- Coinbase’s Layer 2 solution BASE and Optimism have joined hands in their new Optimism Collective initiative.
- This alliance consists of two major improvements – shared upgrades and fee contribution.
- This collaboration is bullish for both projects, especially Optimism’s OP token, which is set to benefit from the upcoming Ethereum upgrade.
- On-chain metrics reveal investors are already accumulating bags of OP on the recent dips.
Coinbase’s Layer 2 solution BASE has triggered an on-chain bull rally. Built on Optimism’s OP stack, BASE’s popularity has allowed many investors to turn a few hundred dollars into impressive returns. In a recent announcement, Layer 2 scaling solution Optimism said it is collaborating with BASE, an alliance that could benefit OP holders.
Let’s dive deep into the collaboration.
Optimism welcomes BASE
Optimism gained popularity after its launch in May 2022. The launch of Coinbase’s Layer 2 solution BASE using the OP stack propelled the token by nearly 20%. Optimism and BASE entered an alliance on August 24 that is set to be mutually beneficial for both parties. For Optimism, however, this move will help it for years to come.
Optimism welcomed BASE to the Optimism Collective with a few terms and conditions.
- Shared updates: According to Optimism, shared updates or shared standards is an incentive to coordinate and will drive disparate chains to cohere into a collective network. In this regard, there will be a shared committee that will oversee rules for updates.
- Fee split: The collaboration comes with a fee contribution understanding between the two projects. A fee of either greater than 2.5% of BASE’s total sequencer revenue or 15% of BASE’s net on-chain sequencer revenue will go towards the Optimism collective. On-chain sequencer revenue is the difference between the L2 transaction revenue and L1 data submission costs.
- Optimism will allow base an opportunity to earn nearly 118 million OP tokens over the next six years. Only 9% of this token treasury will be used to vote in OP governance.
Could BASE’s on-chain summer be taking cues from Compound’s DeFi summer of 2020?
Coinbase’s BASE opened an official bridge in the second week of August, which caused a flurry of inflows, causing a massive spike in activity and Total Value Locked (TVL). In just a few hours, it overtook many prominent Decentralized Finance (DeFi) platforms in terms of fees generated, surpassing prominent L2 platforms in terms of revenue and daily transactions. Given that the popularity generated was partly driven by friend.tech, it is still quite impressive.
The Compound platform kickstarted 2020’s DeFi summer by launching liquidity mining, attracting so much capital that DeFi’s TVL hit billions of dollars. Likewise, it looks like BASE has kickstarted a 2023 on-chain summer with the potential to attract even more capital in the near future. Considering the boring Bitcoin price action and that crypto markets have become dry, it is possible if developers flock to it.
If such a scenario does come into play, the existing collaboration between Optimism and BASE will ultimately reflect positively on the Optimism ecosystem and OP token holders. Such a scenario could kickstart a rally for OP.
Ethereum’s EIP-4844 could be fuel that propels OP’s rally
Lastly, we have the EIP-4844, which will implement the Protodank Sharding and vastly reduce fees for Layer 2 solutions. Such a development is likely to be bullish for Optimism’ OP token, which is already seeing massive developments from a fundamental perspective.
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