Compiled by MetaCat
What is Base Blockchain?
Base is a new Layer 2 blockchain built on top of the Ethereum blockchain. It is created by Coinbase, one of the world’s largest cryptocurrency exchanges.
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What is Layer 2?
Layer 2 is an independent blockchain built on top of an existing chain (Layer 1). For example, Bitcoin and Ethereum are both considered Layer 1. Layer 1 is excellent in terms of security and decentralization, but sometimes it lacks scalability due to a large influx of active users (due to high gas fees or long transaction waiting times).
Layer 2 utilizes the security of Layer 1 blockchain while improving transaction speed and reducing gas fees.
Base is a Layer 2 blockchain built by Coinbase on top of Ethereum. Base is not the only Layer 2 blockchain, there are many others such as Optimism and Arbitrum.
Base is built on an open-source software called “OP Stack” supported by the Optimism team.
With so many Layer 2 solutions, why do we need Base?
The reason is that Coinbase needs it.
In late 2021/early 2022, Coinbase launched its own NFT marketplace, which caused great excitement in the NFT space because Coinbase exchange has over 100 million users. At that time, people naively believed/hoped that the launch of Coinbase’s NFT marketplace would attract millions of people to buy NFTs, but this did not actually happen.
The way Coinbase attracts 100 million users is mainly by holding users’ assets on the Coinbase exchange (meaning they are not actually on the blockchain). Coinbase’s entire business model is to have users use their platform, keep funds on their platform, trade on their platform, and earn fees from it.
Now they are expanding their user base and encouraging users to manage their funds themselves, leaving the Coinbase exchange and entering Coinbase’s non-custodial wallet “Coinbase Wallet”. This is a company with a long-term vision, believing in the fundamental principles of cryptocurrency, and is committed to realizing a decentralized Base blockchain in the coming years.
All of this is reflected in their vision for Base:
“Base has a clear vision: to bring the next million builders and billion users onto the chain.”
Coinbase’s NFT marketplace may face challenges, but the Base chain may thrive.
Base blockchain ecosystem overview. Source: https://base.org/ecosystem
Onchain Summer homepage of Base blockchain. Source: https://onchainsummer.xyz/
Onchain is the next Online
In the early 2000s, the internet changed the world for the first time. Developers were able to build applications that connected people together, no matter where they were, bringing them together to read, write, and share information. This unlocked incredible new products, including streaming, search, social networks, smartphones, and more.
We are on the edge of the next major transformation: Onchain!
Onchain is the next generation internet that will increase the freedom of the global economy by returning ownership to ordinary people.
The number of on-chain users is growing continuously. There are already over 230 million independent Ethereum addresses globally, and the daily transaction volume of Ethereum Layer 2 has surpassed that of the Ethereum mainnet. According to Electric Capital, this expansion also extends to the developer community. By 2030, Onchain is expected to create one million new software engineering jobs worldwide.
Ethereum independent address chart. Source: https://etherscan.io/chart/address
Comparison of Ethereum Layer 1 and Layer 2 transaction volume. Source: https://l2beat.com/scaling/activity
Onchain use cases are expanding, including Zora for collectibles, Blackbird for restaurant loyalty programs, Farcaster for social media, LianGuairallel for gaming, and XMTP for messaging.
Final Thoughts
I am very optimistic about the Ethereum blockchain, and I believe that blockchain will provide the driving force for the future of the internet. I believe the future is a multi-chain world, with Ethereum as the core Layer 1 blockchain for all application use cases, and Bitcoin as the core Layer 1 blockchain for “value storage”.
One of the biggest challenges for Ethereum as the “world computer” is that its usage cost is too high! The transaction fees are outrageously high, and when the cost of on-chain transactions ranges from $3 to $100, 99.9% of the world’s population can never believe that it is reasonable to transact on the mainnet.
Therefore, Layer 2 is needed. This is the scaling solution we need, elegantly designed to use the Ethereum blockchain as Layer 1, like having the best of both worlds. Enjoy faster transaction speeds and lower transaction costs while maintaining the security of Ethereum.
Which Layer 2 will prevail?
It doesn’t matter, and there may not be “one” unique winner. We will have many thriving Layer 2 solutions, building a prosperous Ethereum ecosystem.
Over time, more and more Layer 2 solutions will be used by everyone.
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