chain. This consolidated method decreases the volume of data stored on the main chain, which in turn reduces transaction costs (gas fees).
How did Base's transaction volume spike compared to Arbitrum and Ethereum?
Based on L2Beat data, Base's 30-day transaction count stands at 45.21 million, Arbitrum One at 38.58 million, and Ethereum at 37.93 million. Notably, Arbitrum Nova leads with the highest 30-day transaction count of 81.31 million.
Coinbase's Base Total Value Locked (TVL) currently stands at $3.89 billion, showing a 19.96% increase in transaction volume over the past seven days. This growth is significant compared to Arbitrum One and Ethereum. Arbitrum One experienced a transaction decrease of 4.87%, resulting in a TVL of approximately $18.45 billion.
Ethereum's TVL is $40.02 billion, down by 4.24% from its value a week ago. While Ethereum's L2 Arbitrum was leading the pack a month ago, Base has now surpassed it. Despite recent network congestion challenges, the high transaction volume on Base indicates continued user enthusiasm for its services.
Regarding daily Transactions Per Second (TPS), Base achieved 35.16, marking a 36.12% increase. Arbitrum has a Transactions Per Second (TPS) rate of 17.80, while Ethereum's TPS stands at 14.38. Similarly, Zora also experienced a significant TPS surge, registering over 700% growth with a TPS of 10.95.
Are there additional functionalities that Coinbase is considering implementing?
The recent increase in Base's metrics coincides with significant developments within its ecosystem, particularly the adoption of corporate and retail customers' USDC balances on the network.
Towards the end of Q1 2024, Max Branzburg, Vice President and head of Consumer Products at Coinbase, announced plans to store users' USDC balances on the Base Network. This strategic move allows Coinbase to efficiently manage and secure customer funds at lower fees and faster settlement times. It also enhances Base's functionality, contributing to the growth in its Total Value Locked (TVL).
Speculation persists about the potential introduction of a Base token. Coinbase's legal Chief, Paul Grewa, previously hinted at this possibility in an interview last year. He attributed the delay to Base's focus on advancing its technological infrastructure before considering such offerings.
What does this mean?
The analysis of L2Beat data reveals significant developments and trends within the Layer 2 (L2) scaling solutions ecosystem. Among the platforms examined, Arbitrum Nova emerges as a frontrunner with the highest 30-day transaction count of 81.31 million, showcasing its robust adoption and transactional activity.
Meanwhile, Base, Arbitrum One, and Ethereum exhibit notable transaction counts, reflecting varying levels of user engagement and utilization across these networks.
Coinbase's Base Network stands out with a remarkable 19.96% increase in Total Value Locked (TVL) over the past week, reaching $3.89 billion. This growth surpasses Arbitrum One, which experienced a transactional decline resulting in a TVL of approximately $18.45 billion, and Ethereum, with a TVL of $40.02 billion but showing a slight decrease from the previous week.
Despite Ethereum's larger TVL, Base's surge in transaction volume underscores growing user enthusiasm and confidence in its ecosystem. Moreover, Base's impressive daily Transactions Per Second (TPS) of 35.16, marking a 36.12% increase, further signifies its scalability and efficiency in processing transactions compared to Arbitrum and Ethereum.
These metrics collectively position Base as a key player in the evolving landscape of L2 scaling solutions, highlighting its competitive edge and potential for continued growth and adoption in the coming months.
