August 2, 2023
Web3
7
mins
Author:
0xScope

BASE Madness: Riding the MemeCoin Wave on Layer 2

In the ever-evolving world of cryptocurrencies and blockchain technology, new projects and innovations continuously emerge. One such recent addition to the crypto landscape is BASEchain, a Layer2 protocol backed by Coinbase, one of the world’s leading cryptocurrency exchanges. Launched on top of Optimism’s layer 2 development stack, BASEchain has attracted massive attention, especially from venture capitalists, traders, and enthusiasts within the crypto community.

Background

The users of BASEchain discovered last week that the a Coinbase-backed Ethereum layer 2 was already supporting user deposits through direct transfers despite no announcement by the BASEchain team. Leveraging the efficiency and scalability benefits of layer 2 solutions, BASE aims to provide an improved and enhanced user experience compared to traditional blockchain networks. Supported by Coinbase’s reputation and the growing popularity of layer 2 solutions, BASEchain has quickly become a trending topic among crypto traders and “degens”.

The MemeCoin Mania

One of the key factors driving the massive influx of capital into BASEchain is the meteoric rise of MemeCoins. The token named $BALD, in particular, experienced a staggering surge of 1,000,000% within a single day, propelling its market capitalization to an astonishing $60 million. This unprecedented growth attracted early adopters and speculative investors looking to capitalize on the meme coin mania.

We reported on Twitter how $67 million worth of ETH were deposited into BASEchain within 24 hours, sign of the overwhelming interest generated by the MemeCoin trend. Notable deposits from prominent figures in the crypto space, such as the creator of $BALD and other significant holders, demonstrated the immense allure of BASEchain for the crypto community.

While the MemeCoin frenzy has attracted considerable attention and investment, it has also exposed the presence of scammers attempting to exploit the hype and make a quick profit. Vigilance within the community is crucial to ensure that investors stay safe from potential scams and rug pulls. We advise to use a combinations of tools such as Scopescan’s Money Flow and Entity Anlysis before exposing yourself to such risks.

Aftermath and Lessons Learned

As the MemeCoin wave reached its peak, it was not without consequences. Reports surfaced of the largest token being rugged, resulting in a loss of over $10M for investors.

Some questions if the people behind the rug-pull is SBF (Sam Bankman-Fried, former FTX CEO and founder) or someone related to him. On-chain data shows an address highly related to the token deployer has direct tide with Alameda and has on-chain activity similar to SBF’s one.

Additionally, the biggest decentralized exchange (DEX) on base — leetswap that facilitated these trades was exploited, leading to a halt in trading activities. These events serve as a stark reminder of the risks and volatility associated with meme-based tokens and highlight the need for responsible investing practices.

Innovation in Layer 2 Launch Strategies

BASEchain’s launch strategy, leveraging MemeCoins and their “wealth effect” to attract users and capital, set a precedent for future Layer2 or public chain projects. Traditionally, airdrops were used to incentivize users to join a new chain, but BASEchain’s approach took a different route. However, as witnessed by the MemeCoin mania, relying solely on memes and easy tactics to attract users may lead to unforeseen consequences.

The confusing part throughout this incident is that Coinbase, as the entity behind the Base Chain, has not commented on the related events at any point. Some people suspect that the Bald Deployer may have been promoted by the official Base Chain, but these speculations have no evidence. The author speculates that Coinbase’s approach, as a decentralized (or aiming to be decentralized) public chain, may be to allow developers and users to grow wild on the Base Chain.

Conclusion

BASEchain’s rapid ascent in popularity due to the MemeCoin trend and its association with Coinbase has drawn significant attention from venture capitalists, traders, and other players within the crypto space. However, it also serves as a cautionary tale, reminding us of the importance of responsible investing and diligent research before putting capital into any project. As the crypto landscape continues to evolve, innovations like BASEchain provide valuable insights into what works and what should be approached with caution.

While the MemeCoin mania has brought excitement and capital into BASEchain, it is essential to remember that sound fundamentals, innovation, and sustainable strategies are the pillars on which successful projects are built. Right now, It is to early to say whether the Base ecosystem will grow and prosper, or it whether it will become the next target of short-lived hype. We will be watching closely.

Visit 0xScope

0xScope | Scopescan | Link3 | X | Telegram | Youtube | Discord