Based culture: Inside Coinbase’s L2 feat

Base is posting all-time high transaction counts, stablecoin volumes and unique addresses

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Base modified by Blockworks

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Base has what other L2s don’t: a culture

Coinbase may be pulling off a move that runs opposite to crypto’s holiest cypherpunk ideals: fostering an unironic vibe around Base, its corporate-powered L2.

No matter how you look at it, Base is popping off. The rollup network, built on the OP Stack, is posting all-time high transaction counts, stablecoin volumes and unique addresses.

The rising popularity of its native AMM, Aerodrome, has helped push Base’s total value locked to $2.57 billion — more than double Polygon and Avalanche.

It took years for those other networks to attract all that liquidity and mindshare. Base has done it in under eight months. And while Base still has only a small fraction of Optimism and Arbitrum’s TVL, Base is now firmly within spitting distance of Blast, the L2 offering native yield to attract crypto natives. 

Somehow, Base has developed its own culture. Base boasts bustling NFT markets where being “based” is a big deal. 

Ethereum has Bored Apes and CryptoPunks. Base, on the other hand, has Tiny Baseds Frogs, Based Fellas, and Primitives — the latter of which is a generative pixel art collection with “crypto-native” characters. All have seen millions of dollars of trade in the past week.

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Turns out, Ethereum layer-2s can be big enough to support their own communities

The sudden popularity of friend.tech was, in many ways, Base’s breakout moment. It gave the crypto crowd a familiar proof of concept with which to fool around as they waited for the bull market: Invest crypto in shares of your favorite social media accounts, like BitClout without its own blockchain or native cryptocurrency. 

Friend.tech has died down but the spirit has lived on. Base creator Jesse Pollak, also head of protocols at Coinbase, has pushed to find ways to fuse the network with Web3 social media app Farcaster and its programmable Frames.

Pollak has even been spotted in Base-flavored memecoin Telegram groups, spreading based vibes. 

Coinbase is so far successfully distilling all that buzz down into revenue. Gross profit for Base nearly cleared $4.5 million over the past week alone, up from under $100,000 in the first week of January. 

The secret source for crypto exchanges is diversifying from transaction revenues, and Base may be the killer ingredient for Coinbase

About 60% of Coinbase’s revenue last quarter was transaction fees, more than $500 million. Base’s annualized profit right now, based on the past week, is about $235 million. 

All Coinbase needs to do is keep the vibes high.

— David Canellis

Data Center

📉 Fees for Ethereum L2s are still very low after the Dencun hard fork, at or below $0.01 on Optimism, Starknet, Arbitrum and zkSync Era.

💵 There’s again almost $150 billion in stablecoins sloshing around crypto markets, levels not seen since September 2022 (just before FTX).

🔢 Thanks to Hyperliquid, Arbitrum is still the no. 1 network for on-chain derivatives: $4 billion over the past 24 hours to Ethereum mainnet’s $1.36 billion.

Bitcoin hovers just below $71,000 while ether trades around the $3,600 level. 

📈Coinbase shares rallied during the pre-market trade, gaining 4% after closing almost 10% higher on Monday

⚖️ So, we’re all suing the SEC now? 

Days after being hit with sanctions in a US district court, the Securities and Exchange Commission was served another lawsuit Monday, this time from co-defendants — the DeFi Education Fund and NFT issuer Beba. 

The DeFi Education Fund seeks a court order declaring that Beba — “a small, family-owned business in Waco, Texas,” in the words of Chief Legal Officer Amanda Tuminelli — didn’t break US securities laws with its free airdrop. 

The pair also claims that the SEC violated the Administrative Procedure Act, an allegation we’ve seen brought up in several suits between the regulator and crypto companies. Coinbase most recently evoked this argument in its March appeal to grant a petition for rulemaking

Going head to head with the SEC in court is no small feat. It’s time-consuming and expensive. Just ask Ripple, which spent $200 million and 38 months — and counting — on their defense against the securities regulator. That’s not even counting the penalties they will eventually owe. 

Even bigger crypto firms that have opted to settle in the past are now choosing to fight. Kraken, which settled charges associated with its staking program a year ago, is defending itself against SEC allegations that it’s operating as an unregistered securities exchange. 

Critics argue that under the SEC’s so-called “regulation by enforcement” regime, lawsuits are the only way for the industry to get answers. Going on the offense, though — filing suits before the SEC has a chance to issue an enforcement action — appears to be the latest trend. 

If it works, the industry owes the DeFi Education Fund and Beba a huge thank you. If it doesn’t? Well, at least now we’ve all heard of Beba. 

— Casey Wagner

🇺🇸 Why political memecoins matter 

The US presidential race is well underway, and the momentum for political memecoins continues.

The group is based on politicians such as President Joe Biden and Donald Trump, with MAGA being one of the most popularly known ones. MAGA has a $248 million market cap, according to data from CoinGecko.

Solana-based BODEN is a Biden memecoin, as the name suggests. It quickly gained momentum, popping 850% in just 14 days. TREMP, which sits in the more diluted category of Trump-based memecoins, saw a 70% increase over the past 14 days, though it’s trading higher than BODEN at $0.427. BODEN sits at $0.318.

In an election year, political memecoins launch and trade purely on hype. There are also pretty clear bear and bull cases, which stand out in the broader memecoin market. Some bull cases center around the upcoming election and the potential for debates. Among the bear cases: there’s too much momentum, and too early in the election cycle, for traders to keep up.

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In all fairness, memecoins across the board show that there’s still an appetite in the market despite the risk of a rug pull and overall volatility. 

Political memecoins prove one thing, however: Crypto can both be taken seriously and allow the unserious to continue — whether it comes in the form of Trump and Biden coins or, you know, a dog with a little hat. 

— Katherine Ross

The Works

Welcome to The Works 👋 Your daily slice of crypto (and not-so-crypto) from around the Web. 🕸️

🧪Fred Ehrsam tested out Farcaster as a platform for research bounties, complete with a $1,000 prize. The results: “it worked pretty well!” Read Ehrsam’s thread

⚡Researchers at Cornell University contend that crypto mining combined with so-called green hydrogen could spur “the foundation for wider deployment of renewable energy.”

🤝”Refurbished” crypto mining hardware will find new homes after the upcoming bitcoin halving renders them less profitable, Bloomberg reports

🇬🇧 Speaking of bitcoin: in case you missed it, bitcoin exchange-traded notes are arriving in London this spring. Get excited. 

💸 BlackRock is positioning bitcoin as a portfolio diversifier to its clients, CNBC reports

The Morning Riff

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Cringy TikTok trend 🤝 Crypto Twitter. Some things really don’t change…including our mental health, I guess. 

“This is the marketing Cardano needs,” one user replied. Yes, because Cardano needs marketing that includes a (semi-joking) thirst trap aimed at Charles Hoskinson. 

For his part, Hoskinson replied that he was “blushing” after watching the video. But, hey, it’s always a bonus to see women in crypto.  

— Katherine Ross


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