What Is Base? The Ethereum Layer-2 Network Launched by Coinbase

This guide will provide an overview of Base, one of the leading Layer 2 chains, which is compatible with the Ethereum ecosystem. The network uses the Optimistic Rollups technology, which bundles transactions off-chain and submits them to Ethereum. 

Base Network Overview

What Is Base in Simple Terms

Base is a network that secures transactions using Ethereum’s infrastructure. The network operates as a second layer on top of Ethereum and uses the Optimistic Rollups technology, meaning all proposed transactions are considered valid. Base then posts the transactions on the next Ethereum block.

Why Coinbase Launched Its Own Layer-2

Coinbase has shared its intention to create Base as initially an access point with lower fees. The company wanted to bring mass adoption with fun and accessible activities. Base was used as a venue to bring on-chain summer, a period of light-hearted meme trading and NFT launches. The network used that period to test its capacity, onboard users, and establish its presence among other Layer 2 chains.

Base’s Role in the Ethereum Ecosystem

Base’s main role lies in Ethereum Layer 2 scaling. The launch of Base arrived after Ethereum had a period of extremely high fees. Base solved that problem by carrying some of the traffic, inviting top apps to build new versions for the Layer 2 chain. 

How Base Works

Built on the OP Stack (Optimism Technology)

Base is built using components of the OP Stack, a framework by the Optimism Collective. This makes Base compatible with other similar chains, as cross-chain operations are one of the main goals of Base. 

The OP Stack makes Base a part of the Optimism Superchain, helping Ethereum handle more transactions while offering niche services for each new L2 chain.

Security Through Ethereum Mainnet Settlement

Base offers Ethereum L2 scaling by accepting much more transactions than a usual Ethereum block. The transactions are then batched and rolled up, using off-chain computation. This allows for processing hundrends of thousands of transactions.

The transactions are then cryptographically processed to derive a Merkle root, ensuring the record is tamper-proof. The Merkle root is a unique number, which is then published as part of an Ethereum block. This ensures the record can be verified for tampering, and ensures that no parties on Base will change their transactions. 

To achieve this record, Base uses blobs, paying daily fees for posting on Ethereum. The fees paid to Ethereum vary based on general activity. 

Scalability Benefits (Lower Fees, Faster Transactions)

Because Base can batch more transactions off-chain, while storing only the data from a single Merkle root, transaction fees are extremely low. Transactions are also instant, though there is some waiting time until they are final on Ethereum. However, most of the data processing and data transfers are not stored on the blockchain. 

Base produces a block every two seconds, meaning users have no sense of delay or long waiting times for confirmations.

Features and Advantages of Base

Coinbase Integration (Wallets, Exchange, Onboarding)

Using Base is integrated with other Coinbase features, for both end users and developers. Users can create Base accounts through Smart Wallet features, storing a secure identity and access to all Base services. However, a Base identity does not replace a full-KYC Coinbase account. 

Every user of the Coinbase smart wallet also has a Base account by default. The wallet can hold all assets on the Base chain, and grant access to decentralized exchanges (DEXs) and other apps.

Developer-Friendly Infrastructure

One of the goals of Coinbase is to encourage app building. For that reason, the Base Account SDK is available to developers for integrated apps. Base is compatible with Ethereum, making it user-friendly for developers who use the Solidity programming language.

Base products are also integrated with Coinbase’s features and data. Developers also have access to detailed documentation and the Base Ecosystem Fund, which supports early-stage projects.

Open-Source, Permissionless Network

Base offers open-source code to help expand the decentralized ecosystem.

All resources for Base builders are freely available, with ready-made components for some of the most common tasks in decentralized applications (dApps). Base provides general payment components, building blocks, and trading components.

Part of the “Superchain” Vision

Base is inherently compatible with the Superchain Ecosystem. The Superchain encompasses other Optimistic Rollup networks, where Base aims to serve as a central hub and bridge. 

The Superchain is a system of shared protocols and separately developed modules, easily adaptable to the requirements of different projects. Base is thus opening channels for communication between chains, sharing resources, routing, trading, and more. 

Base vs Other Ethereum Layer-2s

Base vs Optimism (Partnership and Shared Tech)

Both Base and Optimism are optimistic rollup networks. The two chains have differences that make them specialized for their niche tasks. 

Base is optimized to handle a higher number of transactions per second (TPS), while Optimism handles 200 TPS. Both chains produce a block in two seconds, though Base has around 20% faster finality for its transfers. All other parameters of the networks are similar. 

Base is partnering with Optimism on governance. It will contribute 2.5% of its sequencer revenue or 15% of its net profits, in exchange for 118M OP tokens unlocked over a few years.

Base vs Arbitrum (Differences in Ecosystem Growth)

Base and Arbitrum have different growth rates, following a different approach to launching and user incentives. Arbitrum was among the first L2, relying on airdrop incentives. The launch of Arbitrum still required significant fees to be paid to Ethereum, which affected the chain’s growth trajectory. Arbitrum still accrued value and turned into one of the leading hubs for DeFi. 

Base grew its ecosystem through NFTs and memecoins, later expanding with stablecoins and its own versions of DeFi. As of 2025, Arbitrum and Base are not competing directly, as each one hosts its own niche dApps.

