What is Base? A detailed explanation of the Ethereum Layer 2 network launched by Coinbase.

Overview

Base is a second-layer scaling solution built on Ethereum, developed in collaboration between the American cryptocurrency exchange Coinbase and Optimism. It aims to provide developers with a secure, low-cost, and user-friendly environment for application deployment. Base is compatible with all EVM wallets and Coinbase wallets, supporting various application scenarios such as payment applications, token exchanges, liquidity provision, cross-chain asset bridging, and DAO launches.

What is Base?

Base is a Layer 2 blockchain built on Ethereum (L2), officially launched by the American cryptocurrency exchange platform Coinbase on August 9, 2023. The reason Base has gained widespread attention in the crypto space is that it is the first blockchain network launched by a publicly traded company.

The development of Base adopts the Optimism OP Stack technology framework—a standardized open-source development stack that lays the foundation for building Base. Through this platform, developers can create decentralized applications (DApps) and connect to over 110 million verified users and over $80 billion in assets within the Coinbase ecosystem.

Base's vision is to build a “super chain” powered by Optimism, maintained and expanded by a global developer community. It is worth noting that the Base team has made it clear that there are currently no plans to issue an independent network token, so users should be particularly cautious of the fake Base tokens that may appear in the market.

Core Concept of Layer 2 Blockchain (L2)

Layer 2 blockchain refers to secondary protocols or frameworks built on top of existing blockchain networks ( Layer 1 ). Taking Ethereum as an example, the main goal of L2 solutions is to enhance throughput, accelerate transaction speeds, and reduce costs without compromising the network's security and decentralization characteristics.

Currently, there are various L2 technical solutions, including state channels ( such as Bitcoin's Lightning Network and Ethereum's Raiden Network ), sidechains ( like Bitcoin's Liquid Network and Ethereum's Loom Network ), as well as aggregation technologies ( optimistic rollups and zero-knowledge rollups ). In the L2 networks, Optimism, Polygon, zkSync, and Arbitrum are some of the most widely deployed solutions.

Optimism: The Technical Foundation of Base

Optimism is an L2 scaling solution deployed on Ethereum that reduces transaction costs and speeds up processing by optimizing network performance. This solution employs the Optimistic Rollups technology, which aggregates multiple off-chain transactions into a single on-chain data proof, and then submits it to the Ethereum main chain.

Optimism employs an anti-fraud mechanism, initially assuming that all aggregated transactions are valid. Network participants can dispute transactions and submit fraud proofs within a specific time window. If the system detects improper behavior, malicious operators will be penalized, and the relevant transactions will be revoked.

What are the application scenarios of Base?

Like other L2 networks, Base supports a rich variety of application scenarios. Here are some examples of applications that have been deployed on Base:

( 1. Payment and Transaction Applications

Beam is a payment tool that allows users to complete transactions using stablecoins or the platform's native token Eco. Users can log in with their Twitter accounts, and transaction fees are paid in USDC or Eco. The application also integrates a fiat exchange function, supporting the conversion between fiat currencies and crypto assets.

) 2. Distributed Trading Platform

The decentralized exchange ###DEX### deployed on Base provides users with token swap services. Several DEXs such as Uniswap, Maverick, and Dackieswap are running on Base, allowing users to trade various types of crypto assets.

( 3. Liquidity Provision and Yield

DApps in the Base ecosystem, such as Uniswap, BaseSwap, and Dackieswap, allow users to provide liquidity and earn profits from trading fees. Liquidity providers can earn passive income through these protocols.

) 4. Asset Cross-Chain Bridge

Base officially launched the Base Bridge tool, supporting mainstream EVM wallets such as MetaMask and Coinbase Wallet. Users can transfer ERC-20 tokens between Base and Ethereum using this tool. Transfers from Ethereum to Base typically take a few minutes, while the reverse process takes about 7 days.

5. The establishment of autonomous organization ### DAO

Decentralized organizations are entities based on blockchain and driven by community decision-making, operating through smart contracts. Aragon is a DAO creation protocol that has launched no-code tools on Base, enabling more users to easily deploy decentralized organizations.

