What is Base chain?
Base is an Ethereum layer 2 network created by Coinbase. If you are wondering why an exchange decided to roll out Base, then consider this. There is a lot of value to be had in the decentralized world and exchanges like Coinbase have a lot of liquidity that can be used to further develop the decentralized space.
But why exist as an Ethereum layer 2? Well, Ethereum has multiple layer 2 networks but base is a smart-contract enabled network which means dapps can be built on it. That way, users can tap into value on Base, as well as the Ethereum mainnet. This brings us to the main reason why Base is making headlines lately.
Base chain achieves new all-time high
Coinbase rolled out the testnet in February 2023 but the mainnet was launched on August of the same year. The total value locked in the Base ecosystem has since grown exponentially and is currently at $1.68 billion. An impressive feat in just 10 months.
This robust TVL growth signals that the base ecosystem is rapidly attracting investors. Let’s take a look at the characteristics fueling this growth. As noted earlier, The network has smart contract support allowing for dapp development. According to The Dapp list, Base currently has 134 listed projects.
The substantial number of projects coupled with the high TVL underscores the Base network’s investment potential. This means liquidity has been flowing into its ecosystem and this warrants a look at the best projects to invest in. There is another potentially huge reason for the flow of liquidity.
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DeFi is not exactly easy or beginner friendly because of the significant learning curve involved especially with wallets. Coinbase has a unique approach and it involves the introduction of Smart Wallets. These will allow Coinbase users to use their accounts to directly access on-chain apps without requiring extensions, downloading some app or even using seed phrases.
Perhaps one of the biggest reasons why Base is becoming more attractive is its liquidity potential. The layer 2 network is reportedly making it easier for users to access Web3. It is doing so through onramps and offramps which are now available in more than 190 countries. Millions of Coinbase users can enjoy a much smoother DeFi experience. Therefore, liquidity can flow with much less friction and this is quite attractive to developers.
How to invest in Base chain custom network?
Most layer 2 networks have their native tokens. However, the Base network opted to go the opposite direction. Since there is no native Base token, traders can access the ecosystem using wrapped ETH (WETH). Metamask is one of the best DeFi wallets that are suited for this.
Note that you will need to bridge your ETH from the mainnet which will likely attract a substantial gas fee. However, once bridged, the WETH will allow you to buy assets on the layer 2 chain. Base transactions attract very low fees.
How do I identify good projects to trade on Base chain?
Your best bet is to use DEX monitoring tools such as DEX SCREENER. You can filter the search by selecting only the Base network on the left side. It will then provide a list of projects which include memecoins on the network.
You can narrow down the search by ranking based on liquidity or marketcap. Liquidity to market cap ratio should help in identifying high quality projects. Also, you can review each project’s community to determine if the level of focus and hype around each project.
Conclusion
Liquidity is key for the success of a network and it looks like Coinbase has strategically set up base to benefit from inflows into the crypto market. Therefore, some of the most promising Base network dapps and tokens might be due for an impressive performance in the next few weeks or months.
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