Franklin Templeton, a prominent asset manager, has highlighted Base, an Ethereum Layer 2 network incubated by Coinbase, as a frontrunner in the emerging realm of Social Finance (SocialFi). With its flagship application, Friend.tech, Base is positioned to capture a significant share of SocialFi activity, an event termed “Base Season.” Franklin Templeton reports that 46% of transactions in the SocialFi sector are channeled through Base, demonstrating the platform’s dominance and growing influence. Friend.Tech, a standout application within the Base ecosystem, is revolutionizing social interactions and content monetization, further solidifying Base’s position as a leader in the Ethereum L2 sector.
Base differentiates itself through its utilization of “optimistic rollups,” a technology that speeds up transactions and reduces costs by batching them off the Ethereum mainnet. This approach maintains Ethereum’s security standards while significantly boosting transaction throughput and efficiency. Base’s total value locked (TVL) has surged by over 630% year-to-date, reaching $5.45 billion, making it the third-largest Ethereum layer 2 network according to L2beat. The platform’s close affiliation with Coinbase, the sole sequencer of the network, has played a crucial role in its success. Plans for gradual decentralization are in motion, ensuring long-term sustainability and resilience.
In addition to its success in the SocialFi sector, Base is impacting other layers on its network, with Degen Chain, a layer-3 blockchain built on top of Base, gaining rapid traction. Within just four days of its launch, Degen Chain recorded nearly $100 million in transaction volumes, accompanied by over 272,000 unique transactions and the creation of numerous contracts and tokens. Degen Chain, tailored for the DEGEN token, leverages layer-2 protocols to facilitate faster transactions, payments, gaming transactions, and community rewards. While the network has seen the emergence of tokens like Degen Swap (DSWAP) and Degen Easter Eggs (DEE), the valuation is largely driven by speculative trading.
The rapid growth of Degen Chain has sparked debates within the crypto community about the necessity and potential drawbacks of layer-3 networks. Some argue that these networks may divert value from mainnets like Ethereum. Polygon CEO Marc Boiron has expressed his mixed views, stating that L3s exist solely to shift value away from Ethereum and onto the L2s where they are built. However, he acknowledges the unique functionalities and value propositions that layer-3 networks offer, complementing existing layer-2 solutions. The emergence of Degen Chain and its success on the Base network showcases the evolving landscape of blockchain technologies and the challenges and opportunities they present for the industry.
Overall, Base’s significance in the SocialFi sector and its influence on other layers on the network highlight its growing prominence within the Ethereum ecosystem. As a leader in the Ethereum Layer 2 sector, Base’s strategic partnerships, innovative technologies, and community engagement have positioned it as a key player in shaping the future of decentralized finance and blockchain applications. With continued growth and development, Base is poised to further solidify its position as a powerhouse in the evolving landscape of blockchain technologies and decentralized applications.
