Base, Coinbase’s layer-2 Ethereum scaling solution, didn’t gain as many users as other chains in 2023.
A recent report from Web3 analytics firm Flipside Crypto shows that Base gained just under two million users in 2023.
Compared to tier-1 blockchains including Ethereum, Bitcoin, Solana and Avalanche, which saw 15.4 million, 10.7 million, 5.6 million and 2.5 million new users respectively, Base’s adoption remains on the lower end.
This is also the case compared to layer 2 chains, including Optimism, Arbitrum and Polygon, which had 3.3 million, 7.3 million and 15.2 million acquired users in 2023, respectively.
Despite the low adoption rate, Carlos Mercado, data scientist at Flipside Crypto, told Blockworks that it was important to remember that BASE is barely six months old.
Read more: Coinbase layer-2 network Base is now live on the Ethereum mainnet
Base, a product of Coinbase, only launched last August to widespread excitement and was instrumental in validating the OP Superchain thesis.
“Coinbase started strong with both its on-chain summer initiative and identifying how USDC can be transferred for free via signatures at the Base Layer-2. Not to mention the frenzy of friend.tech and the BALD meme token,” Mercado said.
Read more: Friend.tech sees record outflow as top user abandons ship
This excitement quickly subsided, unlike the rest of the cryptocurrency ecosystem, the report said. It is suggested that regulatory oversight of centralized exchanges may have negatively impacted the base, even though Coinbase itself was not involved.
Mercado adds that two more major speed bumps could also have played a role in the slow growth towards the end of 2023.
Firstly, DeFi on Base is still in its infancy. According to DeFiLlama, the chain currently has a total value locked (TVL) of less than $450 million, a significant difference from the likes of Arbitrum, which currently has a TVL of more than $3.5 billion.
“Arbitrum’s lead in DEXs and perpetuals is difficult for even the large Layer-1s to overcome,” Mercado said.
Additionally, Mercado points out that there is a resurgence of similarly low-cost Layer-1 solutions, especially those from Solana.
This resurgence may have been more attractive to users interested in space exploration, as these networks were likely to already have an existing, robust ecosystem.
Despite these challenges, Mercado believes Base still has the potential to grow substantially by 2024.
Read more: Coinbase wants to support ‘responsible DeFi development’ through Base
“Being an OP-based chain, it had a head start on the cultural growth of NFT – even beating ARB, OP and Avalanche in the number of NFT sales transactions in August, September, October and December,” Mercado said. “Although their numbers have declined month over month, we are monitoring this sector as the market changes.”
He notes that additional integrations with Optimism, including shared sequencing and seamless bridging, will likely continue to grow Base activity in the coming year.