August 15, 2023 at 12:02 GMTModified date: August 15, 2023 at 12:02 GMT
August 15, 2023 at 12:02 GMT

Compound joins Base as L2 sees strong user traction

The decentralised finance (DeFi) lending platform Compound is now available on Base, Coinbase’s Ethereum layer-2 network.

Compound joins Base as L2 sees strong user traction

The decentralised finance (DeFi) lending platform Compound is now available on Base, Coinbase’s Ethereum layer-2 network. It is one of the latest to launch on the blockchain after Base’s mainnet went live on 9 August, joining the likes of SushiSwap. 

Compound integration with Base gives investors the opportunity to use Ethereum and Coinbase-wrapped staked ETH as collateral. In exchange, they can borrow the USDC stablecoin bridged onto Base, which goes by the ticker USDbC.

Base has joined numerous other blockchains that Compound is available on. Others include the Ethereum mainnet, Polygon, and Arbitrum.

Describing the platform, Compound says it is an “EVM compatible protocol that enables supplying of crypto assets as collateral in order to borrow the base asset.” The platform added: “Accounts can also earn interest by supplying the base asset to the protocol.”

According to Compound’s dashboard, there is $3.76million worth of collateral on the platform, at the time of writing. The total amount of USDbC borrowed has reached $2.25m. Lenders can earn an APR of 1.24%, while borrowers have an APR of 2.83%. 

There is now a vote among the platform’s governance participators to bridge Compound’s wrapped ETH to the Base network. All votes are for bridging cWETHv3 onto the newly launched Ethereum layer-2 solution.

What is Base?

Base is the Ethereum layer-2 network developed by the Coinbase cryptocurrency exchange. The blockchain boasts a “safe, low-cost, developer-friendly way to build on-chain”. Coinbase collaborated with Optimism to build Base on the OP Stack. 

Its site said: “We’re incubating Base inside of Coinbase, leveraging the last decade of our experience building crypto products, and plan to progressively decentralize the chain over time.”

Coinbase is not the first exchange to build its own network. Binance launched its BNB Chain and native products like Pancakeswap experienced significant success in the crypto industry. 

Base’s testnet went live in February 2023, but its mainnet has only recently launched to the public on 9 August. 

Coinbase is currently running a month-long launch event titled Onchain Summer. It is being met with eagerness from investors. More than $216m has been locked into the network, almost doubling from a week ago, according to Dune Analytics.

The number of daily active users on Base surpassed 100,000 soon after its mainnet launched. Daily transactions are around the 500,000 mark, coming close to large layer-2 networks like Optimism and Arbitrum. 

However, unlike these networks, there are no current plans to introduce a native token. This comes as Coinbase is currently facing a lawsuit from the SEC for operating an unregistered securities exchange. 

Other dApps that launched on the layer 2

Compound is among many other platforms joining the newly launched layer-2 network. SushiSwap was one of the first decentralised exchanges to go live on Base. It brought the exchange’s V3 product to the blockchain. 

Jared Grey, SushiSwap’s head chef, has also revealed that V2 will launch on Base due to demand.

Other products that have launched on the Base ecosystem include the popular DEX AAVE, yield farming app Beefy, and the oracle platform Chainlink. 

Coinbase’ website said: “We believe that the onchain platform is the most important builder platform since the internet.

“We believe that the onchain platform should be open source, free to use, and globally available. And we believe that in order to make it really work, we need all hands on deck, working together to scale in a secure, safe, easy-to-use way.”