So what is all the hype about Base? 

Let’s break it down! Launched on August 9 2023, Base is Coinbase’s ambitious leap into the Layer 2 blockchain space, designed to supercharge Ethereum’s scalability and usability. Built on the OP Stack in collaboration with Optimism, it combines Ethereum’s rock-solid security with faster transactions and lower fees. Plus, Base’s developer-friendly platform makes it a dream for developers to build decentralised applications (dApps). But here’s the real kicker: Base isn’t just about tech—it’s about bringing blockchain to the masses by seamlessly integrating with the Coinbase ecosystem, making onboarding new users smoother than ever. 

• Base’s Total Value Locked (TVL) skyrocketed by nearly 800%, surging from $478.38 million in March 2024 to an astounding $3.786 billion in December 2024.

• As of December 2024, Base leads in TVL among popular Layer 2s, a remarkable feat despite lacking a native token

• This signals something rare in the crypto space: genuine, organic demand

• Based on its current trajectory, don’t be shocked if Base were to continue its meteoric rise and capture even more TVL in 2025. The stage is set, and Base is just getting started!

• This study examined interest in blockchain ecosystems based on CoinGecko’s non-botted global web traffic, from January 1 to November 11 2024. 

• While Solana continue to hold its top ranking since Q1 2024, its grip isn’t as firm as it used to be, with a 10.5% drop in investor interest as other chains slowly nibble away at its mindshare. 

• But here’s where Base is stealing the spotlight! Its share of investor interest has skyrocketed, growing by over 5 times since Q1 2024 and even overtaking heavyweights like ETH, TON, and SUI. 

Expanding Liquidity and Ecosystem Growth on Base Chain

The recent rise of AI-powered agents like Virtuals Protocol on the Base chain has ignited a surge of growth within the Base ecosystem. By leveraging AI-driven automation, it fine-tunes market-making and optimises trades with remarkable efficiency. This cutting-edge technology has captured the attention of savvy traders and liquidity providers who value adaptive, high-performance DeFi services.

But it doesn’t stop there. Enter Brett—the leading memecoin making waves on the Base chain. While memecoins are often viewed as speculative assets, their massive trading volumes and passionate communities cannot be ignored. These tokens spark widespread interest, driving on-chain activity and generating significant liquidity. Their rise has created a network effect where every transaction boosts the TVL, transforming the Base chain into a vibrant and dynamic DeFi hub.

Together, AI agents and viral tokens are redefining what’s possible on the Base chain. They’re not only drawing diverse market participants but also setting the stage for continuous innovation and ecosystem expansion. 

Stay tuned for a deep dive about AI agents in the future!

What makes Base special?

Extremely Low Gas Fees Paid in ETH
One of Base’s standout features is its ultra-low transaction fees. At an average of just $0.0857 per transaction, Base is right up there with leading Layer 2s like Optimism and Arbitrum. Sure, it may not boast the absolute lowest fees when compared to chains like Solana, but it strikes an ideal balance between affordability and security. Paying less than a cent for a transaction? That’s a win for both developers and everyday users.

Considerably High Transactions Per Second (TPS)
By leveraging Optimistic Rollups, Base not only reduces costs but also enhances transaction speeds while maintaining Ethereum’s security. With 106.26 TPS, Base is officially the fastest Ethereum Layer 2 to date, even compared to Optimism and Arbitrum. What’s even better is that Base’s testing indicates it could potentially scale up to 1429 TPS, setting the stage for even greater scalability in the future.

However, what truly sets Base apart is its integration with Coinbase, which offers unmatched user access, fiat on-ramps, and institutional partnerships that drive retail adoption.

The Coinbase Advantage: A Seamless Ecosystem
What truly sets Base apart is its deep integration with Coinbase. With over 100 million verified users globally, Coinbase provides Base with immediate access to a massive audience. While other blockchains often struggle to onboard users, Base seamlessly taps into Coinbase’s established ecosystem, making the transition into crypto smooth and intuitive.

Just think about it—users can convert fiat currencies like USD or SGD directly into crypto using Coinbase. From there, they can transact on Base using Coinbase Wallet, all without the need for complicated bridges or third-party exchanges. This streamlined approach lowers barriers to entry, attracting everyone from crypto newbies to seasoned Traditional Finance (TradFi) veterans.

Institutional Trust and Partnerships
Base’s credibility gets another boost from Coinbase’s reputation as a trusted, secure, and regulated platform. When institutional giants like BlackRock, the world’s largest asset manager, choose Coinbase to custody their Bitcoin and Ethereum Exchange-Traded Funds (ETFs), it’s a game-changing endorsement. This partnership bridges the gap between TradFi and decentralised finance (DeFi), offering a familiar and regulated pathway for investors to explore crypto.

