The rapid ascent of Base in the crypto ecosystem is turning heads. In just one month, its total value locked (TVL) nearly doubled.
This growth spurt is causing headaches for the crypto behemoth Coinbase.
Can Base Network Challenge Solana?
Particularly after Ethereum’s Dencun upgrade transaction efficiency on layer-2 solutions like Arbitrum, Optimism, and Base got enhanced. Hence, the users flocked to these layer-2 platforms.
Base’s meteoric rise has been impressive, with a record total value locked (TVL) of $794 million. This represents a 19.62% weekly increase, surpassing Solana’s 10.54% growth. However, Base still trails behind Solana’s massive $4 billion TVL and $2 billion volume.
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Base Network TVL. Source: DefiLlama
Notably, Base might have a strategy to close this gap with Solana. Coinbase is innovating with its “Smart Wallet,” targeting its vast user base of around 100 million. This wallet is designed to streamline the interaction with decentralized applications (dApps).
Moreover, the company aims to facilitate on-chain activities for its users by eliminating the daunting seed phrases and introducing passkeys. This could make Base a preferred entry point for many.
Moreover, Base’s recent surge in volume and dApp integration is a promising sign. Nevertheless, the network has faced challenges, such as transaction failures and increased gas fees during peak times. These issues highlight the necessity for Coinbase to scale its infrastructure to accommodate growing demand.
On Wednesday, the strain was evident as both Coinbase and its wallet experienced transaction failures due to Base’s heightened activity. To compete with giants like Solana, Coinbase must prioritize scaling to prevent such disruptions. The goal is to ensure a seamless experience for the potential wave of users transitioning to on-chain operations.
Interestingly, the allure of Base extends beyond users to developers as well. On-chain analyst Hitesh Malviya revealed that in the past week, Base surpassed Ethereum in new contract deployments, indicating a vibrant development activity. This trend suggests that Base could enrich its dApp ecosystem, further solidifying its market position.
“Base hit 7,100 new contract deployments last week, while Ethereum had only 5000 new deployments. It’s a great flywheel where devs keep shipping so new crowd keeps coming,” Malviya said.
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For Coinbase, the explosive growth of Base represents both an opportunity and a challenge. While it signifies a lucrative market and potential user base expansion, it also necessitates significant infrastructure enhancements.
Overcoming these technical hurdles is crucial for sustaining the momentum and capitalizing on the rising interest in Base.