Original Author: @lazyvillager1, Crypto Kol
Original Translation: zhouzhou, BlockBeats

Editor's Note: Since Trump's election victory, COIN and BTC have seen significant gains, but the author leans more towards ETH and is optimistic about the development of the Base Layer 2 ecosystem. Base is poised to stand out in the competition, attracting MEME, consumer dApps, and more on-chain activities. ETH remains central to the digital asset space, and Base, as Coinbase's on-chain lever, benefits from Coinbase's resources and support, possesses scarcity and innovativeness, can attract users in the long term without relying on traditional token incentives. The vibrancy of the Base ecosystem and the continuous growth of TVL demonstrate its significant potential in the ETH-L2 space.

The following is the original content (reorganized for better readability):

Key Insights for Future Development

Since Trump's victory on November 5th, COIN and BTC have been leading the way, each rising by 70% and 16%, respectively. Personally, I still lean towards ETH, and based on my previous discussion about MEME coins in October, I believe multiple favorable factors are coming together for the Base Layer 2 ecosystem:

1. "Winning" the competition with other L2 solutions, and even the ETH mainnet, to become the preferred ecosystem to accommodate MEME, consumer dApps, and attract attention

2. Competing as a top EVM-compatible ecosystem with SOL's "full-feature" casino model

My core view is quite simple: ETH remains the key center of the digital asset ecosystem, and to date, all derivative projects rely on two key principles to drive network effects:

a. The underlying coin must outperform its competitors;

b. The underlying coin must be "scarce"

Therefore, in this attention-grabbing competition, most of the time, you are effectively choosing a particular coin (even if this is just a simplified way) to embody its strengths. In the coming weeks (this trend has already begun), the CT community will discuss why a particular coin may emerge victorious (e.g., SOL's adversary or a MEME coin) or why an application supporting a coin may succeed (such as utility tokens, DeFi governance, etc.).

What I would like to propose is that starting today, a more risk-adjusted advantageous option is to bet on an ecosystem with no native currency. In my view, Base's organizational structure has created the strongest potential for continued adoption, and the double-edged sword is that it may rely on ETH's resurgence.

However, considering that I believe ETH's current potential is underestimated—if/when there is a relative value shift between BTC, ETH, and SOL in the coming weeks, there will inevitably need to be a "reservoir" to absorb this newly generated and circulating wealth.

I believe Base is poised to capture this position

1. The "faucet" interconnectivity on Base has seen a significant boost this year, yet it has not received enough attention.

2. Base's strategic value for COIN is crucial, and it has an actual balance sheet to provide support.

3. Base has been stress-tested multiple times this year and has performed remarkably well.

I have accordingly adjusted my positioning and will discuss my logic in detail in upcoming tweets, addressing the risks and mitigations involved in redirecting on-chain traffic to Base, which I consider the most dynamic "playground."

Memecoin and Its Typical Success Environment

The key is that low-market-cap memecoins usually offer unrelated returns, and on-chain activity tends to heat up around significant uncertainties.

"The Power of Resilience: MEME Coins and Their Role in Portfolio Construction"

Reflection on the Strength of Major Assets and Their Role in Driving On-Chain Activity

Based on the above points, I believe that in the next few weeks, on-chain activity will show very strong performance.

The performance of major assets supports this trend—buy-side activity is mainly being driven by spot, ETH and BTC's open interest (OI) has mostly reset to pre-election levels, the rise in funding rates is primarily due to a lack of new short positions (and the recent breakout levels—the amount of short liquidations has reached $1 billion, the highest this year), rather than excessive leverage.

Therefore, based on the viewpoint that there is support within the current price range, I believe on-chain activity will become a convergence point for off-exchange funds, new funds, and recirculating funds. The funds created in the past week contrast with the funds from the 3-4 weeks before the election. The latter witnessed a significant increase in funding and open interest, but other than BTC, other assets struggled to truly attract what I call "mercenary funds."

The flow of funds in the past week not only appeared widely across assets other than BTC (all selected assets globally saw general increases), but even included DOGE—a very important indicator, reflecting the characteristics of these "buyers": willing to use leverage, willing to speculate, and engage in 24-hour trading. These buyers are not limited to U.S. trading hours, similar to BTC's rise in October.

