Reviewing the Rise of BASE Chain: On-chain Marketing May Be the Best Approach, No Possibility of Airdrops for New Public Chains

Author: defioasis, Wu Shuo

Since its launch at the end of July, Base, an L2 network built by Coinbase based on Optimistic Rollup, has accumulated $7 million in transaction fees, surpassing most other L2 networks during the same period; its on-chain TVL has exceeded $540 million, nearly equal to the combined total of zkSync Era and StarkNet, making it the third-largest L2 network after Arbitrum and Optimism. As a public chain with minimal expectations for airdrops, it has achieved greater success in a shorter time than public chains driven by potential airdrop farming. In this landscape of one-click chain launches and potential airdrop-driven dynamics, Base's experience seems to reveal another possibility for the development of public chains.

Looking back at the developments over the past three months, Base has experienced at least four significant events worthy of historical note.

(1) No promotional buildup, ignited by Memecoin on social media

At the end of July, the Base mainnet quietly went live, but the public learned of this news not through official media promotion, but through discussions across various social accounts and communities about the massive price surge of Base's first Memecoin, BALD. On the evening of July 30, approximately 25,000 ETH was deposited into the Base network, with over 10,000 ETH flowing into the BALD/WETH liquidity pool, demonstrating a strong capital attraction as more than half of the funds on the entire network were circulating in this Memecoin.

At that time, BALD's market cap nearly approached $100 million, with an increase of tens of thousands of times; however, amidst this massive surge, the development team lost their way and withdrew a large amount of liquidity the next day, triggering a sharp decline in BALD, which was a provocation to a significant portion of the new network's users. This was followed by a large-scale search on social media for the identities behind the BALD deployment team, believed to be closely related to the now-bankrupt FTX/Alameda, and even SBF himself. Although it ended poorly, BALD undoubtedly brought significant exposure to the newly born Base.

(2) Venture capital-backed super applications, surpassing public chains

The failure of BALD and the collapse of other Memecoins driven by BALD briefly labeled Base's ecosystem as concerning in quality, until the emergence of the super social application friend tech a week later. Tied to Twitter, it quickly became popular across major communities due to its novel personal social value trading relationships and invitation system, making it hard to obtain an invite code. On August 10, the Base network's daily active users first broke 100,000, reaching 136,000, with 42,000 new users joining.

However, the simple functionality and poor user experience led to a rapid loss of users after an initial surge. Just when it seemed to fade into obscurity, friend tech made a high-profile return with seed round financing from crypto venture capital firm Paradigm, coupled with the first round of points distribution for potential airdrops, causing previously exited users to quickly return and reignite trends on social media, attracting more new users. The involvement of celebrities such as Y Combinator President and CEO Sam Altman and FaZe Clan founder FaZe Banks, along with the exponential growth of friend tech MEV bots, brought more high-quality traffic and reputation to this young social network friend tech and the emerging public chain Base.

Base's achievements in the L2 network are already impressive, but the application built on Base, friend tech, has far surpassed the Base network itself. According to DeFiLlama data, as of September 27, Base captured $1.93 million in September, generating $1.06 million in revenue; meanwhile, friend tech captured $21.74 million in fees during the same period, generating $10.87 million in revenue, ten times that of the Base network itself, becoming a super application protocol that can stand alongside Bitcoin and Uniswap. Currently, friend tech's active users account for about 25%-30% of the Base network, and its transaction gas consumption accounts for about 20%-40% of the Base network, demonstrating the influence of super applications on public chains.

Source: https://dune.com/21co/friendtech-analysis

(3) DeFi flywheel, helping TVL reach new heights

On August 31, Velodrome, the largest DEX protocol on Optimism, deployed a new forked DEX called Aerodrome on the Base network. Within less than two days of its launch, Aerodrome's TVL reached $200 million, accounting for 50% of the entire Base TVL. Aerodrome inherited Velodrome V2 and improved upon the flaws of Solidly Ve(3,3).

