Base is an Ethereum Layer 2 platform solution powered by Coinbase, the largest US-based cryptocurrency exchange. Its L2 solution is based on OP Stack technology in collaboration with Optimism. The main goal of the project is to expand web3 accessibility to a broader user base by offering a secure, affordable, and user-friendly platform for developers.

History

In February 2023, Coinbase announced the testnet launch of Base, a platform that the company plans on utilizing as its on-chain products’ layer. ^[1]

Today, we’re excited to announce the testnet launch of Base, an Ethereum layer 2 (L2) network offering a secure, low-cost, developer-friendly way for anyone, anywhere, to build decentralized apps or “dapps” onchain. We’re incubating Base inside of Coinbase, leveraging the last decade of our experience building crypto products, and plan to progressively decentralize the chain over time,” Will Robinson, vice president of engineering at Coinbase

Coinbase said it intends for the governance of Base to be fully decentralized, although it won’t be that way at the start. ^[2]

“Coinbase is going to gradually transition into a role where we’re a contributor to Base, we provide services and products that are built on top of Base, and we are not the decision maker for everything in the Base network—that’s being done through more decentralized governance,” - Jesse Pollak, Coinbase Senior Director of Engineering

Base has announced a launch with numerous partners, including Chainlink, an oracle network, Etherscan, an Ethereum block explorer, and Aave, a DeFi protocol.

Coinbase has also introduced the Base Ecosystem Fund to invest in promising early-stage projects that meet specific investment standards and are built on the Base network. There are currently no plans to issue a new network token by Coinbase. ^[3]

In July 2023, Base announced that mainnet was open for builders. In this first phase of mainnet, developers have the opportunity to deploy their products onto Base as part of the preparations for the mainnet GA (General Availability) scheduled for early August. During the GA, the platform aims to onboard the next billion users onto the blockchain network. ^[5]

On August 10th, the mainnet of the protocol went live. ​​In the first week of what Base called “on-chain summer,” users would be able to mint multiple NFT designs and artworks to celebrate the launch. Ecosystems and Dapps including Uniswap, Aave, and Compound would also be publicly available for users. The layer 2 protocol showed more trading volume compared to established layer 1 protocols less than 24 hours after it went public. ^[8][9]

According to data from DeFiLlama, Base ranked among the top 10 networks based on trading volume, recording a total volume of $26.23 million. In contrast, well-established layer1 blockchain networks such as Fantom, Cardano, and Tron collectively saw transactions amounting to less than $20 million. ^[9]

Dune Analytics data from August 10th indicates a record of over 136,000 daily users. This figure marks the highest daily user count in its history, happening during the second day following its public release. On August 10th, approximately 30% of the daily users were individuals newly introduced to Base, totaling nearly 42,000. ^[10]

Mainnet Incident

On September 5, 2023, there was a momentary stall in the Base mainnet network. Around 2:25 pm PT, the Base mainnet network ceased block production for a duration of 29 minutes. This occurred because a group of L1 nodes, on which the network relies, reached full disk capacity at 2:15 p.m., rendering them inaccessible to the sequencer. ^[19]

Base promised efforts to enhance resilience against L1 RPC failures. A planned improvement involves implementing a proxy layer to ensure the constant availability of functional L1 nodes to the L2 network, with redundancy across multiple L1 node providers. ^[19]

Overview

Base leverages the security and scalability of Ethereum, along with Coinbase's best practices, to provide a secure platform for decentralized app development. It also supports onboarding from Coinbase, Ethereum L1, and other interoperable chains. ^[2]

Base provides access to Coinbase's products, users, and tools, making it easier for developers to build decentralized apps. The L2 includes seamless Coinbase product integrations, simple fiat onramps, and acquisition tools that allow developers to reach Coinbase's 110 million verified users and $80 billion+ assets in the Coinbase ecosystem.

Base is compatible with Ethereum Virtual Machine (EVM) and offers a cost-effective solution for developers. It enables gasless transactions for dApps, supports account abstraction, and allows for the secure development of multichain applications with simple bridges.

Base aims to be an open-source, permissionless platform that supports the creation of a standard, modular, rollup agnostic Superchain powered by Optimism.^[7]

In September 2023, Base hit an all-time high in daily transactions. A notable portion of the usage can be traced back to the emergence of Friend.tech, a social application that is built on Base.  ^[11]

Chainlink enabled its Cross-Chain Interoperability Protocol (CCIP) on Base. CCIP, or Cross-Chain Interoperability Protocol, serves as a communication framework designed to facilitate interaction between various blockchains and conventional Web2 applications, such as SWIFT's payment system. Chainlink is also the primary oracle of the Base network. ^[13]

Seamless, a liquidity market operated by its community, has introduced its undercollateralized borrowing market on Base. Undercollateralized lending allows borrowers to take out loans without having to put up the full loan amount as collateral. This provides borrowers with more flexibility in how they use their capital compared to traditional DeFi lending pools, where full collateralization is typically required. ^[14]