Structured products like ETFs provide a simple way for retail investors to dip their toes into crypto without worrying about managing wallets or private keys. This means increased liquidity, broader participation, and ultimately, increased adoption for DeFi ecosystems on Base.

The Snowball Effect: Gateway to Mass Adoption
Base’s integration with Coinbase doesn’t just attract crypto enthusiasts—it opens the floodgates to mass-market adoption. By combining low fees, fast transactions, and an easy onboarding process, Base is poised to become the go-to platform for anyone looking to explore blockchain technology. Add in Coinbase’s institutional partnerships, and you’ve got a recipe for bringing traditional investors into the fold, normalising crypto in retail portfolios, and driving the next wave of blockchain innovation.

In short, Base isn’t just another Layer 2—it’s the gateway to the future of blockchain. Whether you’re a developer, an investor, or simply someone curious to learn more about crypto, Base offers something for everyone. The hype is real, and Base is here to lead the charge!

But if Base lacks a native token, how can users be part of its ecosystem?

That’s a great question and is definitely worth exploring! Coinbase has made it clear: they have “no plans to issue a new network token.” This aligns with their strategy to leverage existing assets, particularly ETH, as the gas token for Base. By avoiding the introduction of a new token, Coinbase simplifies the user experience while maintaining alignment with the broader Ethereum ecosystem.

But fret not! This is where innovative projects like Aerodrome Finance (AERO) and Moonwell (WELL) step in to power Coinbase's decentralised exchange (DEX) on Base and elevate its ecosystem.

Aerodrome Finance: Base’s Liquidity Powerhouse

Launched on August 28 2023, Aerodrome Finance has become the central liquidity hub for Base, playing a critical role in its DeFi ecosystem. Here’s what makes it a key differentiator:

• Dominating TVL & Volume: As of December 2024, Aerodrome boasts a staggering $1.651 billion in TVL and has facilitated over $81.196 billion in cumulative trading volume. 

• Efficient Token Swaps: Aerodrome serves as the primary automated market maker (AMM) on Base, enabling low-fee, low-slippage token swaps while leading in both concentrated liquidity and total volume.

• Liquidity Incentives: The AERO token incentivises liquidity providers, while veAERO voters direct emissions to specific pools, aligning the interests of Liquidity Pools (LP’s), traders, and protocols.

• Strategic Backing: A $20 million investment from Coinbase Ventures underscores Aerodrome’s importance in the Base ecosystem.

By integrating features from Curve, Convex, and Uniswap, Aerodrome combines the best DeFi innovations to support efficient trading and liquidity provision. Its governance model empowers users to participate in protocol decisions, ensuring the community has a say in its direction.

Moonwell: Lending and Borrowing Made Easy

Launched on August 9 2023, Moonwell extends Base's DeFi capabilities by enabling permissionless lending and borrowing of digital assets. With its presence on Base, Optimism, Moonbeam and Moonriver, Moonwell strengthens Base’s financial infrastructure:

• Seamless Liquidity: Moonwell’s WELL-WETH (Wrapped ETH) pools on Aerodrome ensure deep liquidity for WELL tokens, bolstering trading efficiency across the Base network.

• Borrowing and Lending: Users can earn interest by supplying assets or borrow assets by providing collateral, making Moonwell an integral part of Base's DeFi landscape.

• Collaborative Growth: Through partnerships like Warden Finance, Moonwell effectively manages liquidity incentives, ensuring community-driven allocation and transparency.

The Synergy Between Base, Aerodrome Finance, and Moonwell

Infrastructure Support: Base provides a secure, scalable foundation for Aerodrome’s trading and Moonwell’s lending services.

Ecosystem Development: Aerodrome and Moonwell attract users to Base, increasing activity and liquidity while broadening its DeFi offerings.

Mass Adoption: Coinbase’s seamless onboarding and established user base make it easier than ever for retail and institutional participants to engage with Base’s ecosystem.

By integrating Aerodrome and Moonwell into its network, Base transcends its role as a mere Layer 2 blockchain, transforming into a dynamic and interconnected DeFi ecosystem. The key takeaway? Base may lack a native token, but with Aerodrome and Moonwell leading the charge, its ecosystem is flourishing—and it’s only just beginning.

Is Base truly unstoppable? Let’s unpack the risks beneath the hype.

Base is making waves with its innovations, but no ecosystem is without its flaws. As exciting as its rise has been, there are challenges looming on the horizon that could test its resilience. Here are two critical areas to keep an eye on:

1. Technical Limitations: Is 1429 TPS Really Enough for What’s Coming?

Base’s use of Optimistic Rollups is nothing short of impressive, propelling it to achieve a record-breaking 106.26 TPS—outperforming even Optimism and Arbitrum. And in testing? A potential scaling limit of 1429 TPS promises big things.

