Coinbase’s Layer-2 Network Base Faces Market Setback: Is It at a Crossroads?
Base Network Struggles Amid Market Downturn: What’s Next for Coinbase’s Layer-2 Solution?
Base, the Layer-2 network launched by Coinbase, is facing significant market turmoil after a promising debut over a year ago. Once a leader in the Layer-2 ecosystem, the network is now grappling with a series of setbacks, raising questions about its future. As the broader crypto market takes a downturn, Base finds itself at a critical juncture, struggling to maintain momentum.
Base Ecosystem Under Pressure: A Sharp Decline in Performance
Data from IntoTheBlock, a market analytics platform, highlights the growing challenges within the Base ecosystem. After reaching a peak of $4 billion in Total Value Locked (TVL) in mid-December 2024, Base has seen its TVL drop to $3.2 billion, a significant decline.
The network’s transaction volume has also taken a nosedive, dropping from $2.2 billion in mid-December to just $852 million at the time of writing. This sharp decrease is reflected in Base’s revenue, which has fallen from $629,000 to under $192,000. Active addresses and the number of transactions on the network have also dropped drastically, indicating a weakening user base.
According to IntoTheBlock, only a handful of tokens within the Base ecosystem are showing profits for their holders, which has contributed to diminishing retail interest. The network has also seen a notable decline in on-chain volume, with a 78% decrease across eight Base assets, including Aerodome Finance (AERO) and Morpho (MORPHO), since December.
Base’s Past Performance: A Meteoric Rise Before the Fall
Despite the current downturn, Base’s past performance paints a picture of remarkable growth. In 2024, Base experienced explosive growth, making it the go-to network for new retail crypto traders. Daily transactions surged by a staggering 1,600% in 2024, growing from 372,000 in January to 6.63 million in October. During the same period, TVL increased by 470%, pushing the network’s share of the global on-chain TVL from 1.07% to 3.59%.
At its peak, Base’s daily transaction volume jumped by 1,900%, rising from 2.1 million to 42.34 million. This meteoric rise allowed Base to capture 9% of the global daily transaction volume, earning it a spot as one of the leading Ethereum Layer-2 solutions. By November 2024, Base’s TVL had surpassed $10 billion for the first time, making it the second-largest Ethereum Layer-2 network after Arbitrum.
Is Base at a Crossroads?
After such remarkable growth, Base’s current struggles raise the question: Is the network at a turning point, or is this just a temporary setback? While the current market dynamics are clearly impacting Base’s performance, there is still reason for optimism. Analysts are expecting an altseason in the coming months, which could drive renewed interest in altcoins and Layer-2 solutions like Base.
Additionally, Base has an ambitious roadmap for 2025, which includes new features and improvements aimed at boosting the network’s performance. If the market conditions improve and Base can execute its planned upgrades, there is potential for a strong rebound in the mid-term.
Conclusion: A Bumpy Road Ahead for Base
As Base navigates through this period of market uncertainty, the network finds itself at a crucial crossroads. While it’s currently facing a decline in key metrics, the institutional interest in Ethereum Layer-2 solutions and the potential for a broader crypto market recovery could help Base regain its footing.
For now, investors and users will need to keep a close eye on the network’s ability to recover and adapt in the face of market volatility. With its ambitious 2025 roadmap and the anticipated altseason, Base still has a fighting chance to return to its former glory. However, its success will depend on how well it can weather the current storm and execute its vision for the future.
