Net capital inflow surpasses Solana, will the Base chain experience a breakout?

Author: ZENECA

Translator: Baihua Blockchain

In this article, I will share why I believe Base is still very important, the areas I am currently focusing on within Base, and how you can get involved from an operational perspective. I will provide an overview of the ecosystem and share some indicators that make me more confident that the "Base Era" is approaching.

However, before diving deeper, it is necessary to clarify some obvious points: most of the content discussed in this article, as well as the vast majority of projects currently in the crypto market (especially those related to Memecoin), carry extremely high risks, with massive bubbles, and almost everything could plummet 95%-100% from current levels. Like others, I am trying to trade this market, selling when I believe prices are close to their peak and gradually locking in profits as prices rise. In fact, I have already realized some gains.

Don't be a stubborn "diamond hand" holder, and don't hesitate to sell due to moral pressure from others. Ultimately, you have to do what is most beneficial for yourself. If your investment has reached a life-changing amount, then sell, cash out, and change your life.

I have seen too many people "ride back to zero" from the peak, so I wanted to clarify these risks first. The following are my personal views; they may be wrong, the timing may be off, or there may be other issues. The importance of "Do Your Own Research" (DYOR) has never been more pronounced.

Next, let's start with Coinbase and discuss why I am optimistic about Base.

1. Reason One: Coinbase is a Major Player

Coinbase is one of the largest and most influential cryptocurrency trading platforms in the world and an important player in the crypto industry. Whenever a Memecoin lands on Coinbase, Memecoin investors worldwide rejoice because they know this usually means the price of that token will (generally speaking) rise. This is because Coinbase provides a convenient channel for ordinary users (or general crypto enthusiasts) to trade these tokens.

Coinbase's mission is to increase economic freedom globally and bring 1 billion people into the on-chain ecosystem. While they would be happy to have 1 billion users on any chain, it is clear that they particularly hope to attract these users to their own Base chain.

I believe that most people still underestimate the power of Coinbase's marketing machine and its importance as a company.

As one of the largest trading platforms in the U.S., Coinbase not only holds a significant commercial position but also often represents the entire crypto industry in legal and political battles.

Last year, when the SEC decided to sue Coinbase, it was one of the few moments in the crypto space where almost everyone united under a common goal. Nothing brings a group together like a common enemy. Of course, there were some dissenters, but to hell with them; they are insignificant and hardly worth mentioning.

Regarding Coinbase, I want to add one more point—this company seems to be filled with sincerity from top to bottom, and the employees are very talented. This is not to say that other trading platforms cannot achieve this, but the atmosphere that Coinbase exudes is particularly positive.

In short, Coinbase is a very important player. They have their own Layer 2 blockchain, which is likely to be a significant event worth paying attention to.

Speaking of Base, we must mention Ethereum— a blockchain that people love and hate. However, I believe the ETH era is also approaching…

2. Reason Two: The ETH Era

By the way, Ethereum is also a major player. I know that complaining about Ethereum on social media seems to have become a popular trend, but honestly, I think these voices are just a few loud opinions on Twitter. Most influential people are not spending all day on Twitter. Of course, this applies to all blockchains, but especially to Ethereum (partly because many have moved to Farcaster).

I will not deny that Ethereum has indeed experienced some failures. Over the past 12-18 months, it has "lost" to Solana (SOL) in many ways. It is slow, expensive, and the presence of numerous L2s (and L3s) makes the entire ecosystem seem somewhat fragmented and clunky.

Even so, Ethereum remains the second-largest blockchain by market capitalization, with a market cap nearly 4 times that of its competitors.

Among the 328 blockchains tracked by DeFi Llama, Ethereum still accounts for over 50% of the total value locked (TVL). Quite the "dead chain," huh? (laughs)

Clearly, Ethereum's price performance this year has lagged behind almost all other cryptocurrencies. But I believe this situation is about to change.

