Recently, Base Chain has attracted the attention of many investors. As a project backed by Coinbase, Base's TVL continues to increase, and popular meme projects were also built upon Base one after another.

So what are the driving factors behind the popular Base? Will the Base chain become the new treasure in this bull market? Let's dive in.

 

Origin of Base: Ethereum and Coinbase

There are two key elements behind Base’s popularity: Ethereum and Coinbase.

First of all, according to the Blockchain intelligence platform Arkham, Coinbase Exchange holds a large amount of Ethereum assets, with a total of approximately 6.9 million ETH now. In comparison, Binance, the largest crypto exchange, only holds about 4.49 million ETH. Therefore, it can be said that Coinbase is definitely a large holder of Ethereum.

As a listed company, Coinbase naturally needs to pay attention to the rise and fall of its stock price. As Ethereum is an important asset, the rise and fall of Ethereum's price will naturally affect Coinbase's stock price to a certain extent. However, as we all know, Ethereum has been strongly suppressed by Solana in the past year or so, and the price increase rate of the former is far less than that of the latter. Considering that Coinbase holds a large amount of Ethereum, from Coinbase's perspective, it is necessary for it to take measures to increase the price of Ethereum to protect its own stock price. And this measure is to launch Base. Base serves as the layer 2 chain on Ethereum. Coinbase can create its own ecosystem on Base, which is equivalent to promoting the expansion of the Ethereum ecosystem and thus raising the price level of Ethereum.

 

The Huge User Base and Declining Gas Fees Have Promoted The Rise of Base

After launching Base, the next key is to increase the popularity of Base and attract as much market attention as possible. In order to achieve this goal, Base needs to rely on two major factors: a large user base and reduced gas fees.

Let’s talk about the user base first. Base is backed by Coinbase, which is an unique advantage. According to Base’s official website, the assets on the Coinbase platform are as high as $130 billion. And this is the data as of March 31, 2023. Considering that we are currently in a bull market, this number will definitely be higher now. In this way, considering Coinbase's huge user base and asset volume, users and assets can easily flow into Base, thereby increasing the popularity of Base.

According to on-chain data, Base’s new users are showing an overall upward trend, and the current cumulative number of users has exceeded 5.5 million. According to data from DefiLlama, Base’s TVL has also been showing an upward trend and currently exceeds $787 million. The growth in user base and TVL has undoubtedly created favorable conditions for Base’s popularity.

In addition, after the Cancun upgrade, Base Chain’s gas fee continues to be significantly reduced. On March 22, its gas fee was only $0.0093. This laid the foundation for the explosion of its on-chain ecology.

 

Where Will The Funds in Base Flow?

Base has the two major advantages of low gas fees and a large number of users, but it does not issue coins directly. So this raises a question, where will the funds in Base ultimately flow?

In the current bull market, categories such as AI and DePin are undoubtedly very popular, but these are currently mainly occupied by the Solana ecosystem. As the Layer 2 of Ethereum, Base is more technically complex than Solana, and building an ecology such as AI and DePin often requires the intervention of traditional companies. This process will undoubtedly take time. Therefore, if Coinbase wants to seize the current bull market and quickly increase the value of Base Chain, then choosing categories such as AI and DePin will obviously not yield quick results in the short term.

So what is the category that can quickly rise in the bull market? From this point of view, Meme coin is undoubtedly the best choice in the short term. On the one hand, Base's significantly reduced gas fees help promote the meme ecology. On the other hand, memes are also prone to skyrocketing prices in bull markets. This is why many highly popular meme coins have appeared on Base Chain recently, such as DEGEN, BRETT, NORMIE, etc., and these meme coins have all experienced relatively high increases in the short term.

Of course, for investors, the shortcomings of meme coins are also very obvious, that is, they are also prone to plummeting in price and are extremely risky. Therefore, if investors are not confident enough about how to choose meme coins in Base, they can simply choose Ethereum. Because in the final analysis, the original intention of Coinbase to launch Base is actually to increase the price level of Ethereum.

 

Disclaimer:

The above content does not constitute any investment advice. Investing in cryptocurrencies is risky, and investing in Pandora tokens and NFTs carries higher risks, possibly resulting in the loss of the entire capital. Investors should conduct their own research (DYOR). BingX is not responsible for any losses incurred from purchasing tokens.