- The Ethereum Layer-2 scaling solution, Base, launched by Coinbase, achieved substantial on-chain profits in May.
- The Ethereum update EIP-4844 and proto-danksharding has significantly driven Base’s profit surge.
- “Base generated the highest on-chain profit among layer-2 solutions, making it the current leader,” reported GrowThePie.
Discover how Base outperformed its rivals in May’s layer-2 profit wars, propelled by strategic upgrades and innovations.
Base Leads the Layer-2 Profit Race in May
In May, Coinbase’s Ethereum layer-2 solution, Base, emerged as the most profitable layer-2 network with over $6 million in on-chain profits. This performance has placed Base ahead of competitors like Blast and Optimism, according to data from GrowThePie.
Impact of Ethereum’s EIP-4844 and Proto-Danksharding
The impressive profit surge of Base can be attributed to enhancements in Ethereum’s infrastructure, specifically the implementation of EIP-4844 and proto-danksharding through the Dencun upgrade in March. These updates have significantly increased Base’s total value locked (TVL), propelling its profitability.
Competitive Landscape: Blast and Optimism
Though Base has taken the lead, other layer-2 networks are also making strides. Blast, created by the team behind the NFT marketplace Blur, has seen a rise in recognition due to its unique native yield for ETH and stablecoins. Also, projects like Pacmoon and Fantasy Top are providing considerable incentives, boosting its adoption and share of profits.
Profit Share and Performance Metrics
Despite Blast increasing its share of layer-2 profits from 5.3% in April to 15.2% in May, it’s still dwarfed by Base’s commanding 56.8%. These figures offer a snapshot of the profitability dynamics among layer-2 networks, which are primarily driven by the cost-revenue balance of interacting with the Ethereum mainnet.
Base vs. The Competition: An Analytical Insight
Beyond on-chain profit, Base’s TVL has seen remarkable growth, nearly sextupling to $7.6 billion in just three months. While Optimism’s TVL has plateaued, Base’s aggressive growth trajectory suggests a significant potential to surpass OP Mainnet. However, it still trails behind Arbitrum, which leads with an industry-high $19.1 billion in TVL.
Technological Advancements and Future Outlook
Base’s success is not merely a result of market growth but also of technological advancements and strategic initiatives. Coinbase’s announcement of the new Smart Wallet, leveraging account abstraction, promises to simplify on-chain transactions for new users, further enhancing Base’s market appeal.
Conclusion
Base’s remarkable performance in May underscores its strong position within the layer-2 scaling solutions ecosystem. Driven by substantial technical upgrades and proactive innovations, it has set a high bar for profitability. As the network continues to evolve, its influence and market dominance will likely expand, positioning it as a critical player in the landscape of Ethereum layer-2 solutions.