This is the ETH/BTC chart over the past five years. Clearly, Ethereum's performance over the past two years has not been ideal! But anyone with even a slight understanding of charts, markets, and investments will tell you that this is a buying opportunity, not a selling time.

18-24 months ago was when you should have swapped ETH for BTC or SOL.

I am not saying you must swap BTC or SOL for ETH right now, but it is certain that the timing for swapping is much better now than at any time in the past few years.

Yes, yes, I am going to bring up this old saying again, but it is just too accurate and applicable. The best time to buy SOL was during the peak panic after the FTX collapse.

I must admit that I reacted a bit late to SOL's miraculous performance during this wave (at least relatively speaking, I entered when SOL reached about $40). And as a stubborn ETH bull, I may have held on longer than a qualified trader should. But there are reasons for my continued bullishness on ETH, and many of these reasons are mentioned in this article.

Many people's dissatisfaction with ETH mainly comes from friction when using the chain, such as high gas fees and slow transaction speeds. L2s have solved many of these issues, and they are quickly catching up in their own weak areas. Thus, we arrive at…

3. Reason Three: Usage Friction is Rapidly Disappearing

One important reason for Solana's recent success is its focus on consumer applications and end-user experience. They minimize usage friction as much as possible, and undeniably, the barrier to entry for ordinary people using the Solana blockchain is much lower compared to other major blockchains. Low transaction fees and fast transaction speeds are important, but mobile-friendly wallets like Phantom and applications like Moonshot have had a huge impact on user acquisition.

Combined with the popularity of Memecoins, especially the hype around the Pump Fun protocol, and the network effects brought by these factors, this success is clearly not surprising.

But I believe Base is experiencing a similar trend or is very close to it. For example, just today, Phantom announced support for Base:

In the past few weeks, I have communicated with people in dozens of Discord/TG chat rooms, and I can't count how many times I've heard someone say, "Ah, I only have SOL in my wallet, and I don't know how to use Base."

I think this is just the beginning; we will see more and more protocols and applications starting to support Base, and more applications native to Base will emerge.

Additionally, many people still have lingering fears from Ethereum's high gas fees and MetaMask's poor user experience in 2021, but they have yet to experience the convenience of interacting with Base using Rabby, Rainbow, Phantom, or the native Coinbase Wallet (which offers a 4.7% native yield on held USDC, quite nice).

4. Reason Four: Strong Team

When investing in traditional companies or projects, I always believe in betting on talented individuals. Base has a very strong and reliable team that is working their magic:

Brian Armstrong casually meets with Trump to discuss cryptocurrency policy. By the way, Brian is truly an incredible figure; you can read this article from 2020 (yes, sorry, I'm asking you to read more), and reflect on what the world was like back then, as well as the political stances of most large tech companies at that time, and compare that to the very different approach Brian has led Coinbase to take.

Then there's the face of Base, Jesse Pollak, who leads both Base and the Coinbase wallet.

I have saved dozens of tweets because I was looking for some to post here to showcase his personal qualities, especially how he has shaped Base into what it is today. Browsing through his Twitter timeline is an endless delight. I recommend you check it out yourself, but for the lazy ones, which is 99% of you (if I were in your position, I would be too), here are a few of my favorite tweets:

Jesse visiting builders and leaders on a 21-day global tour, spreading the good news:

On trying to break into Instagram and TikTok:

On understanding meme culture (highly recommended to watch the video):

And more. These are just two of the outstanding individuals working hard to achieve Base's goals. Supporting this team feels quite reassuring.

5. Reason Five: Strong Data Performance

Data shows that activity on Base has significantly increased, and the capital inflow is also considerable. For me, the most important indicators to predict whether a chain might achieve significant success are: 1) the number of builders/developers creating applications; 2) whether capital is flowing into the chain.

