Coinbase’s Layer 2 Base Experiences Significant Capital Outflows; Ethereum Reclaims Inflow Lead

Coinbase’s Layer 2 solution, Base, has seen a staggering net outflow of $4.3 billion this year, a dramatic shift from its previous standing as a top performer in 2024. In the same timeframe, Ethereum has made a strong comeback with a net inflow of $8.5 billion, reestablishing its dominance among blockchains.

Base loses billions through bridges. Base loses billions through bridges.

Key Points:

• Base, which previously led in 2024 with $3.8 billion in inflow, has reversed course.
• The decline in Base’s performance is largely due to Binance reallocating capital back to Layer 1, which has upset the overall ether deposits on the platform.

According to data from the Artemis Terminal, Base’s outflows indicate a marked decline in user investment strategies. Retry efforts to capture more enhanced cross-chain communication could stem from evolving market dynamics.

Additionally, the cumulative supply of stablecoins on Base has stagnated around $4 billion, coinciding with a drop in trading activity since mid-May.

Top chains by net flows (YTD). (Artemis) Top chains by net flows (YTD). (Artemis)

The analysis also reveals that the total number of ETH deposited on Base has seen a significant drop from 1.82 million ETH to just over 835,000 ETH in the last month. Viktor Bunin, a Protocol Specialist at Coinbase, has cited that these outflows are primarily linked to Binance withdrawing to Layer 1, an action that has seen investment strategies shift.

This ongoing market scenario illustrates the volatility and rapid changes in the crypto landscape, highlighting the need for investors to remain vigilant and adaptable.