Base vs zk-Rollups (ZKSync, StarkNet)

Base uses Optimistic Rollups, meaning all transactions are presumed valid. Then, validators or the sequencer monitors the transactions for disparities. Zero-knowledge rollups take a different approach, using a validity proof that the transactions are real and valid. ZK-rollups require a complex mathematical proof and are more computationally expensive. Hence, Base has chosen the path of Optimistic Rollups with sequencer verification, to offer the fastest and cheapest way possible to scale Ethereum.

Ecosystem and Adoption

dApps Building on Base (DeFi, NFTs, Gaming)

Base allows for the creation of many types of apps. The chain started its adoption with NFTs linked to each user’s Base identity. Later, the chain added DeFi apps, both multi-chain versions and native marketplaces. As of October 2025, Base carried 1.74M weekly active users, with up to 30% week-on-week growth, based on DappRadar data.

Coinbase User Funnel (Fiat → Base Onboarding)

All users of Coinbase Smart Wallets have a Base identity. The wallet offers Coinbase’s usual fiat on-ramp, which can also be integrated with other Base apps. The fiat on-ramp directs users to USDC ownership, the most widely used stablecoin on Base.

USDC transfers are virtually free for Base users. The Coinbase infrastructure thus onboards new users and adds fresh liquidity to the Base chain.

Partnerships and Developer Grants

Base grows its ecosystem through the Base Ecosystem Grants for new projects. There are also additional resources for developers, boosting knowledge, visibility, marketing, and networking. Additional funding comes from the Base Builder Reward, as well as from the Paymaster Gas Credits program. 

Base also attempts to keep an open stack, partnering with other platforms and tool builders. The chain partnered with Aerodrome Finance, Animoca Brands, Alchemy, and other projects for specific tools or Web3 tasks. Base is a partner with the Optimism chain, one of the main Layer 2 venues for DeFi and fast on-chain activity.

Risks and Criticisms of Base

Centralization Concerns (Coinbase’s Influence)

While Coinbase offers a strong selection of services, both for fiat and crypto, one of the criticisms of Base is that the chain is too tied up with the Coinbase culture. The chain predominantly encourages the usage of USDC, a stablecoin which can be frozen or censored. The influence of Coinbase may discourage some app builders from attempting to use Base as their main chain. 

Base is considered a Stage 1 chain, allowing for sequencer failure. However, Base still operates with a centralized sequencer that levies fees for ordering the transactions. Base defends its position in that the sequencer only orders approved transactions, while the actual on-chain content is decided by other apps and smart contracts. Nevertheless, the sequencer also allows Base to retain a significant part of fees for deploying the sequencer, while paying a minimal amount to Ethereum.

Competition Among L2s

L2 chains are numerous and diverse, with over 120 active networks. Multiple chains are competing for users, as well as for liquidity inflows. Base is closely competing with Arbitrum, which is still the leader in stablecoin inflows. 

The main focus of competition between L2 chains is transactions cost, as well as available apps. L2 chains host versions of lending protocols, each with a slightly higher yield, offering opportunities for arbitrage. 

Base partners with some networks like Optimism, while others try to build an independent user base. Base chain also competes for Solidity developers, though some of the apps are deployed on multiple chains.

Growing activity on L2 is not harmful to Base, and may in fact grow exposure to all chains. L2 chains grab nearly 14% of economic activity in the Ethereum ecosystem, of which Base takes up its own share.

Regulatory and Compliance Risks

Base shares Coinbase’s culture of remaining as close to compliance as possible. The chain encourages the usage of USDC, which is MiCA compliant in the EU and is covered by the Genius Bill in the USA.

Base is still a no-KYC chain, with the exception of specific Coinbase tasks, which may still require user verification. 

The Future of Base in 2025 and Beyond

Growth of the Superchain Ecosystem

The Superchain ecosystem has grown to carry nearly 700K smart contracts, locking in $5.5B in revenues, based on data from Dune Analytics. Base chain is the main driver of growth of the Superchain, followed by Optimism. Over time, the presence of Base solidified and even displaced smaller chains. 

The entire L2 ecosystem is constantly changing, as networks have different opportunities and incentives. In 2025, the state of the ecosystem showed most contracts were carried by Optimism, but most on-chain activity happened on Base.

Potential for Mass Adoption via Coinbase’s User Base

Base launched at a time when blockchain projects started seeking mass adoption, with a strong retail user base. The Base chain popularization started with mass minting of NFTs, followed by a summer of incentives and fun content. 

Over the years, Base chain evolved into a financial hub, a venue for payments, and an ecosystem for app-building activity.

Role in Ethereum’s Scaling Roadmap

Base is one of the most successful networks to take up some of the excess liquidity on Ethereum. The Ethereum roadmap includes both L1 and L2 efforts with the goal of achieving up to 100K transactions per second (TPS). Base for now carries around 1,500 TPS. 

L2 and especially optimistic rollups achieved unexpected scaling, when the Ethereum chain initially planned to go with sharding the chain. L2 rollups received some criticism that they took activity from Ethereum and paid back only limited fees. However, the ecosystem growth and app development have improved the standing of Ethereum, allowing users to tap DeFi, lending, DEX trading, and meme tokens without the burden of high gas fees and congestion. For that reason, Base chain is considered a part of Ethereum’s future, and not a competitor to L1 activity.