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Coinbase’s Base hits All Time High Usage Off FriendTech Resurgence — Cause for Concern?

Published September 18, 2023 1:48 PM
Teuta Franjkovic
Published September 18, 2023 1:48 PM

Key Takeaways

  • Coinbase’s Ethereum layer-2 solution, Base, has gained significant momentum since its August launch.
  • Base recently achieved an all-time high in daily transactions, surpassing 1.8 million, a sharp increase from its August figures.
  • The platform has attracted nearly $380 million in total assets locked and sustained a trading volume of over $20 million.
  • Despite its success, Base faced security challenges, with four attacks reported in the past month.

Since its launch in August, Base, the Ethereum layer-2 solution created by cryptocurrency exchange Coinbase, has gained significant traction, primarily thanks to the resurrection of FriendTech.

The increasing popularity of the Base-based decentralized social application, FriendTech, is one factor that may have driven this development.

ATH Conquered

Base recently announced that the total number of daily transactions exceeded 1.8 million a few days ago. At the beginning of August, the number was below 300K.

DeFiLlama reported  that the total assets locked within the L2 blockchain solution have reached approximately $380 million, with a trade volume averaging over $20 million in the past week.

Base was created more than two months ago, and on August 12, its price reached an all-time high. The trading volume was also much bigger back then, occasionally rising exceeding $100 million.

However, the L2 solution became a prime target for hackers last month and experienced four separate attacks. Magnate Finance, a lending system on the Base blockchain, was the target of one of the largest single fraud incidents.

Shortly after the community was made aware  of a potential fraud operating on the site by the anonymous X (Twitter) user ZachXBT, miscreants pulled off a rug pull scheme. This fraud resulted in losses exceeding $6.4 million.

FriendsTech’s Comeback

One aspect contributing to Base’s increasing daily transaction volume could be FriendTech’s reappearance as a decentralised social network.

In the past week, the former, which is based on Coinbase’s Base, has drawn new users. On September 13, its trade volume peaked at nearly $18.5 million.

Given that some X (Twitter) users had earlier declared it “dead,” its comeback is, to put it mildly, impressive. The application has suffered  because of “greed and poor execution” from its team management, according to Lisandro Rodriguez, Payments Risk Manager at Coinbase.

He added that access to FriendTech is “very clunky and not open to everyone” and that it is only available to a select group of users.

Following the debut of FriendTech  in early August, Base experienced an increase in activity. Base averaged a record-high 15.88 transactions per second, exceeding Ethereum and other competing layer 2 blockchains like Arbitrum and Optimism. The launch increased daily active users to a record high.

The number of transactions on FriendTech, which peaked at 525,000 in early August, sharply decreased to 51,000 by the end of the month. During the same time frame, Base’s daily transactions also saw a decline.

According to IntoTheBlock , the current increase in Base activity is due to participants becoming “more specialised in their own niche” as layer 2 ecosystems for Ethereum continue to develop. “Base has quickly become the L2 with the most unique addresses and transactions, fueled by Coinbase’s wide reach, making it a strong candidate for social applications like FriendTech to thrive,” it said .

Analysts have observed that, unlike prior frenzy episodes, the increase in Friend.tech activity did not cause Ethereum to become congested or to charge higher fees. This might be a sign that initiatives to grow the blockchain by supporting supplementary “layer-2” networks like Base are working well.

Base Still Trailing Polygon, BSC

The layer-2 network outperformed competing chains Optimism and Arbitrum, which recorded a total of 878,000 transactions for the day, in terms of volume.

The layer-2 network has reached the milestone, although it still lags behind more well-known blockchains like Polygon  and BNB Smart Chain  (BSC). On that day, BSC had 3.1 million transactions, compared to 2.1 million transactions for Polygon.

The layer-2 network did not have as many users as it did on Aug. 21, when the blockchain set a new record for transactions and also reached 136,000 daily active users. According to data gathered by Dune Analytics , Base had only 86,000 daily active users on September 14.

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