Base Blockchain is an Ethereum Layer-2 solution developed by Coinbase, offering low fees, fast transactions, broad compatibility, and enhanced security.
All You Need to Know About Base
Base chain aims to bridge the gap between everyday users and the decentralized world. Partnering with the Optimism Collective, Base envisions a future built on a 'Superchain' of interconnected Layer 2 solutions. The Base chain, an Ethereum Layer 2 scaling solution developed by Coinbase, is designed to “bring the next billion users on-chain”. Developed in collaboration with Optimism and built on the MIT-licensed OP Stack, Base offers a secure, low-cost, and builder-friendly environment.
Base Chain Foundation
Base was incubated within Coinbase and released on August 9, 2023, with a clear and consistent “master plan”: to create an open financial system that increases economic freedom globally.
This vision, according to Coinbase, has four major steps that are akin to the evolution of the Internet. Coibase joined the global blockchain development with their centralized exchange in 2012 and is now progressing to enter the decentralized world with the Base chain.
The future context for Base contains a network or “mesh” of interconnected L2s built on top of Ethereum, helping it scale. This scenario values decentralization and diversity rather than having only one ultimate scaling solution.
Why Scale Ethereum?
Scaling solutions are essential due to the growing popularity of Ethereum and the subsequent increase in network usage. This surge in users and transactions has caused congestion on the network, resulting in slower transaction speeds and higher fees.
The necessity for scaling solutions arises from several key factors:
- Rising Adoption: As more applications and users flock to Ethereum, the demand for quicker and more cost-effective transactions intensifies.
- Decentralization: Ethereum's vision of a decentralized global computer hinges on a network that can accommodate numerous nodes and users without compromising security or performance.
- Competition: As alternative blockchains offer swifter and less expensive transactions, Ethereum risks losing both users and developers if it fails to enhance its scaling capabilities.
How does Base Work?
Base chain is a so-called optimistic L2 scaling solution. This means that it helps Ethereum process more transactions for only a fraction of the original gas fee. Base chain is built using the OP Stack - the same set of open-source technology that is used to develop Optimism L2.
Because of this, Base shares a lot of its functionality with Optimism. Transactions are processed off-chain on layer 2 and then bundled together to be validated by the Ethereum mainnet (layer 1). By wrapping multiple transactions together, L2s are able to significantly reduce the congestion of Ethereum, while also maintaining affordable price and fast speed.
Transacting on Base chain
On the Base L2, users perform transactions much like they would on the Ethereum mainnet. These transactions are then grouped together and placed into blocks. At this time, the only entity capable of generating L2 blocks is a specific type of validator known as the Sequencer.
The Sequencer's role lies mainly in ensuring the validity of all transactions, resolving potential disputes, and subsequently posting these blocks onto the Ethereum mainnet (L1).
At this early phase of functioning, there is only one sequencer in the whole L2 network capable of confirming transactions. This sequencer is only run by Coinbase, which, in theory, poses a centralization risk. However, the official plan is to progressively decentralize the network in the future.
The Connection of Base and Ethereum
Base is not a competitor to Ethereum; rather, it is designed to complement and enhance the Ethereum network by addressing its scalability issues. The two networks are connected via a two-way peg bridge.
Bridge is essentially a smart contract application that allows a secure transfer of assets from one chain to another. It works by locking the assets on one side of the bridge and minting exactly the same assets on the other side. This way, the assets transferred from L1 to L2 are always backed 1:1 and can be withdrawn at any time.
The only problem with bridging from the Ethereum mainnet to L2s is that the transaction requires the user to pay gas fees on both chains. Regular bridging transactions can be quite costly and most users prefer to limit them as much as possible.
Key Concepts and Features of Base Chain
EVM (Ethereum Virtual Machine) compatibility refers to a blockchain's capability to run smart contracts programmed in the Solidity language, commonly used for Ethereum's smart contracts.
Base chain, being EVM-equivalent, allows for an effortless adaptation of Ethereum-based decentralized applications (dApps) to Base chain. This smooth migration eases the process for developers and users moving from Ethereum to Base, broadening the potential applications for both platforms.
This EVM compatibility provides:
- Execution of Ethereum-based Code: Base chain executes code and dApps written in Solidity in the same way that Ethereum would.
- Seamless Developer Transition: Developers can port their projects seamlessly from Ethereum.
- Enhanced Interoperability: Interoperability between multiple EVM chains, such as Optimism, Arbitrum, Avalanche, Polygon, and more, offers the use of multichain applications.
No Native Token Design
A bold decision from the Base development team was to create the chain entirely without its native token. According to the developers the idea was to make Base as close to Ethereum as possible. This includes paying gas fees directly in ETH. Currently, there are no plans to issue a native Base token.
Speed and Affordability
Base addresses the speed issue by processing transactions off-chain on its own Layer 2 chain. This means that transactions are not processed individually on the Ethereum mainnet, which is often congested, but are instead batched together and processed on the Base network. Only the final state of these transactions is then submitted to the Ethereum mainnet, significantly reducing the load on the network and speeding up transaction times.
At this time we do not know yet what will be the final speed capability of Base chain, but it is expected to reach similar values as Optimism, that is 2K transactions per second (TPS). Regarding gas fees, according to Coinbase, Base chain is said to have 10 times lower gas fees than Ethereum mainnet.
How is Base Connected to Coinbase?
Coinbase, a well-known name in the crypto industry, is the company behind the development of Base. This connection is crucial as it lends significant credibility to the project, given Coinbase's established reputation and existing user base.
Moreover, it signifies a strategic move by Coinbase to transition from being just a centralized exchange to becoming a gateway to the decentralized world of Web3. However, this involvement also raises important questions about decentralization and potential centralization risks.
As Coinbase is currently the sole operator of Base, it controls the network's sequencer and collects transaction fees, making it a potential revenue stream for the company. This centralization in the early stages of Base is a point of contention for some in the crypto community who advocate for more decentralized solutions. Although Base has a roadmap for increasing decentralization in the future.
Use-cases and applications
Base Network has witnessed rapid user adoption since its launch, reaching 1 million active addresses within 11 days. In terms of activity, Base joins established networks like Ethereum, Arbitrum, BNB chain, Polygon, and zkSync as one of the most actively used blockchain platforms with about 200-500 thousand transactions sent daily.
Due to its EVM compatibility, we can find many well-known dApps that were originally developed for Ethereum, like Uniswap V3, AAVE, or Compound. Similar to any other new chain, Base was quickly populated by DEXs, such as Aerodrome, AlienBase, or BaseSwap.
Other interesting projects to mention are Overnight Finance with its conservative stablecoin yield or Friend.tech, a Web3 decentralized social network that offers tokenized access to content.