Base Onchain Summer boosted users for the chain, will ending rewards program affect transaction activity?

• Base chain has recorded almost $400 million worth of crypto assets, catapulting its DeFi ecosystem to eighth place on TVL metrics.
• The reward program, Onchain Summer, played a crucial role in boosting its user base but ended recently after running for 23 days.
• Historically, the end of a rewards program, like for Arbitrum and Optimism, marked the beginning of reduced transaction activity.
• Lead developer Jesse Pollak thinks otherwise, saying Base’s rewards program could succeed where others have failed.

Base recently closed its Onchain Summer, a rewards program that played a huge role in influencing user boost. The success score of this program was among the driving factors that earned Base a place among the top eight DeFi ecosystems on Total Value Locked (TVL) metrics. The chain has recorded almost $400 million worth of crypto assets moved by users or depositors, according to data by analytics and research website detailing Ethereum layer 2 scaling data, L2Beat.

Crypto deposits on Ethereum L2

After its debut on August 9, Base employed a rewards program, a 23-day Onchain Summer campaign that drove users to move their crypto to Base, while minting commemorative non-fungible tokens (NFTs) or using specific applications. Data from Coinbase shows that over 268,000 addresses minted about 700,000 NFTs.

However, if history is enough to go by, the end of a rewards program marks the beginning of reduced network activity. Base peers in the Layer-2 sector, Arbitrum (ARB) and Optimism (OP), suffered the same fate. After launching, they kickstarted a rewards program that ended in June 2022 and January 2023, respectively. Both programs allowed users to mint NFTs after moving crypto and completing specific tasks. When the programs ended, both transactions and revenue recorded cavities or craters, dipping before rising again. 

Arbitrum, Optimism transactions after reward programs ended

Lead developer Jesse Pollak thinks otherwise, saying Base’s rewards program could succeed where others have failed. In his words:

Anytime you do a big push on marketing and distribution, you’re always going to have a tail-off at the end. I think one of the things that’s really different about Onchain Summer was this wasn’t manufactured quests that people were doing. This was, like, real utility that people were experiencing on chain, whether they were buying a restaurant pass for Blackbird or a pack of cards for Parallel.

Drawing a difference between what ARB and OP ecosystems did to what Base has done, Pollak says, "The activity [for Base] hasn’t been as tied to the NFT program as it was on Arbitrum and Optimism."

In his opinion, such programs draw in many people looking to acquire NFTs, but then this is "kind of a cheap way to bring some attention to their ecosystem and to onboard people who are already using crypto on-chain.” His stance, therefore, is that the distinguishing factor for Base is that the chain also offers DeFi ecosystem, which has attracted a lot of liquidity. Nevertheless, Pollak attributes the actual user activity on Base to the Friend.tech social platform. 

Also Read: Base transactions peak to a new all-time high, beats Arbitrum and Optimism Mainnet combined

Base transactions outperform Arbitrum and Optimism combined

Base transactions recorded a new all-time high on Thursday, reaching 1.88 million. This was more than the sum of what Arbitrum and Optimism achieved, data from Dune Analytics shows.

Transactions per day” Base, Arbitrum, Optimism Mainnet

On-chain analytics and market intelligence tool, IntoTheBlock, corroborates this with a distinct chart for the Base chain. Arbitrum and Optimism recorded 780,000 and 370,000 transactions respectively. The sum of transactions for ARB and OP is by far less than what Base achieved.

Base premiered barely two months ago as an L2 on the Coinbase network and has since gained remarkable usage. However, things became even more interesting when Friend.tech debuted, a decentralized social network platform built atop the Base chain. 

IntoTheBlock’s head of research, Lucas Outumuro believes Friend.tech is the driving force behind the sky-high transaction volume on the Base chain. Citing IntoTheBlock in a medium post:

Interestingly, it is not decentralized finance (DeFi) applications nor non-fungible token (NFT) marketplaces driving the surge in Base's activity. Instead, a significant portion of usage can be attributed to a new social application, Friend.tech.

Friend.tech has indicated a steadily increasing number of transactions since late August, reaching 529,280 as of September 14.

Friend.tech transactions

As indicated in the chart above, the number of transactions has been increasing, particularly over the last week. Considering the social network platform has an airdrop coming soon, the increased activity could be attributed to users looking to get as many points as possible to be used for the community-focused airdrop.

Data from DeFiLlama supports this, showing increasing capital inflow into the platform to record a total value locked of $32.99 million at press time. This represents a 514% rise since the month began when the TVL was $5.37 million.

Friend.tech TVL

Evolution of Ethereum L2 ecosystems

Amid intensifying L2 wars for the best Ethereum Layer-2, ecosystems in that space are recording commendable transformations. At first, competition was between Optimism and Arbitrum, before ZkSync Era jumped in, and now Base is putting up a strong fight, ascending to the top three on metrics of total value bridged, despite being only two months old.

Ethereum Layer 2 wars

IntoTheBlock acknowledges this evolution, with the L2 ecosystems each becoming “more specialized in its own niche.” 

In terms of unique addresses and transactions, Base L2 is at the helm, a privilege inspired by the extensive reach of Coinbase. Notably, Base debuted under the incubator program of Coinbase. This head start positioned Base in a favorable position for the likes of Friend.tech to build.