Looking back over the past three months, Base's net capital inflow is almost on par with Solana:

Looking back over the past week, Base's performance has far surpassed all other platforms:

Trading volume is also steadily increasing, with a recent uptick in the past few days:

In recent days, many AI agents on Base have gained significant attention on Twitter:

Overall, it is clear that traffic and attention are moving towards Base. Whether this can be sustained or is just a temporary fluctuation remains to be seen. Many claim this is just temporary, and Solana will retain most of the attention in this round. I clearly disagree, but I am not arrogant enough to think I am definitely right and others are definitely wrong.

The data looks good, but it could be temporary.

6. Reason Six: Airdrop Speculation

I want to clarify that this is purely speculation; I have no insider information and do not know if there will be a Base Token. They have clearly stated that there will not be a token, but similarly, Optimism and many other chains have made similar promises in the past.

However, with significant changes in the legal and regulatory environment, I do not completely rule out the possibility of an airdrop at some point in the future.

That said, I won't put too much energy into this; I personally consider it a nice bonus rather than something to keep in mind all the time. I recommend using the chain normally and doing some experiments or trials, as this is often the best way to participate in airdrops when protocols do indeed launch them.

Alright, those are my six reasons for being optimistic about Base and believing that Base Szn may be approaching. Now let's delve into some areas worth paying attention to and where I am spending my time on Base:

7. Base Chain Ecosystem

1) Virtuals Protocol

You may have already heard of Virtuals, whether through my tweets/retweets or other discussions on the timeline. Simply put, Virtuals is a platform that provides a launchpad for on-chain AI agents. In their own words:

Over the past few months, it has gained slow but steady adoption, with a rise starting a few weeks ago and a parabolic growth in the past few days.

I think I don't need to tell you that AI is currently a significant topic in the crypto space and may be a mainstream topic and industry for some time to come (or even forever). We have seen AI meme coins like GOAT and ZEREBRO explode on Solana, with many other projects performing well.

Currently, the market value of top AI tokens and agents on Virtuals is still only a small portion of the giants on Solana, but if you look at the capital flow and anticipate an ETH season + Base season, I think paying attention to the Virtuals ecosystem will be one of the best places to be.

The two tokens I am most optimistic about (and hold the most of) are AIXBT and VADER, in addition to the native token VIRTUAL. I hold about 20 agents' tokens on the platform, and there are many others that I believe will perform well, considering they already have significant market capitalizations and could outperform the aforementioned tokens.

You can find new Virtual AI agent tokens being released (and you can also launch your own token). I recommend reading their full whitepaper for a comprehensive understanding of the protocol.

Additionally, here is a great thread from last month about Virtuals, providing a high-level overview in an easy-to-understand manner: link.

2) Farcaster

Base and Farcaster are closely related. While Farcaster supports and utilizes multiple chains, Base is currently almost swallowing the entire world. As this chart shows, for most of this year, Base has accounted for 60% to 80% of all on-chain transactions by Farcaster users, and in recent days, this number has exceeded 95%.

Recently, there have been two integrations related to Farcaster that have garnered a lot of attention: clanker and anoncast.

Clanker is an AI agent deployed on Farcaster that deploys tokens for users; anyone can simply @ mention it and request it to create a token for them. It uses its own funds to create liquidity pools for the tokens and generates some fees for the creators. People see it as Base's "pump fun," but I think this is not a completely equivalent comparison.

This website is a good place to track new clanker token releases.

Anoncast is a very cool technology that allows people to post content on Farcaster and even Twitter 100% anonymously using zk-proof technology (which I wrote about last year). You can post content through this website and need to hold anon tokens (as a utility for tagging).

As developers and experimenters try various new implementations, things are rapidly evolving, making it worth paying attention to and exploring the development of Farcaster.

I recommend watching this interview where ThreadGuy interviews one of the founders of Farcaster, Dan Romero.

3) "Old" Coins, Memes, Traditional Memes, etc.

While most attention is currently focused on the two areas mentioned above, especially the AI-related coins that occupy most of the attention, I think it is also worth paying attention to some older coins that have been around on Farcaster for a long time and have some loyal communities.

