- Coinbase’s Base TVL has tanked in the past week despite Friend.tech’s positive run.
- The primary catalyst for the TVL slump has been traced to a single address.
- The decline has reignited criticism of the network and the frequency of rugpulls.
Coinbase incubated Ethereum Layer 2 protocol Base burst into the scene in August 2023 and has enjoyed a meteoric rise since. However, this parabolic run appears to be slowing down despite the continued strides of Friend.tech, a social protocol built on Base that has often been linked to the Layer 2 chain’s success, at one point, contributing 49% of the gas fees spent on Base.
While Friend.tech’s TVL and revenue rise, Base’s TVL has witnessed a sharp decline over the past week. The decoupling highlights that Friend.tech’s notoriety alone will not be enough to sustain the Layer 2 chain’s rise. Is Base’s “Onchain Summer” turning to Winter?
Base’s TVL Tanks Over 17%
L2Beat data places Base’s TVL at $446 million at the time of writing, representing a 17.17% decrease in the past seven days.
Highlighting the recent decline in Base’s TVL, Wu Blockchain suggested that the slump resulted from an 81% drop in the USDC supply on the Ethereum Layer 2 chain from 160 million to 29.84 million on Friday, September 29. Dune Analytics data shows that the outflows came from a single wallet address.
Amid the recent TVL slump, crypto community members have thrown shade at the Coinbase-incubated Layer 2 for its supposed lack of a unique use case and frequency of rugpulls.
An Explosive Start Marred By Rugpulls
Aside from the fact that Coinbase builds it, there is little differentiating Base from other Layer 2 protocols built on Optimism‘s OP stack. But Coinbase’s backing has been enough to see the chain become the fourth-largest Ethereum Layer 2 protocol by TVL in less than two months ahead of dYdX and Starknet.
However, the excitement surrounding the protocol’s launch has been marred by scammers who have taken advantage of the hype to conduct multiple rugpulls on the protocol. Magnate Finance, the most recent project confirmed to have rugged on Base, led to an estimated $6.5 million loss to investors.
On the Flipside
- Despite the recent TVL slump, Base’s rapid growth remains impressive.
- The third largest Ethereum Layer 2 chain by TVL, zkSync Era, saw its TVL rise 12.34% in the last seven days, according to L2Beat data.
Why This Matters
Base’s growth trajectory decoupling from Friend.tech highlights that the chain will need more than decentralized social media sensation to sustain its rise.
Read this to learn more about Friend.tech’s recent revenue surge:
Friend.tech’s Revenue Skyrockets Against Rising Criticism
Learn more about last week’s crypto fund flows:
Crypto Breaks Outflows Streak on U.S. Government Shutdown Fears