Written by Hazel J. Greene, Senior Analyst

The Ethereum ecosystem is constantly evolving, with multiple layer-2 scaling solutions vying for prominence. Among them, Base, a layer-2 protocol utilizing optimistic rollups, has experienced a remarkable surge in its total value locked (TVL), bolstered by its association with Coinbase, one of the largest cryptocurrency exchanges worldwide.

According to data from L2Beat, Base has emerged as the fastest-expanding layer-2 protocol within the Ethereum ecosystem. The TVL of Base has skyrocketed by an impressive 53%, currently standing at $952,000. Notably, this surge is primarily fueled by various assets, particularly Ethereum (ETH), being locked into the layer-2 protocol. The platform’s growing popularity can be attributed, in part, to the credibility provided by Coinbase’s backing, which further enhances Base’s appeal to users.

In terms of TVL, Base’s closest competitor is Zora Network, another layer-2 solution backed by Coinbase, with a TVL of $1.8 million as of July 24. Additionally, Starknet, a layer-2 platform utilizing zk Rollups, has also witnessed rapid growth, recording a 28% surge in TVL, amounting to $128 million. However, while Base continues to flourish, the most popular layer-2 platform on Ethereum, Arbitrum, has experienced a decline in TVL, falling by 4% to $5.8 billion at the time of writing. Meanwhile, Optimism, another optimistic rollup and general-purpose layer-2 platform, has shown slower growth.

Despite the impressive growth, it is essential to note that Base is still under development. One key aspect is the ongoing work on building a “state validation system.” However, the platform’s sequencer remains upgradable, providing flexibility and advantageous features for protocols launching on Base.

The rapid growth of Base’s TVL coincides with the recent upgrade of Optimism, which introduced significant improvements through its Bedrock hard fork. An important enhancement is the introduction of optimized batch compression, which further reduces the already low layer-2 transaction fees. By optimizing the compression of batched transactions, Bedrock contributes to lowering fees for all platforms relying on rollups.

Furthermore, Optimism now utilizes Ethereum’s data availability layer, leveraging the higher uptime that the decentralized mainnet offers. This transition from relying solely on a sequencer to incorporating Ethereum’s robust infrastructure enhances the overall performance and reliability of the layer-2 protocol. The Bedrock upgrade also addressed delays in including layer-1 transactions in rollups, resulting in improved re-organizations.

Ethereum developers are actively exploring additional on-chain scaling solutions, one option being sharding. This approach involves splitting Ethereum into interconnected segments known as “shards,” ultimately increasing throughput, reducing gas fees, and attracting more users and decentralized applications (dapps) to the platform. The pursuit of scalable solutions underpins Ethereum’s commitment to evolving and meeting the growing demands of its users.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.