blockworks.co
Base, Coinbase’s layer-2 Ethereum scaling solution, did not acquire as many users as other chains did in 2023.
A recent report by Web3 analytics firm Flipside Crypto shows that in 2023, Base acquired a little under two million users.
When compared to layer-1 blockchains including Ethereum, Bitcoin, Solana and Avalanche, which respectively saw 15.4 million, 10.7 million, 5.6 million and 2.5 million new users, Base’s adoption remains on the lower end.
This is similarly the case when compared to layer-2 chains, including Optimism, Arbitrum and Polygon, which saw 3.3 million, 7.3 million and 15.2 million acquired users in 2023, respectively.
Despite the low adoption rate, Carlos Mercado, a data scientist at Flipside Crypto, told Blockworks that it was important to remember that BASE is barely six months old.
Read more: Coinbase layer-2 network Base now live on Ethereum mainnet
Having only launched in August last year, Base, a product of Coinbase, launched with widespread excitement and played an important role in validating the OP Superchain thesis.
“Coinbase started strong with both its on-chain summer initiative and identifying how to make USDC free to transfer via signatures on the Base layer-2. Not to mention the frenzy of friend.tech and the BALD meme token,” Mercado said.
Read more: Friend.tech sees record outflows as top user jumps ship
This excitement quickly tapered off, in contrast to the rest of the cryptocurrency ecosystem, the report noted. It is suggested that regulatory oversight over centralized exchanges may have negatively impacted the Base, even though Coinbase itself was not implicated.
Mercado adds that an additional two major speed humps could also have played a role in its sluggish growth near the end of 2023.
Firstly, DeFi on Base remains in its early days. According to DeFiLlama, the chain currently has a total value locked (TVL) of under $450 million, a significant difference from Arbitrum, for example, which currently has a TVL of over $3.5 billion.
“Arbitrum’s lead on DEXs and perpetuals has been difficult for even major layer-1’s to surmounts,” Mercado said.
Additionally, Mercado points out that there has been a resurgence of similarly low-cost layer-1 solutions, particularly the likes of Solana.
This resurgence may have been more attractive to users interested in exploring the space, as it was likely that these networks already had an existing, robust ecosystem.
Despite these challenges, Mercado believes that Base still has the potential to substantially grow in 2024.
Read more: Coinbase wants to support ‘responsible DeFi development’ through Base
“Being an OP-based chain, it had a headstart on NFT cultural growth — it actually beat ARB and OP and Avalanche in the number of NFT sales transactions in August, September, October and December,” Mercado said. “While their numbers declined month to month, we’re watching this sector as the market shifts.”
He notes that additional integrations with Optimism, including through shared sequencing and seamless bridging, will likely continue to ramp Base activity in the coming year.