In August 2023 Coinbase launched on Base the event called “Onchain Summer”, which encompassed a series of Web3 initiatives spanning art, gaming, and music. Throughout the month, more than 50 brands, such as Coca-Cola, Friends With Benefits (a social decentralized autonomous organization or DAO), and NFT creator platform Zora, facilitated NFT minting on the Base network. ^[12]

Fees

Each Base transaction involves two components: an L2 (execution) fee and an L1 (security) fee. The L2 fee covers the expense of executing the transaction on the L2, while the L1 fee is an estimate of the cost to broadcast the transaction on the L1. Generally, the L1 security fee exceeds the L2 execution fee. ^[15]

The L1 fee is subject to change based on transaction volume on the L1. If the timing of the transaction is flexible, costs can be reduced by submitting transactions during periods of lower gas fees on the L1, such as over the weekend. ^[15]

Similarly, the L2 fee can fluctuate depending on the volume of transactions being submitted to the L2. This adjustment mechanism mirrors that of the L1. ^[15]

Pessimism

Pessimism is an open-source monitoring system designed to enhance the security of Base, the broader OP Stack, and Ethereum ecosystems. It works by swiftly detecting and responding to various protocol threats. ^[18]

Pessimism is capable of detecting protocol threats specific to the OP Stack, including Withdrawal Enforcement and Fault Detection, as well as general EVM blockchain events like Balance Enforcement and Event Emission. This enables the detection of unauthorized or malicious events on the Base native bridge and the L1/L2 system contracts on Base. Additionally, it facilitates the capture of liveness failures for important protocol roles such as the proposer. ^[18]

Partnerships

Base x Coinbase

The development of Base is being carried out in partnership with Optimism, using the open-source, MIT-licensed OP Stack on Ethereum to ensure decentralization. As an incubation project within Coinbase, Base is benefitting from the company's expertise in developing crypto products over the past ten years. Coinbase intends to decentralize the chain progressively in the future. ^[4]

Base x Optimism

The network was constructed using the open-source OP Stack in cooperation with OP Labs and the Optimism Collective. Their shared objective is to establish a "mesh" or "Superchain" that collectively enhances the scalability of the Ethereum blockchain. ^[7]

Base Camp

Base Camp is a learning platform by Base that offers modules for participants to complete. As individuals progress through each module, they have the opportunity to earn unique NFT badges, which are issued on the Base testnet. These NFT badges serve as a way to commemorate and mark their accomplishments in successfully finishing each module of the program. ^[6]

Upon completing Base Camp, participants will have engaged in deploying more than 10 smart contracts. This experience is intended to equip them with the necessary knowledge and skills to confidently pursue their own onchain projects or creations independently. In essence, Base Camp aims to provide a practical and hands-on learning experience in the realm of smart contract deployment and blockchain-based applications. ^[6]

Base Ecosystem Fund

The Base Ecosystem Fund is a pool of capital dedicated to investing in pre-seed to seed projects building on Base. In March 2023, a Request for Builders was announced to work on some areas of the ecosystem, encompassing flatcoins, onchain reputation, onchain limit order book exchange, and safer Defi. ^[17]

In September of the same year, the fund announced the investment in six projects: Avantis, BSX, Onboard, OpenCover, Paragraph, and Truflation. ^[16]

• Avantis is a synthetic derivatives protocol relying on oracles. It allows users to engage in trading activities involving both crypto and real-world assets with leverage of up to 100x. Additionally, users have the opportunity to generate yield as market-makers by supplying USDC liquidity.
• BSX is a platform with a decentralized limit order book, which enables users to engage in both long and short positions with leverage.
• Onboard offers an on-chain, self-custodial pathway for users to facilitate the onramping and offramping of crypto in a peer-to-peer fashion, utilizing their own MPC wallet and smart contracts.
• OpenCover is an L2 insurance aggregator that partners with underwriters like Nexus Mutual. It offers protection to DeFi users against onchain risks like smart contract hacks and oracle failures. OpenCover also focuses on providing users with onchain insurance options at the point of transaction, aiming to make onchain risk management straightforward and cost-effective for everyone.
• Paragraph is a creator platform utilizing blockchain technology. It helps creators publish, share, and monetize their content. The platform employs permissionless protocols to enhance growth and earning potential. It offers features such as turning posts into collectibles, sending newsletters to wallet addresses, and enabling recurring memberships. Additionally, creators can tap into decentralized social protocols like Farcaster, Lens, and XMTP to build and foster their communities.
• Truflation serves as an onchain financial oracle that delivers automated and impartial daily inflation reports, specifically the Consumer Price Index (CPI). It achieves this by aggregating data from over 18 million points and 40+ sources in real time.