The growth dilemma of Base: everything was done right, yet users still leave

Original author: Thejaswini M A

Original translation: Chopper, Foresight News

A few days ago, I read about a concept in Japanese philosophy: basho. A rough translation is "place," but the philosopher Nishida Kitarō imbued it with a meaning that goes far beyond a geographical location; it resembles a situation: a field where all things can become themselves. In other words, people do not appear in a place by chance but are shaped by the place they are in. Today, I will use this theory to interpret Base.

Last month, its number of active addresses fell to an 18-month low. Reflecting on this phenomenon, I realized that Base has only built a location but has never created the conditions for things to grow and take shape.

When Coinbase launched Base in 2023, the crypto-native community rarely generated a kind of faith. Everyone believed it could finally solve Ethereum's oldest problem: infrastructure everywhere but no real users. And with Coinbase holding 100 million users and unparalleled distribution capabilities, this was a unique advantage. Once the door opened, users were already waiting outside.

For a time, this confidence seemed validated. Base's growth rate surpassed all previous Layer 2s. By October 2025, its tvl-7532">total value locked (TVL) reached $5.6 billion, and its fee revenue was unmatched across the entire L2 space. Thus, in September 2025, Base confirmed the issuance of tokens, seemingly heralding an inevitably successful experiment. Yes, a place was transforming into a basho.

Then, users left.

Looking at the data is more intuitive: Base's active addresses returned to the level of July 2024. The expectation of token issuance perfectly met the needs of the airdrop crowd: collect the last reward and then leave.

Base's bet on the creator economy in 2025 also did not succeed. Its core is the Zora protocol, which defaults to tokenizing content. By the end of the year, Base had issued 6.52 million creator and content tokens through Zora, of which only 17,800 remained continuously active throughout the year, accounting for 0.3%. The remaining 99.7% went unnoticed.

Base's daily active addresses peaked at 1.72 million in June 2025. By March 2026, only 458,000 remained, a staggering 73% drop from the peak. After Armstrong announced in September 2025 that Base was considering issuing tokens, active addresses decreased by 54% in just six months, indicating that speculative funds had completely exited.

Sociologist Ray Oldenburg once studied what makes people return to a place repeatedly without regard for compensation. He called it the third place, such as bars, barbershops, and town squares. They are not efficient production spaces but provide a reason for return unrelated to incentives. The core is that the desire to return cannot be artificially manufactured; it can only grow naturally from the possibilities that a place offers over the long term. The purpose of designing places in the cryptocurrency industry is to extract users, yet they wonder why no one stays.

This is a location without a basho: people pass by, take what they need, and then leave, as leaving incurs no cost. There is no identity formed here, no ability established that cannot be replicated elsewhere within three weeks, and nothing makes leaving feel like a loss. Is there a unique relationship on this chain? We have never built things with this mindset, have we?

You cannot build a basho with financial incentives. Incentives can certainly draw people in, but they cannot make people want to stay. The desire to stay must come from the possibilities that a place nurtures over the long term. Nishida Kitarō referred to this as "place logic," which describes how relational fields shape the things that emerge within them. The crypto industry designed a field for extraction and was ultimately surprised to find that only extraction was born.

Brian Armstrong publicly stated that the Base App is now focused on becoming a self-custody trading version of Coinbase.

The once-aspired vision of creating social stickiness and allowing users to build identities worth protecting on-chain has vanished. From the data, this is a rational decision, but it also acknowledges that this vision never truly formed. Base has a location; it now only focuses on serving past users because that is all it can offer.

One Chain, One Track

Base is the most prominent epitome of the entire L2 model.

Since June 2025, the usage rate of small and medium-sized L2s has overall declined by 61%. Most chains outside the top three have become zombie chains: active enough not to shut down but too quiet to be significant. The daily active ratio of L2 to L1 has dropped from 15 times in mid-2024 to now 10-11 times. Most new L2s see their usage collapse directly after the incentive cycle ends. The entire L2 ecosystem is cooling down, not just Base.

The rollup-centered roadmap was once a theory about user adoption: lowering participation costs → influx of users → ecosystem formation → compounding growth. The Ethereum Foundation released a 38-page vision document this year outlining the future direction of Ethereum. However, the largest L2's activity has bottomed out and left the OP Stack, while the second-largest L2 has stagnated in growth.

Lowering entry costs does not equate to creating the conditions for things to take shape. The industry solved the "entry" problem but naively assumed that "a sense of belonging" would follow. It does not appear automatically because a sense of belonging is not a feature that can be launched.

Farcaster is the closest product in the crypto world to building a basho. Because a specific group of people established a specific culture on it: developers share their work, discuss Ethereum, and form opinions about each other over months. This takes time, and competitors cannot replicate it with higher rewards. Friend.tech tried to do the same with an incentive mechanism, reaching the top in a week and disappearing in a month. The same mechanism did not form a culture. The difference lies not in the product but in whether people stay long enough for something to truly take shape.

What Can Retain People?

Chains that retain users during the winter do not rely on better incentives.

Arbitrum's daily active addresses peaked at 740,000 in June 2024 and now stand at 157,000, also plummeting by 79%. Both chains are declining, but the underlying logic is entirely different.

Base's users come online to trade, and when trading volume declines, they leave. In contrast, Arbitrum's users are not affected by fee levels; the correlation between user numbers and fee revenue is almost zero. Base attracts tourists, while Arbitrum somehow retains users.

Hyperliquid can stand firm because its trading experience is unique, and the community has formed an identity that does not exist elsewhere. Token incentives are almost irrelevant; being part of it has become a part of their behavior and identity. Things shape users, and users, in turn, shape things.

The crypto industry is still optimizing "how to attract people," while the question of "how to create situations" is only remembered after data collapses and has never been considered at the beginning of chain design.

I believe Base has the strongest distribution capability in history and could have solved this problem better than any other chain.

Now it is a trading application. This is a reasonable product direction, but it is also something that over 40 products have already been doing. A trading application cannot create a basho; it can only generate conversations: users come in when they have trading needs and leave after completing them.

To truly become a successful application, a continuous connection needs to be established. Users need to build a relationship between each visit, making the next visit feel like a return rather than just an arrival.

Armstrong's transformation is largely based on the lessons learned from Base's data. The social layer, creator economy, and on-chain identity—these should have transformed Base from "being used" to "being inhabited"—all require patience, and the system does not reward patience.

The Ethereum ecosystem needs Base to be more than just a trading venue. The foundation of the entire L2 narrative lies in the chain becoming the infrastructure around which people build their lives. If the L2 with the strongest distribution capability in crypto history ultimately settles for being a faster Coinbase, then this narrative itself is untenable.

Nishida Kitarō believed that the deepest basho is where the boundaries between self and place begin to dissolve. You cannot completely separate "who you are" from "where you are shaped." This sounds abstract, but applied to a public chain means: a user cannot imagine their financial life after leaving a certain chain; a developer's entire toolkit is based on a specific ecosystem; their identity can hardly exist elsewhere.

As far as I know, such things have never been built on any L2. It may not even be possible to build under an incentive program.

Even if you have 100 million potential users, without something worth staying for, in the end, it will still be empty. Base understands this now.