There are too many of these coins to list them all, but by checking the Base page on Dexscreener and sorting by market cap, you will find some good old Memecoins.

I speculate that if we really enter Base Season, there may come a moment when attention shifts from AI/Farcaster content to cute animals and traditional memes (or perhaps they could happen in parallel).

While the Virtuals ecosystem has recently experienced explosive growth, many of these old coins have also seen declines during the same period. Remembering the old saying, "Be fearful when others are greedy, and be greedy when others are fearful," it may be a good time to observe those areas that people are paying little attention to.

4) Other Points Worth Noting

I initially planned to write a whole paragraph here, but I just saw a fantastic tweet covering 10 cool applications worth trying, 10 ways to earn on-chain yields, 10 communities to join, and 10 articles worth reading. So, since that's the case, I won't ramble on; just check out this tweet.

https://x.com/davidtsocy/status/1861507879792189769?s=46\&t=sQ0QVUQyoiZQeVyh-DXZpg

There are countless other cool things being built on Base that I obviously cannot cover. The above are just the areas I have personally focused on in the past few weeks, but I encourage you to explore yourself and find those areas that interest you.

Alright, those are the main areas I am focusing on. Lastly, let me say a few words about logistics.

I have received many questions about how to start operating on Base, so here is a quick start guide/some tips:

If you have funds in your Ethereum wallet, you can bridge funds to Base using websites like Relay or Bungee. These platforms are very user-friendly and low-cost, and bridging usually takes about a minute.

If you have SOL funds in your wallet, you can also use Relay to bridge, or simply select the bridging option directly in the Phantom wallet.

If you want to trade on Base, you can manually trade 90% of the time like I do without using trading bots, but there are also some trading bots that support Base, and I guess there will be more soon. The two most popular trading bots are BullX and Photon (disclaimer: these are referral links).

The main decentralized trading platforms for buying and selling tokens on Base are Aerodrome and Uniswap. Personally, I prefer using the decentralized trading platform aggregator LlamaSwap, which can find the cheapest trading paths for you and help you get the best rates.

The trading method for Virtuals tokens is a bit different because all AI agents can only trade using the native VIRTUAL token. The easiest way to trade is through their website, but you can also use LlamaSwap to swap Virtuals tokens as long as you select KyberSwap as the decentralized trading platform.

If you are looking for a wallet suitable for all Base/EVM tokens, I personally use and recommend Rabby, and I have also heard that Rainbow Wallet is very good. Of course, Coinbase also has its own wallet, but to be honest, I personally think it lacks features compared to the other two wallets (or I am just not familiar with it).

8. Conclusion: Final Thoughts on SOL and Base, and General Views on Blockchain Competition

I have always felt that the fierce competition between blockchains is quite unnecessary. I personally view "competing chains" as friendly rivals, much like the U.S. and Canada, or Australia and New Zealand. We tease each other, joke about Solana occasionally having issues, Ethereum's exorbitant transaction fees, and Cardano, well, just being itself.

But ultimately, if you are here to make money (I guess 99% of people are), then you should keep an open mind, experiment, and go with the flow.

If you are more concerned about the future of finance, about decentralization and censorship resistance, rather than making money, then boldly stick to your views. In this field, you will encounter various extreme opinions: Bitcoin maximalists believe everything other than Bitcoin is harmful to the industry; Ethereum maximalists think Solana is a blight on the industry; and Solana maximalists believe Ethereum and Base are the industry's scourge.

There are even some of Bitcoin's biggest supporters who hate ETFs and MicroStrategy, while others love them.

I say this to express—no matter which side you stand on, you will encounter a group of people who think you are foolish and that your views are silly. To be honest, that's just life; you can let it affect you, or like me, accept it calmly, go with the flow, follow the money, follow the developers, follow the attention, and most importantly: follow your own curiosity.

I suggest you try doing the same. The most valuable information (Alpha) is not to follow my curiosity, my posts, or anyone else's footsteps, but to follow your own curiosity, explore deeply, and think independently.