Coinbase-backed Base, a Layer-2 scaling solution, has seen a huge jump in its TVL (Total Value Locked) over the past week. On April 16, the total amount of value locked in the protocol reached an all-time high of $118.7 million, representing a massive 53% increase since April 8. This growth is likely due to the recent high trading volumes of Ethereum and other cryptocurrencies, as well as the potential of Layer-2 scalability solutions. In this article, we explore how Base is taking advantage of these favorable conditions to scale its user base and market value.
- 1. Introduction to Coinbase-Backed Base’s Layer-2 Scaling Solution
- 2. TVL of Coinbase-Backed Base Jumps by 53%
- 3. Factors Behind the Surge in TVL
- 4. What’s Next for the Coinbase-Backed Base Layer-2 Scaling Solution?
1. Introduction to Coinbase-Backed Base’s Layer-2 Scaling Solution
Base Layer, a Coinbase-backed project, is an innovative scaling solution designed to the power the Ethereum-based network. It utilizes the zero-knowledge layer-2 technology to enable near-instant and low-cost transactions to take place on the Ethereum blockchain. This system, built on the open-source Substrate framework, uses state channels to batch transactions into bundles so they can be settled collectively in a single transaction.
Base Layer’s scaling technology has potential far beyond simple transaction processing. Through its use of “gas tokens” and state channels, the system is designed to allow developers and businesses to build decentralized finance protocols and applications on Ethereum with unbounded scalability. As an example, the solution is capable of securely and rapidly integrating smart contracts with off-chain payment systems.
In addition to providing Ethereum scaling, Base Layer is also focused on reducing transaction costs for users. Through its “fee tokens” system, the platform allows users to pay in blockchain tokens to a Base Layer community node in order to pay transaction fees more cheaply. This allows users to pay a fraction of the cost of a regular Ethereum transaction even when processing high volumes of data.
2. TVL of Coinbase-Backed Base Jumps by 53%
Coinbase-Backed Base Jumps
The tokenized total value locked (TVL) of Coinbase-backed Base has seen an increase of 53%, according to its project leader. Coinbase Ventures, the investment arm of cryptocurrency exchange Coinbase, was an investor in the protocol.
At the time of the launch of the protocol in July 2020, the total value locked (TVL) of Base was around $28 million. Since then it has grown to $44 million, with Coinbase-backed Base doubling its TVL in five months. The latest financial statement from Base also reveals that the protocol’s locked volume (LV) per user has increased to $185,500, up by $82,281 from the previous month.
Base is an Ethereum-based protocol for trading and investing. It provides individuals and institutions with a platform to trade digital assets and pledge collateral to secure loans. Over the last few months, the platform has been introducing new features such as tokenized options, flash loans and margin trading. The influx of capital suggests that the project is gaining confidence amongst investors.
3. Factors Behind the Surge in TVL
Travel has been surging since the coronavirus pandemic has begun to subside in some countries. While much of the travel industry has been decimated over the past year, leisure travel has actually seen a sharp uptick. Several factors have contributed to the sharp increase in Travel Lesiure (TVL).
Plummeting Airfares: Airfares have been plunging ever since the pandemic began due to the dramatic reduction in demand. This has made travelling by air much more affordable for recreational trips, which has made the option of travel more attractive to people. Airlines have also taken steps to improve safety protocols, providing an additional layer of reassurance for passengers.
Ease of Vaccination: Vaccine rollouts across the globe have contributed to the overall sense of safety that people have when it comes to travelling. In many countries, the process for getting vaccinated has been streamlined, making it easy to get a COVID-19 vaccine if needed. This has provided another incentive for people to travel as they are able to get vaccinated quickly and efficiently.
Changing Attitudes towards Travel: Public attitudes towards travel have likewise shifted. More and more people are embracing the idea that travelling can be done responsibly while still taking necessary precautions. This has made people more comfortable with the idea of taking a trip, as they are reassured by the fact that they can take the necessary measures to keep themselves and others safe.
- Plummeting airfares
- Ease of vaccination
- Changing attitudes towards travel
These three factors have combined to create an environment where travel has become a much more attractive option, thus leading to an increased number of people taking trips for leisure purposes.
4. What’s Next for the Coinbase-Backed Base Layer-2 Scaling Solution?
After Coinbase’s acquisition of the base-layer-2 scaling solution, the platform has made great strides towards developing the technology. The team has already begun integration with major exchanges, wallets, and merchant services. The platform is currently in its first iteration, allowing users to send and receive cryptocurrency with faster transactions and reduced fees.
Coinbase is continuing to push further development of the base-layer-2 scaling technology. They expect to further integrate the service with exchanges, wallets, and merchant services to allow more payment options. Additionally, the team is exploring options to open up the platform to developers and third-party providers to allow them to integrate their own services.
The short-term goal is to enable cross-chain transfers with the technology, allowing users to transfer and receive payments both on the Ethereum and Bitcoin networks. Coinbase is also planning on enabling users to easily deploy and manage smart contracts. This will allow users to create their own decentralized applications and launch them on the platform.
Base has provided a viable second layer scaling solution that is significantly more cost effective than the existing options and the fact that it is backed by Coinbase provides further assurance to its users. It has become a game changer in the DeFi market and is likely to maintain its current trajectory into the future.