The Aerodrome team provided nearly 7% AERO emission incentives to the AERO-USDC LP Pool by controlling veAERO, while the circulating supply of AERO was low at launch, and the overall scale of the LP Pool was small. The high LP yields attracted liquidity providers to purchase the limited AERO available in the market, further increasing its scarcity, which in turn drove a significant price increase for AERO. The price increase then allowed liquidity providers to earn higher yields, creating a positive flywheel effect that attracted a large amount of external liquidity to the Aerodrome protocol and the Base network in a short period.

Source: https://www.wu-talk.com/index.php?m=content\&c=index\&a=show\&catid=47\&id=17856

Although over time, AERO fell into and has yet to escape the negative feedback spiral of ve(3,3), Aerodrome still holds a locked value of $97 million, making it the largest DeFi protocol on the Base network, accounting for about 18%. The negative feedback spiral of ve(3,3) has been addressed by Velodrome on Optimism by increasing the locking rate through OP incentives from the Optimism Foundation, and whether this method can be applied to the Base network without token incentives remains to be seen.

(4) Setting a precedent for OP Stack, sharing revenue with Optimism Collective

To ensure sustainable funding for the open-source OP Stack and the supporting products of Base, creating a virtuous cycle within the ecosystem, Base announced on August 25 a deep cooperation with Optimism Collective, committing to contribute 2.5% of Base's total revenue from the sequencer or, after deducting the costs of data submission to L1, 15% of the profits from L2 transactions to Optimism Collective, choosing the option with the higher revenue share. Base will also actively participate in the governance of Optimism Collective, as part of the contribution, with the opportunity to earn up to 2.75% of the OP supply over the next six years, and commits that its voting power in Optimism Collective will never exceed 9% of the total voting supply at any time. This undoubtedly sets a precedent for deep ecological binding between L2 networks based on OP Stack and the builders at Optimism, which may accommodate more OP Stack-based networks sharing revenue with Optimism in the future, forming a large pan-OP Stack ecosystem.

Reflections on the Development of Base

(1) On-chain marketing will become the best marketing tool in the future

Marketing strategies need to guide users into the next phase, ultimately achieving conversion goals. The discovery of the Base mainnet did not come from official marketing but from countless on-chain detectives tracking on-chain data and pursuing on-chain wealth effects, leveraging social influence to reach more ordinary users. BALD is a prime example of on-chain marketing. On-chain detectives first noticed the informal opening of the Base mainnet, then the birth of the first on-chain token, and the FOMO of funds flowing into the Memecoin, gradually attracting user attention and injecting funds into the Base network through community and social influence, ultimately leading to a significant surge in less than a day. If it had been typical official marketing rhetoric, in a saturated L2 environment, it would have been difficult for a network with almost no airdrop expectations to give birth to such a love-hate Memecoin and generate such massive traffic for the network launch.

(2) Building super applications for the network

Although friend tech's high fee extraction and value growth curve model have drawn criticism, it is undeniable that friend tech has pioneered a unique social track, turning users' social data into tradable social assets. With the support of this new model, friend tech attracted investments from those adept at betting on innovative sub-tracks like Paradigm, further attracting social influencers and celebrities. Coupled with the points incentive system for potential airdrops learned from another Paradigm investment, Blur, and continuous functional improvements, it formed a sustainable positive growth for the application, ultimately benefiting the Base network itself. With super applications, Base has shifted users' pursuit of airdrops from the network to the network applications, achieving a win-win-win situation.

The connection between friend tech and Base also seems not to be a coincidence. As early as March this year, after friend tech founder Racer launched the social application Stealcam, it received high praise from Jesse Pollak, the chief core developer of Base, on social media, which may have laid the groundwork for the birth of friend tech on the Base network.

(3) Shifting from competition among public chains to collaboration

There seems to be a significant competitive relationship between most public chains, such as the legitimacy struggle between EVM and non-EVM chains, the scaling road disputes among rollups, Validiums, and Optimiums, and the L2 leadership competition between Arbitrum and Optimism. Unlike public chains backed by luxurious VCs and massive financing, Base adopts a much lower profile, and its cooperation with the Optimism ecosystem breaks the "hostile" prejudice between L2s, absorbing the fork from Optimism's largest DEX to become Base's largest TVL protocol, innovatively sharing revenue with Optimism and widely participating in governance. The partnership between Base and Optimism may bring more 1+1>2 effects in the future.