Base Protocol Primer

What is Base?

Base is a Layer‑2 (L2) blockchain built on Ethereum, incubated by Coinbase and powered by Optimism’s OP Stack (an “optimistic rollup” framework). It batches (“rolls up”) user transactions off‑chain and periodically posts them to Ethereum for final settlement, inheriting Ethereum’s security while offering lower fees and higher throughput.

Base is positioned as the infrastructure and distribution layer for Coinbase’s onchain strategy (Base App, Base Pay, Base Build) and a core chain in the Optimism Superchain, a federation of OP Stack L2s.

Base Metrics DefiLlama Nov 2025

Problem It Solves

• Ethereum congestion & fees: Mainnet gas is too expensive and slow for mass‑market UX.

• On‑ramp gap: Regulated exchanges have users and assets; DeFi has products. There was no tightly integrated, low‑friction path from Coinbase’s KYC’d user base into permissionless onchain activity.

• Developer UX: Teams want Ethereum security and liquidity, but with simplified infra, grants, and co‑marketing instead of bootstrapping from scratch.

Base addresses this by:

• Offering sub‑cent to low‑cent transaction fees

• Plugging directly into Coinbase exchange, custody, and fiat ramps.

• Providing a “Superchain‑aligned” environment where upgrades, tooling, and governance patterns are shared across OP Stack chains.

Business Model

Users pay Base to use the network. Base pays Ethereum its share. Coinbase keeps most of the remainder, and a small guaranteed cut goes back to Optimism.

1. Sequencer Revenue

Think of Base as a toll road that Coinbase operates:

• Every time someone sends a transaction on Base, they pay a fee (“gas”).

• Part of that fee is used to pay Ethereum for storing the data.

• Whatever is left over is profit for running the road.

From that profit:

• Most of it goes to Coinbase (because Coinbase operates the sequencer).

• A small, contractually defined slice goes to the Optimism Collective:

  • Either 15% of the net profit, or

  • 2.5% of the total fees collected,

  • Whichever is larger.

2. MEV (maximal extractable value): Block ordering and MEV capture contribute materially; recent research shows “optimistic MEV” consumes >50% of gas on Base and Optimism, keeping blocks persistently full

3. Strategic value to Coinbase: Onchain trading, USDC float/yields, and Base as an engagement funnel into other Coinbase products (exchange, custody, card, commerce).

Base TVL as of 11/30/2025 $4.433B

Key Peer Set

Focus on general‑purpose Ethereum L2s:

• Base (OP Stack, Coinbase distribution)

• Arbitrum (Nitro rollup, strong DeFi/perps)

• OP Mainnet (Optimism’s own chain, governance center of Superchain)

• ZKsync Era, Linea, others (zk‑rollups and other EVM L2s).

Metric (approx)	Base	Arbitrum	OP Mainnet	ZKsync Era
DeFi TVL	~$4.4bn	~$2.8–3.0bn	~<$2bn	< $1bn
Stablecoins Mcap	~$4.9bn	~$4.2bn	~$0.6bn	~$0.06bn
DEX Volume (24h)	~$557m	~$286–395m	~$14m	~$0.5m
Perps Volume (24h)	~$299m	~$206m+	<$20m	~$117m
Transactions (24h)	~12.9m	~2.9m	much lower	n/a (low)
Daily Active Addresses	~680k	~400k	lower	lower

Base stands out for:

• High activity density (transactions and addresses per unit TVL).

• USDC‑heavy stablecoin mix (≈90% USDC dominance vs ~56% on Arbitrum).

• Coinbase funnel (regulated CEX as distribution channel).

Base has moved from “new Coinbase L2” to a core piece of Ethereum infrastructure in a short window. It combines Ethereum security, OP Stack scalability, and Coinbase distribution into a single venue that is now one of the busiest chains in the market by transactions, DeFi TVL, and stablecoin depth. Versus other major L2s like Arbitrum, OP Mainnet, and ZKsync, Base is differentiated less by technology and more by who sits behind it and who it can bring onchain.

Economically, Base is a toll road and liquidity hub. Users and bots pay gas to transact; Ethereum is paid for data; Coinbase retains most of the residual while sharing a defined slice with the Optimism Collective. MEV activity keeps blocks full and fee revenue meaningful, and the chain acts as a flywheel for Coinbase’s broader franchise: more onchain activity on Base tends to support USDC usage, onchain trading, and engagement with other Coinbase products.

For a senior stakeholder, the “so what” is straightforward:

• Scale & traction: Base already screens as a top-tier L2 on TVL, volumes, and active users.

• Strategic leverage: It deepens Coinbase’s role in the onchain stack and could, over time, become a key distribution and settlement layer for both retail and institutions.

• Risk focus: The upside sits alongside clear dependencies – a centralized sequencer and upgrade path today, heavy USDC reliance, and U.S. regulatory exposure around Coinbase itself.

Net-net, Base is now a systemically important L2 in the Ethereum ecosystem and an increasingly important economic asset for Coinbase. Any forward view on the L2 landscape – or on Coinbase’s onchain strategy – needs to treat Base as a central, not peripheral, component.

Sources:

1. https://help.coinbase.com/

2. Base - DefiLlama

3. https://www.base.org/