Coinbase's Base Network Faces Activity Slowdown
Introduction to Base Network
Coinbase's Ethereum layer-2 network, Base, launched on August 9, initially saw a surge in activity. The network gained traction with tokens like Echelon Prime and Aero, contributing to a rise in token holders. Notably, the launch of platforms such as Friend.tech and the decentralized exchange Aerodome helped elevate the total value locked (TVL) on the network to over $400 million.
Collaborations and Activity Decline
Base's growth was further supported through partnerships, including collaborations with Chainlink. However, despite these strategic moves, there has been a significant decline in activity. Daily active users have decreased by over 64% from a peak of 145,479, and no single day post-August 25 has seen transaction volumes surpass $4 million for major protocols.
Token Activity and Market Response
The slowdown in activity indicates that the tokens on Base have not yet achieved blue-chip status. The initial retail enthusiasm drove an early surge, but transaction volumes for key protocols remain below expectations. Data from Dune Analytics confirms a gradual decline in activity, suggesting investor caution regarding Base's tokens.
InvestingPro Insights on Coinbase
Coinbase faces a challenging financial landscape, with a declining trend in earnings per share. Analysts from InvestingPro anticipate the company will not achieve profitability this year. The stock has experienced volatility, with significant fluctuations over the past months.
Financial Performance Overview
As of Q2 2023, Coinbase holds an adjusted market cap of $18.45 billion and a negative P/E ratio of -13.82. The revenue for the last twelve months was $2580.23 million, marking a 55.34% decrease from the previous period. The price-to-book ratio stands at 3.37, indicating the company's market valuation is over three times its book value.
Conclusion
These insights reveal the complex and dynamic environment in which Coinbase operates. While Base's initial growth was promising, the recent decline in activity and financial challenges highlight the need for strategic adjustments. For a deeper understanding of Coinbase's financial status and future prospects, further exploration of InvestingPro's resources is recommended.
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