According to data from L2Beat, the total value locked (TVL) of Base, a layer-2 scaling solution for Ethereum utilizing optimistic rollups, is up 53%. As of the latest figures, the TVL stands at $952,000 as various assets, mainly Ethereum (ETH), are tied up in the layer-2 protocol.
Base Rapidly Growing
The platform’s rising popularity among users can be attributed partly to the backing of Coinbase, one of the world’s largest cryptocurrency exchanges, which lends credibility. At its current pace of growth, Base has emerged as the fastest-expanding layer-2 protocol within the Ethereum ecosystem.
Only Zora Network, another layer-2 competitor backed by Coinbase, matches Base’s growth with a TVL of $1.8 million as of July 24. Additionally, Starknet, a layer-2 platform utilizing zk Rollups, has experienced rapid growth, recording a 28% surge in TVL, now at $128 million.
Base’s increasing TVL coincides with a sharp contraction in Arbitrum, the most popular layer-2 platform on Ethereum by assets under management. At the time of writing, Arbitrum’s TVL has fallen by 4% to $5.8 billion. At the same time, growth in Optimism, another optimistic rollup, and general-purpose layer-2 platform, has been slower.
Although Base’s growth has been impressive, looking at the TVL trends, the layer-2 platform remains under development. For instance, data shows that Base’s developers are still building a “state validation system.” However, while work continues, the platform’s sequencer is upgradable, a feature that provides flexibility and is advantageous for protocols launching on Base.
Optimism Releases Bedrock
The rapid growth in Base’s TVL occurred just a few weeks after the upgrade of Optimism via Bedrock. The Bedrock hard fork in early June tagged several improvements improving performance.
For instance, by introducing optimized batch compression, Bedrock reduces the already low layer-2 transaction fees. In all platforms reliant on rollups, all transactions are batched before being confirmed on the mainnet. Bedrock brought changes by optimizing how it compresses these batched transactions translating to lower fees.
At the same time, Optimism, whose tech is used by Base, now relies on Ethereum’s data availability layer. Considering the decentralized nature of Ethereum, the mainnet has higher uptime than Optimism, a layer-2 protocol that relies on a sequencer. Other improvements via Bedrock included reduced delays in including layer-1 transactions in rollups due to better re-organizations.
Ethereum developers are presently exploring more ways of scaling the platform on-chain with sharding on the table. Sharding, which will splinter Ethereum into small, interlinked segments called “shards,” would improve throughput, ultimately reducing gas fees and drawing more users and dapps to the pioneer smart contract platform.
Feature image from Canva, chart from TradingView