In this price environment, we are just under a week—the market's dislocation is significant: capital needs time to assess whether these funds are irrational or substantive. During this period, projects that can fluctuate significantly on the margin are expected to have the most significant re-rating effect.

Base Has Already "Won" — Even Though It Has Not Issued Tokens

Base may be one of the most misunderstood ecosystems at present, as due to its unique build, Base lacks the typical crypto-native investors/KOLs to manage and disseminate information. However, looking at various indicators, Base is already "winning." The attention Base attracts compared to the growth of its users/wallets/TVL is likely the most disproportionate among all current projects.

Take a look at the chart below, which shows elfa ai's coverage of Base. In terms of collective mentions, there have been approximately 18 mentions in CT in the past 7 days, 10 times less than ARB and roughly equivalent to STARKNET, BLAST, and OP mentions.

It is the only ETH-L2 with TVL consistently growing throughout the year, even though it has not set up user incentives like other L2s (such as BLAST GOLD). With a TVL of $3 billion, its TVL even exceeds ARB (ARB custody of the very popular HyperliquidX, which has around $1 billion TVL).

In October, Base also saw its highest revenue within the developing ecosystem (this was a month of TRON decline while Base and ETH grew). Currently, Base also has the most independent active wallets and transaction count (actual data may need to be treated with caution, but this is the only picture we can draw).

Base evokes memories of SOL in the fourth quarter of last year—an environment that attracted builders when attention was low.

Base Has Disrupted and Broken the Traditional L1/L2 Operating Mode

The traditional operating mode is usually as follows:

1. There is a conceptualization of an ecosystem, ideally with a unique variant (faster, more reliable, more decentralized, easier to build, more trustless, etc.)

2. Funding is raised by almost zero valuation of the token through grants (usually to companies with the best relationships and resources)

3. While building, connections are made with dApp developers—each blockchain typically looks for a local "bank," so there may be some type of lending protocol as well as a transaction protocol. Developers are rewarded with tokens to incentivize on-chain development.

4. Users are attracted through a point/token incentive program, where users deposit/stake stable capital to earn rewards.

5. User/new TVL provides a foundation for the founding team to raise funds from a new round of investors, at a higher valuation for the second round of financing—and notes the inflow of users/funds.

6. Post blockchain launch, users are initially rewarded with unlocked tokens; whereas investors and team members must wait through locked tokens (but at a much larger proportion).

7. Lending protocols typically establish partnerships with liquidity providers and investors to hold and maintain on-chain capital through promised returns.

8. Gradually, the hope is to attract organic capital inflow and retention through certain metrics (such as interoperability, usability, ecosystem richness, etc.)—thereby reducing or eliminating the need for diluted capital.

9. The founding team paid early supporters and employees with tokens—turning the token into essentially free expenses (used to pay vendors). Ideally, the ecosystem supports the chain's sustainable development through serialized revenue.

This model has matured and is being disrupted, with HyperliquidX being the most typical example that does not rely on traditional ways of launching and overlooks most of the above measures.

This year, this fundraising method has apparently failed at multiple levels, with pain points concentrated in:

· Mining incentive mechanisms are usually very unclear, and once capital is locked, it becomes a "hostage," allowing the team to disregard consequences and retroactively change terms.

· Investors/team members can stake locked tokens—this means that even if the original locked tokens lack liquidity, staked rewards can still be sold at TGE (Token Generation Event), severely diluting retail investors.

· New capital is very expensive (the opportunity cost in the crypto field is extremely high), so if there is no significant dilution or manipulation of the supply, users are very utilitarian. Once the reward distribution is complete, they usually choose to leave.

Why is Base more likely to achieve greater success?

Base is not just an L2; it is Coinbase's on-chain leverage—Coinbase seized this opportunity due to the regulatory scrutiny relief brought by Trump's victory (i.e., policy environment improvement).

