Base Chain Bleeds Capital as Ethereum Attracts Billions

The narrative around Coinbase's Base chain seems to be shifting. After a strong start to 2024, the layer-2 scaling solution is now experiencing significant outflows, while Ethereum is seeing a resurgence of capital inflows.

From Leader to Loser: Base's Reversal

According to data from Artemis Terminal, Base has witnessed a net outflow of approximately $4.3 billion this year. This is a stark contrast to the $3.8 billion net inflow the chain enjoyed in 2024, which at the time made it the top blockchain in terms of capital attracted via cross-chain bridges.

Ethereum Reclaims Top Spot

Meanwhile, Ethereum has rebounded strongly, registering a net inflow of around $8.5 billion this year, a significant turnaround from the $7.4 billion net outflow it experienced in the previous year. This data suggests that Ethereum is regaining its dominance in the decentralized finance (DeFi) landscape.

What's Behind the Shift?

• Reduced Stablecoin Supply: The cumulative supply of stablecoins on Base has plateaued around $4 billion since mid-May, coinciding with a slowdown in trading volumes.
• ETH Exodus: Data from L2BEAT indicates a sharp decline in the amount of Ether (ETH) deposited on Base, plummeting from 1.82 million ETH to just over 835,000 ETH in a mere four weeks.
• Binance Withdrawals: Coinbase's Protocol Specialist, Viktor Bunin, suggests that substantial withdrawals by Binance to Layer 1 (presumably Ethereum) are a major contributing factor. Bunin noted that Binance had kept a large amount of capital on L2s, and its movement could be influencing these numbers.

Key Takeaways

• Base's initial momentum has stalled, with significant capital outflows. A possible reason is that Binance is simply moving their capital back to Layer 1.
• Ethereum is experiencing a resurgence, attracting substantial inflows and solidifying its position as a leading blockchain.
• Cross-chain bridges play a crucial role in capital flow between blockchains, highlighting the importance of interoperability in the crypto ecosystem.