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Tuesday, May 28, 2024

Coinbase’s Base Hits Record $2B in TVL as Demand Surges After Dencun Upgrade Activation

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Base, Coinbase’s layer-2 blockchain initiative for reducing Ethereum transaction fees, seems to be witnessing massive demands of increased network activity. As a result, its TVL also rose sharply, hitting a new milestone, surpassing $2 billion this week.

One of the major reasons for the surge in activity of Base was the activation of the Dencun upgrade.

Base’s TVL Growth

According to data from L2Beat, Base’s current TVL stands at $2.27 billion, increasing by over 230% YTD. Over the past seven days alone, this figure has grown by almost 50%.

This increase can be attributed to the Dencun upgrade, which significantly reduced Layer 2 transaction fees, rendering the Layer 2 network a more economical choice for Ethereum transactions. Despite a temporary increase in average transaction fees to above $1, the level of activity remained strong.

The Dencun upgrade, which went live on March 13, aims to lower transaction fees on the many Layer 2 networks built on top of Ethereum and is being touted as a major catalyst for developers’ efforts to move towards achieving widespread scalability through these solutions.

Prior to the important upgrade, Base was handling approximately 440,000 transactions per day, according to data from Dune Analytics. Following the upgrade, however, this figure surged to 1.1 million the very next day and continued to climb in the subsequent days, soaring beyond 2.06 million on March 16.

Meanwhile, the daily influx of new users on Base spiked to over 666k on the same day, marking an impressive 3,200% increase compared to the average in the weeks leading up to Dencun.

Rise in Traffic

Base Mainnet experienced high traffic and rising fees last week, with some users witnessing transaction delays due to insufficient fees. The situation was also aggravated by certain wallets, like Coinbase Wallet, lacking transaction cancellation features.

This uptick in activity coincided with the resurgence of the meme coin craze across the wider ecosystem. It is important to note that Solana has been a preferred venue for developers over Ethereum when it comes to launching meme tokens due to the former’s lower fee structure, easier trading, and inexpensive token presales.

However, Dencun could potentially be a game-changer in this aspect, potentially positioning Base as the hub for the next wave of meme coin frenzy.

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