In other words, Base does not intend to win through the traditional "long tail" method I mentioned above. What does that mean? Here is an excerpt from the Coinbase Q3 earnings call, showing how the team views Base:

Base is (partial content only):

1. A collaborative testing platform with CIRCLE and the development of a smart wallet. Coinbase can collect real-time data to create a truly independent "Eden" ecosystem comprehensively (i.e., i. attract users, ii. seamless onboarding, iii. set up smart wallets through the use of passphrases instead of traditional mnemonic phrases, iv. provide a "playground" for speculation).

2. As Coinbase transitions to a subscription-based service business (e.g., through Coinbase One subscriptions) instead of relying on volatile trading fees, the team's vision is to attract the most retail users in the long term rather than charging fees as much as possible in the short term.

The latter is a succinct representation of the extractive value capture model that every blockchain follows—due to the creation of a token and its inherent nature. By separating the ecosystem from the token, Base is able to take a more long-term view to "winning." In other words, the only way Base will make money in the future (since COIN already exists as equity) is by having applications and users pay "rent."

The most important point is:

The biggest difference between Base and other blockchain projects is that it has the backing of an enterprise with a real balance sheet. Any other ecosystem, at least at some point, is supported by financially incentivized adversaries seeking a return. These adversaries themselves do not have unlimited capital.

Once they receive their return, this support (whether financial or community-driven) will exit. Therefore, other ecosystems have a lifecycle, or a time limit, where new support funding will eventually cease, and the product will have to stand on its own. You will see some ecosystems starting to struggle in the next 12 to 16 months (e.g., platform shutdowns).

However, the situation with Base <> Coinbase may not be the same. If Base stops receiving support, this means a significant part of Coinbase has failed (thus implying the failure of the overall strategic vision). As Coinbase itself creates traffic and revenue through "where the price is," we can speculate that Base may receive a form of "evergreen" funding support.

Base Has Proven Its Resilience

Base initially appeared as the foundational platform for Friend Tech (at the time, basically an empty shell with limited functionality). Since then, it has gone through several key stages:

1. Application migrations, such as timedotfun. Please refer to jessepollak's response: link. This demonstrates a very positive attitude and support for understanding that each chain has its unique value.

2. The only project to successfully hatch another L2 project—degentokenBase. DEGEN garnered attention earlier this year over a weekend, rapidly driving its valuation to $6 billion, comparable to apecoin's self-built and rise this month.

3. The only chain capable of accommodating AI-related applications like SOLANA—VIRTUAL, surged from 0 to $5 billion during the AI and memecoin craze in October this year.

In my view, no other ecosystem has been able to withstand such attention and drive such a scale of capital influx. Therefore, the question is: If other ecosystems could do this, why didn't they? Thus, Base clearly demonstrates the ability to support novel and interesting projects/applications, far beyond simple yield farming or lending applications.

Here are some other examples:

warpcast

BlueSocialApp

OnchainKit

liberoverse

Sofamon xyz

BetBase xyz

dreamcoinswow

ethxy

This is not an exhaustive list, nor is it an endorsement of any of the names mentioned here, but merely a snapshot of the highly diverse creative projects built on Base since the last iteration, especially in the Friend Tech era (when most of these applications were not yet formally launched).

Buying at a moment considered the value bottom

Profiting on Base essentially means betting on the success of the entire ecosystem, even as an agent for Coinbase. No single token can concentrate demand, thus true network effects can be realized at a holistic level.

Currently, most tokens on Base are at cyclical lows— and I won't provide any token names or recommendations, but you can see some chart examples, which are randomly selected by me.

Therefore, I believe Base is the most attractive capital allocation position because you are effectively betting on two aspects— and this has nothing to do with leverage or savvy token selection:

1. ETH stabilizes and finds a bottom that can support on-chain demand (as I've discussed before),

2. ETH winners are looking to capture profits somewhere.

Considering the lack of organic options on the mainnet (which have shifted to L2) and the underwhelming NFT market demand this year, I'm betting that this attention and capital will concentrate on Base.

In summary— as long as ETH stays hot, Base should stay hot too.

「Original Source」

欢迎加入律动 BlockBeats 官方社群：

Telegram 订阅群：https://t.me/theblockbeats

Telegram 交流群：https://t.me/BlockBeats_App

Twitter 官方账号：https://twitter.com/BlockBeatsAsia