But here’s the catch: in the world of blockchain, success brings scaling pressure. With crypto adoption growing rapidly, 1429 TPS might feel like a drop in the ocean before we know it. Think about it:

• Institutional Heavyweights: Companies like BlackRock are diving straight in and the trading volume from institutional players alone could surge exponentially.

• Retail Boom: DeFi apps, blockchain gaming, and the broader Web3.0 space are onboarding millions of new users, all eager to transact.

• Demand Surges: Remember the chaos of Ethereum’s network during the 2021 bull run? Major events like token launches or NFT drops caused severe congestion, and that was with Layer 2s.

Without further innovation, Base could risk bottlenecking under demand, leading to higher fees and slower transactions—the very issues it’s designed to solve. The real question? Can Base keep pushing the boundaries to meet the demands of a global-scale financial ecosystem?

2. Security Vulnerabilities: DeFi’s Achilles' Heel

In DeFi, one word can spark panic: security. Even with Ethereum’s robust infrastructure, vulnerabilities within Base’s ecosystem could spell trouble. No one wants to lose their funds to a hack—but it’s a risk we’ve seen before.

1st Case in Point: The Nomad Bridge Exploit

Let’s rewind back to August 2022, when the Nomad Bridge fell victim to a devastating $190 million hack.

Here’s how it unfolded:

The Exploit: A critical flaw in Nomad’s contract allowed attackers to withdraw funds without proper authorisation. Once the news broke out, it triggered a feeding frenzy as others joined in to drain the bridge.

The Fallout for Moonwell:

• TVL Nosedive: Moonwell, which relied on Nomad for cross-chain liquidity, saw its TVL drop sharply as funds vanished or were withdrawn in fear.

• Loss of Confidence: Investors began second-guessing protocols tied to vulnerable bridges, eroding trust in Moonwell and, by extension, the Base ecosystem.

• Liquidity Disruption: Asset flows between chains were thrown into disarray, straining lending and borrowing activities.

2nd Case in Point: 2023 Aerodrome Hack

In December 2023, malicious actors orchestrated a well-planned breach, gaining unauthorised control over the domain accounts of both protocols by circumventing multi-layered security protocols, including Two-Factor Authentication (2FA). This breach allowed them to manipulate the domains’ nameservers, redirecting legitimate traffic from the official websites to meticulously crafted phishing clones.

Imagine visiting what you believe is a trusted DeFi platform, only to find yourself engaging with a near-perfect imitation as unsuspecting users connected their wallets and unknowingly approved transactions that funneled funds into attackers’ wallets across multiple blockchain networks.

The aftermath was grim as approximately $250,000 was stolen from users of both platforms. For many, it wasn’t just about losing digital assets—it was a stark lesson in the evolving sophistication of cyber threats targeting decentralised ecosystems.

The Broader Risk to Base

Both of these cases are not unique. Base’s reliance on third-party protocols like bridges, oracles, and even its own DeFi platforms (Aerodrome and Moonwell), leaves room for exploits:

• Protocol-Specific Attacks: Vulnerabilities in projects like Aerodrome or Moonwell could have ripple effects across the ecosystem.

• Weak Links: Bridges and other third-party integrations can become entry points for malicious actors, putting user funds at risk.

To win and keep user trust, Base needs uncompromising security standards—from rigorous smart contract audits to redundancy in integrations that reduce dependence on any single point of failure.

Conclusion: The Balancing Act: Innovation vs. Risk

Let’s face it—Base is crushing it. It’s a leader among Layer 2s, delivering speed, scalability, and low fees while maintaining a seamless user experience. However, building a great ecosystem is one thing; sustaining it is another.

The future depends on whether Base can:

• Scale Beyond 1429 TPS: Can Base innovate fast enough to handle the inevitable tidal wave of new users and transactions?

• Fortify Its Ecosystem: Will Base remain secure and resilient, even as the complexity of DeFi grows and cross-chain interactions multiply?

As Base steamrolls ahead, the spotlight isn’t just on what it has achieved but on how it will adapt to the challenges ahead. In the race for blockchain dominance, Base is off to an incredible start, but can it keep up the momentum? Only time will tell.

We, from Blockchain at NTU, thank you for being part of this enlightening journey and extend a warm welcome to the enthralling universe of blockchain!

NOTE: Articles written by Blockchain at NTU ARE NOT FINANCIAL ADVICE!

Written By:
Charlie Weng
Education Director of Blockchain at NTU Club AY24/25

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