Will Base issue its own independent tokens?

According to Base's development plan and official social media statements, the project team currently has no plans to launch an independent network token. However, it should be noted that the project team may sometimes change its original intentions — they may initially claim that there will be no airdrop, only to unexpectedly announce an airdrop plan later. This is usually done to reward early participants for their contributions to the network while also promoting community building.

How to connect to the Base network and use the testnet?

The process of connecting to the Base network is relatively straightforward, and users can do so through Coinbase Wallet or any EVM-compatible wallet.

( 1. Connect to Base using Coinbase Wallet

Activate the Base network in your Coinbase wallet by following these steps:

1. Launch the Coinbase wallet browser extension and log in to your account.
2. Connect the wallet to the application ), using BaseSwap in this example ###.
3. Click the network selection button in the upper right corner to open the network menu.
4. Select Base from the list
5. The network will switch to Base

( 2. Connect to Base using MetaMask

Many EVM-compatible wallets support Base connections. Taking MetaMask as an example, the connection steps are as follows:

1. Open the MetaMask browser extension
2. Click on the network selection dropdown menu at the top of the extension.
3. Select the “Add Network” button
4. Select the “Manual Add Network” option
5. Enter the Base Goerli testnet information in the pop-up dialog and save.
6. You can now find the Base network in the network selection menu.

The Core Advantages of the Base Network

The main advantages of using the Base network are:

) 1. Low transaction costs

As an implementation of the optimistic rollup solution, Base offers extremely low gas fees, significantly reducing users' transaction costs and accelerating data processing speeds. This is achieved by processing transactions off-chain and aggregating them into a single proof.

2. Easy to use

EVM-compatible chains like Base allow developers to easily migrate and utilize ready-made tools, development frameworks, and smart contracts based on Ethereum, enhancing cross-platform interoperability.

3. Network Capacity and Throughput

The scalability of Layer 2 has significantly improved the capacity and data processing speed of blockchain networks. This eliminates performance bottlenecks, enhances efficiency, and ultimately provides users and developers with faster and more cost-effective solutions.

Main Limitations of the Base Network

The core challenges faced by Base include the following points:

1. Centralization Risk

One of the main concerns about Base is its level of centralization. Coinbase serves as the sole sequencer ### in the Base network, holding the power to order and process transactions. The sequencer is responsible for organizing transactions in a specific order and improving data throughput efficiency. A single sequencer means that the power of transaction processing is concentrated in one entity, which can simultaneously control the associated fee policies. Coinbase has hinted at the possibility of introducing third-party nodes in the future.

2. The fund withdrawal period is relatively long.

A significant limitation of Base is that the withdrawal of funds requires a cycle of about 7 days. This stems from the design of the Optimism anti-fraud mechanism, which allows network participants to challenge transactions and submit fraud proofs within a specific timeframe. The long withdrawal cycle can affect user experience.

( 3. Security Considerations

As an L2 built on the OP Stack, Base faces several security risks. First, the effectiveness of the anti-fraud mechanism is in question. The anti-fraud protection relies on the continuous monitoring of network participants and challenges to off-chain illegal transactions, intervening before final confirmation on the main chain. However, this mechanism faces multiple challenges, including insufficient incentives for participants and the potential risk of data withholding attacks.

Overall Evaluation

Since its launch, Base has received positive responses from the industry. As of September 7, 2023, Base has accumulated over 1 million users, with a total locked asset value of )TVL### exceeding 385 million USD, ranking 8th on the TVL leaderboard, surpassing well-known public chains such as Cardano and Solana.

As the first blockchain network launched by a publicly listed company, Base creates new opportunities to attract a broader range of users into the Web3 ecosystem. As the platform continues to develop and improve, users and developers need to continuously assess and make informed decisions to ensure safe and efficient interactions with Base.

Disclaimer: This content is for reference only and does not constitute financial, legal, or investment advice. The prices of digital assets are highly volatile, and their investment value may rise or fall. Investment decisions should be based on thorough personal due diligence, and users bear full responsibility for their own decisions.