Summary

  • Base is an Ethereum Layer 2 solution developed by cryptocurrency exchange Coinbase in partnership with Optimism to provide a secure, cost-effective and developer-friendly environment for building on-chain applications.

  • Base is compatible with all EVM wallets and Coinbase wallets.

  • Base has a variety of uses, including payment applications, token swaps, liquidity provision, token bridging, and DAO launches.

What is Base?

Base is an Ethereum Layer 2 (L2) blockchain which was officially released on August 9, 2023 by the crypto exchange headquartered in the US, namely Coinbase. Base caught the attention of the crypto community because it was the first blockchain launched by a public company.

Base was developed in partnership with Optimism's L2 Ethereum blockchain on the OP Stack, a standardized open source development stack that powers Optimism. Base enables developers to build decentralized applications (DApps) with access to the Coinbase ecosystem of 110 million verified users and over $80 billion in assets.

Base's vision is to create an Optimism-driven Superchain supported by a community of developers. Base has publicly announced that they do not currently plan to issue new network tokens for Base, so users should be especially wary of fraudsters offering fake Base tokens.

What is Layer 2?

Layer 2 blockchain is a term used to describe a secondary protocol or framework built on top of an existing blockchain network (Layer 1) such as Ethereum. The main goal of a Layer 2 solution is to improve the scalability, transaction throughput, and efficiency of its underlying Layer 1 blockchain without compromising its security or decentralization.

There are several types of Layer 2 blockchain technology, including state channels (Lightning Network for Bitcoin and Raiden Network for Ethereum), sidechains (Liquid Network for Bitcoin and Loom Network for Ethereum), and rollups (Optimistic Rollup and ZK-rollup).

Some of the most commonly used Layer 2 blockchain networks are Optimism, Polygon, zkSync, and Arbitrum.

What is Optimism?

Optimism is a Layer 2 blockchain solution built on the Ethereum network with the goal of increasing scalability, transaction throughput and reducing associated costs. Optimism utilizes a technology called Optimistic Rollup. In it, multiple off-chain transactions are aggregated into one representative on-chain data and sent to the main Ethereum chain.

Optimism utilizes an anti-fraud system that assumes that all rollup transactions collected initially are valid. Users can challenge these transactions and submit evidence of potential fraud within a certain time period. If fraudulent activity is detected during this period, the user who committed the crime will be penalized and the transaction will be refunded.

What are the uses of Base?

Just like other L2 networks, Base has a variety of uses. Below are some implementations that have been generated based on Base.

1. Payment application

Beam is a payment application that allows users to make transactions using USDC stablecoins or the application's native token, namely Eco. Users can log in using their Twitter account (renamed X) and cover gas costs with USDC or Eco. Additionally, Beam has an integrated fiat-to-crypto and crypto-to-fiat conversion gateway.

2. Swap token 

Token swaps on decentralized exchanges (DEX) allow users on Base to trade various cryptocurrencies. Currently, there are several decentralized exchanges running on Base, such as Uniswap, Maverick, and Dackieswap.

3. Providing liquidity

Users can provide liquidity on the Base blockchain through various DApps, such as Uniswap, BaseSwap, and Dackieswap. The DApp allows liquidity providers to collect fees from transactions in liquidity pools.

4. Bridging

Base has developed an official bridge called Base Bridge that is compatible with most Ethereum wallets, such as MetaMask or Coinbase Wallet. Users can bridge ERC-20 tokens on Base and Ethereum.

Bridging from Ethereum to Base usually takes a few minutes, while bridging from Base to Ethereum takes about 7 days.

5. DAO Launch

Decentralized Autonomous Organization (DAO) is a blockchain-based organization with the characteristics of community-based decision making and operated through smart contracts. Aragon, a protocol for creating DAOs, has introduced a codeless DApp on the Base network to simplify the process of creating DAOs.

Will There Be a BASE Token?

Base's official roadmap and twitter bio (renamed X) state that they have no plans to issue network tokens in the future.

