Now, picture this: a fresh layer 2 solution steps onto the scene, poised to welcome the next 100 million users – potentially a staggering $166 million in revenue.

The problem is Wall Street technically owns it.  

So, unsurprisingly, it doesn’t have a token, and there’s no way for the public to profit from it. 

But what if we told you we had found a way to get exposure to it? 

Let’s dive in.

TLDR 📃

• Base, Coinbase's layer 2 solution, competes with other solutions like Arbitrum and zkSync Er.
• Since its launch, Base has amassed $230M Total Value Locked (TVL), outperforming other layer 2s
• Base earns Coinbase $3M in fees and $2M in revenue.
• Buying Optimism's token (OP) may offer exposure to Base's success.

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Disclaimer: Not financial or investment advice. Any capital-related decisions you make are your full responsibility.

The unusual pathway for onboarding normies to DeFi 📈

Coinbase is many people's go-to platform for their foray into cryptocurrencies. The company's growth has been remarkable; an impressive 108 million users have a Coinbase account.

Though a major player in the centralised exchange arena, Coinbase is fully aware of the evolving landscape. Coinbase is responding by introducing its own on-chain layer 2 solution called Base. This solution challenges platforms like Arbitrum and zkSync Era, luring users interested in DeFi and NFT activities. 

Base, however, has an unfair advantage. With Coinbase’s expansive user base and iconic brand, Base can seamlessly onboard crypto normies into DeFi. 

Coinbase’s well-established connections have also conjured an impressive lineup of projects ready to launch in Base. These projects include renowned NFT markets like Magic Eden, influential lending protocols like Aave and Euler, and decentralised exchanges like Uniswap and Sushiswap.

These developments sound great on paper, but how are things playing out in practice since the launch of Base? 

Well, let's examine its current status👇  

How the Base ecosystem is shaping up 🌱

Barely two weeks since its debut, Base is already making waves with a stunning $230M Total Value Locked (TVL). 

This feat becomes even more remarkable, considering many other new layer 2 solutions struggled to match such figures. Mantle, for instance, reached a TVL of only $90M post-launch, while Linea remained stuck at $30M. 

Base? It's confidently claiming its spot among the top 5 contenders!

Of course, it’s not all been a walk in the part for Base. Base's initial launch and momentum were fueled by speculation surrounding memecoins. Tokens like BALD received substantial attention and usage only to turn out as rug pulls, resulting in financial losses for many investors.

However, after the frenzy of speculation, the spotlight has shifted to reveal Base's true potential— the launch of friend.tech,  a decentralised social media that converts crypto personalities into tradable tokens.

The project attracted significant attention, culminating in a trading volume of 7,336.2 ETH ($13,382,916.13) through 320,344 transactions. As you can imagine, all this activity occurring on Base is highly beneficial for Coinbase.  Base has generated nearly $3 million in fees since its launch, resulting in a substantial $2 million in revenue for Coinbase. 

So, how can you grab a slice of this revenue pie? While $COIN is an option, we're not big fans of the legacy system. 

Here's an alternative way to claim your share and profit from Base's growth – through a token.

The shortcut to getting exposure to Base 🗺

Coinbase didn't build Base from scratch; it leveraged Optimism’s ‘OP Stack’ infrastructure.

This integration makes Base a part of the Optimism ecosystem, thanks to Optimism’s 'SuperChain,' network. For Base to be part of this ecosystem, it must adhere to specific 'laws' that make it part of a coherent and interconnected system.

This integration is beneficial as it allows millions of users who join Base from Coinbase to easily transition to Optimism because, as you can see in the image, these 'OP Chains' are all connected.

Also, Base will provide a percentage of the fees earned through transactions to the Optimism Collective. This means that as Base grows, Optimism benefits monetarily from it.

Because of this, since Base doesn't have a token yet and its ecosystem is still such a wild west, the real play to get exposure is buying OP, Optimism's token, as it benefits the most from Base.

OP price analysis 📊

OP's performance didn't meet our initial expectations, but no need to fret. The trajectory remains intact; only the timing shifted.

Last week, OP closed below $1.557, a strong indicator of potential downside. Despite that, we anticipated a rebound from that point. 

With this thesis invalidated, two fresh scenarios emerge:

1. OP holds $1.40, then bounces toward $1.557 and above. This is the ideal case, one which we'll be monitoring ourselves.
2. OP fails to hold $1.40 and drops to the grey support region between $1.25 - $1.15, where its price will meet some buying pressure. From there, we expect OP's price to bounce toward $1.40, $1.557 and above.

Probabilities demand confirmation. Let's focus on the initial outcome and whether OP can rebound at $1.40. That alone will reveal the next steps.

Cryptonary’s take 🧠

Base will be crucial in onboarding normies into DeFi in 2024, especially in the bull market. Coinbase will put a lot of capital and resources into marketing the chain, and a large part of Coinbase’s existing 100 million users will try Base.

However, the primary challenges for Coinbase will be harmonising its legacy brand with the wild west of DeFi and ensuring a continuous influx of innovation to Base. While friend.tech currently steals the spotlight, expanding the ecosystem is essential for propelling it to the next level.

If everything proceeds according to the plan, Base is poised to become one of the preferred layer two solutions in the upcoming bull market.

If you're looking for exposure, know that we are closely observing whether OP maintains its position at $1.40 and then rebounds towards $1.557 and beyond.

On Friday, we bring you another edition of Cryptonary’s smart money. Is the smart money taking up a position in Optimism? Are there better plays out there? Don’t miss the opportunity to know what is happening in the portfolios of the biggest winners in crypto. 

As always, thanks for reading! 🙏

Cryptonary, out!