- Coinbase launched its layer-2 solution BASE amid large fanfare and earned up to $1 million in revenue in a week at its peak.
- Seven weeks since the peak, the revenue has declined by 84%, raking in $183,000 in the past week.
- BASE is also facing criticism for taking seven days to withdraw money to the Ethereum mainnet.
Coinbase has suffered an 84% decline in revenue for its BASE layer-2 solution seven weeks after earnings peaked. Soon after its launch on August 9, 2023, BASE – which was seen as a competitor of the likes of Optimism and Arbitrum – raked in over a million US Dollars in revenue, but since then, earnings have slumped more than fivefold. Now, the chain is facing more backlash than praise.
Users pull out of using BASE
Coinbase witnessed a surge in users on BASE in the first month of its launch, which translated into a large number of transactions. This, in turn, meant high revenue for the chain, and BASE managed to make history on that front. During its first week, BASE managed to rake in over $1.19 million.
In the third week of August, the L2’s success continued as revenue touched $1.15 million. However, since then, the figure has been in a downtrend, and as of the last seven days, BASE has only generated $183,000 in revenue. This is an 84% decline from August 21, which suggests that the assets moving through the chain have reduced drastically.
BASE weekly revenue
Meanwhile, user data paints a markedly different picture, with the number of new users in the last week reaching 242,650, which is nearly double the amount of new users observed in the week before. Taken together with the fall in revenue it indicates that although a higher number of users are on BASE, they are shifting less tokens.
While the reason for the surge in users during the past week is uncertain, one probable explanation is that the fake report of a spot Bitcoin ETF approval on Monday led to a temporary influx of new users.
BASE weekly new users
Regardless, high users and low revenue suggest that BASE is not alluring large wallet holders, which is impacting the flow of funds, consequently resulting in low revenue. If the trend continues over time, the chain will lose relevance, and these new users joining the chain will also pull out.
BASE is its own enemy
One of the biggest reasons why BASE might fail to keep users is the fundamentals of the layer-2 solution not meeting the standards set by its competitors. According to Adam Hollander, the founder of Hungry Wolves NFT collection, it is taking him about seven days to withdraw money from the L2 chain to the Ethereum mainnet.
— Adam Hollander (@HollanderAdam) October 17, 2023
It takes SEVEN DAYS to withdraw money from BASE to ETH Mainnet?
This is the opposite of what layer-2 solutions are built for, as transactions, including the movement of assets, are supposed to be faster than the mainnet. Due to the slowness of transfers, the chain has faced heavy criticism from users, who state L2 is comparable to a ‘bank’.
that remittance time is slower than legacy banking— rcubed.eth (@rcubed2003) October 17, 2023
This could further impact the revenue of the chain as such slow movement of assets would result in users jumping ship in favor of alternative, faster options.
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