However, a project may initially state that it has no plans for an airdrop and then execute an unannounced airdrop at a later date. This is usually done to reward early supporters for contributing to the network and building the community.

How to Connect to the Base Network and Use the Testnet?

The process to connect to the Base network is quite easy and can be done with a Coinbase wallet or any EVM compatible wallet.

1. Connect to Base with a Coinbase wallet

To utilize Base with Coinbase Wallet, follow these steps:

1. Launch the Coinbase Wallet browser extension, then log in to your account.

2. Connect to an app using Coinbase Wallet (in this example, we'll use BaseSwap).

3. Access the network selection menu by clicking on the network symbol located in the upper right corner.

4. Select Base from the list.

5. The active network will now be set to Base.

2. Connect to Base with MetaMask

Users can connect to Base with any number of EVM wallets. Let's see how to connect the Base network with the MetaMask wallet as an example.

1. Launch the MetaMask browser extension.

2. Access the network selection dropdown menu by clicking the dropdown button located at the top of the extension.

3. Select the "Add a network" button.

4 Select “Add a network manually”.

5. In the “Add a network manually” dialog box, enter the following details for the Base Goerli testnet, then click “Save”:

6. You will now be able to connect to the Base network in the network selection dropdown section.

What are the Benefits of a Base Network?

The main benefits of using a Base network include the following:

1. Low cost

Like other optimistic rollups, Base has low gas fees designed to significantly reduce transaction costs and increase transaction throughput. This is achieved by processing transactions off-chain and combining them into a single proof.

2. Accessibility

EVM-compatible chains, such as Base, increase accessibility by allowing developers to easily deploy and leverage existing Ethereum-based tools, frameworks, and smart contracts on multiple platforms.

3. Scalability

L2 scalability offers significant advantages by increasing the capacity and transaction throughput of blockchain networks. These improvements address bottlenecks and reduce inefficiencies, ultimately providing faster and more cost-effective solutions for users and developers.

What are the Weaknesses of the Base Network?

The main limitations and concerns regarding Base are as follows:

1. Centralization

One of the main concerns regarding Base is the level of centralization. Coinbase functions as the only sequencer node on Base, giving it great control over transactions. Sequencer nodes are special nodes in a blockchain network that are responsible for sequencing and finalizing transactions in a certain order to increase transaction throughput.

Having a single sequencer node will centralize the ability to process and sequence transactions into a single entity. Additionally, a centralized authority is able to set and change fees associated with Coinbase Sequencer. Coinbase has stated the potential for third-party node integration in the future.

2. Long withdrawal period

One of the main limitations of the Base blockchain is the long withdrawal period, which is around 7 days. This delay is related to the design of Optimism's anti-fraud system which allows users to challenge transactions and submit evidence of potential fraud within this specified time period.

Long withdrawal periods can make the user experience less than optimal.

3. Security

As an L2 built on the OP Stack, Base faces a series of security risks. The first concern concerns the efficacy of fraud proof mechanisms as a security measure. Fraud proof relies on network participants' vigilance in monitoring and challenging invalid off-chain transactions before they are finalized on the main blockchain.

However, this mechanism faces various challenges, including reward incentive problems for participants and vulnerability to data suspension attacks.

Closing

Base has attracted a lot of attention since its launch. The network has a total of over one million users and a total value locked (TVL) of over $385 million as of September 07, 2023. This incredible achievement places Base as the 8th ranked chain based on TVL and overtakes popular blockchains such as Cardano and Solana.

As the first blockchain launched by a public company, Base opens up new possibilities to attract a wider audience and bring more users to the world of Web3. As the platform grows and develops, users and developers must continue to evaluate and make informed decisions when interacting with Base.

Further Reading

  • Blockchain Scaling Solution Layer 1 vs. Layer 2

  • What is Polygon (MATIC)?

  • Optimistic vs. Zero-Knowledge Rollup: What's the Difference?

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