Ethereum L2 networks are thriving with Base in lead
In May, the Ethereum layer-2 scaling solution Base, inaugurated by the prominent U.S. cryptocurrency exchange Coinbase, amassed over $6 million in on-chain earnings, ascending to the pinnacle of profitability among layer-2 networks, surpassing competitors Blast and Optimism in the process.
The remarkable surge in Base's profitability is attributed to a swift upturn in its total value locked (TVL), as cataloged by L2BEAT. This is largely the result of Ethereum’s incorporation of EIP-4844 and proto-danksharding through the eagerly awaited Dencun upgrade in March.
Data from the blockchain analytics firm GrowThePie reveals that Base topped the charts for on-chain earnings among layer-2 solutions, securing $6.1 million in May alone, with Blast and Optimism trailing behind with earnings of $1.5 million and $1.4 million, respectively. Despite Base’s dominance in the profit stakes, it witnessed a significant decline in earnings following the March surge owed to the Dencun upgrade.
Conversely, the emerging layer-2 network Blast, created by the team behind the NFT marketplace Blur, has been acknowledged for its exclusive native yield opportunities for ETH and stablecoins, along with incentives offered by projects such as Pacmoon and Fantasy Top to engage users.
May saw Blast's portion of the total layer-2 profits jump to 15.2% from April’s 5.3%, still trailing behind Base, which captured 56.8% of the month's layer-2 profits.
According to a Dune analytics page managed by the alias on-chain analyst Kofi, Base was marginally below the $7 million profit mark in May. Discrepancies may arise from differing methodologies in calculating income and expenses between data sources. Notably, Dune’s analysis does not account for Blast, offering a restricted view on the competitive landscape among the top tier layer-2 networks.
As per GrowThePie, Base has consistently been the most lucrative layer-2 option every month since its launch in March 2024. Over the recent quarter, its TVL soared sixfold, from $1.3 billion to an all-time high of $7.6 billion. With Optimism’s TVL holding steady, Base is poised to eclipse the OP Mainnet in the near future.
Though both built on the OP Stack and members of the Optimism “superchain” ecosystem, Base and OP Mainnet operate as individual layer-2 solutions within this framework. Still, in the realm of TVL, Base considerably lags behind the sector’s leader, Arbitrum, which boasts a TVL of $19.1 billion.
The allure of Base within the crypto community has been bolstered by the implementation of the Dencun fork upgrades and the announcement of Coinbase's new Smart Wallet, intended to simplify on-chain transactions for novices.
Coinbase’s Smart Wallet aims to lower the barrier to on-chain transaction processes for those new to DeFi through account abstraction. The visibility and marketing clout of Coinbase, coupled with initiatives like the recent "On-Chain Summer" rewards promotion, further amplify Base's appeal.
