Ethereum, the world’s second-largest cryptocurrency by market capitalization, has long been plagued with scalability issues. As the popularity of decentralized applications (dApps) grew, the Ethereum network struggled to handle the increasing number of transactions. To address this problem, developers have been working on implementing Layer 2 (L2) solutions to improve scalability and reduce fees. However, despite the promising potential, the base L2 Ethereum chain is not yet ready for mainstream adoption.
The Need for Scalability
Ethereum’s scalability issues have become more evident in recent years. As more projects and users flock to the network, the congestion has led to significant delays and high transaction fees. These limitations hinder the growth of Ethereum as a viable platform for decentralized applications and hinder mainstream adoption.
Traditional Layer 1 solutions, such as increasing the block size or reducing block times, have proven to be impractical for Ethereum due to the impact on decentralization and security. As a result, Layer 2 solutions have emerged as a more viable alternative.
Layer 2 solutions aim to alleviate the congestion on the Ethereum network by offloading some of the transaction processing to external networks, while still relying on the Ethereum base chain for security and settlement. These solutions introduce mechanisms such as sidechains or state channels to achieve scalability without compromising decentralization.
There are several Layer 2 solutions currently being developed, including Base, Optimistic Rollups, ZK-Rollups, Plasma, and state channels. Each solution has its own unique approach and trade-offs, but they all share the common goal of improving scalability. Base which is being developed by Coinbase is perhaps the biggest of these L2 chains and is also the one that is showing the most promise. However we think that it’s not ready yet and here are a few reasons why.
1. Scammers Ruin Reputation with Constant Rugging
One of the most pressing issues plaguing the Base L2 Ethereum chain is the rampant presence of scammers. These malicious actors exploit vulnerabilities in smart contracts to execute rug pulls, leaving investors high and dry. Such incidents tarnish the reputation of the platform and erode trust among users.
2. Low Fees Enable Scammers with a Low Barrier for Entry
While low transaction fees are often touted as a benefit of Ethereum, they also serve as a double-edged sword on the Base L2 chain. The affordability of transactions makes it easy for scammers to execute their schemes with minimal financial investment, further exacerbating the issue of fraudulent activities.
3. Lack of Legitimate Projects Beyond Meme Tokens
Another drawback of the Base L2 Ethereum chain is the dearth of legitimate projects. With the majority of tokens being mere meme coins lacking substantive utility or value, investors are left with few options for meaningful investments. This lack of diversity undermines the credibility and viability of the platform.
4. Absence of a Coinbase Base Currency
Unlike other chains that have established their own base currencies, the Base L2 Ethereum chain lacks a comparable foundation. This absence impedes the development of a robust ecosystem and limits the platform’s interoperability with other networks.
5. Unpredictable Fee Fluctuations
While low fees are an attractive feature, they can become a liability during periods of high network congestion. The Base L2 Ethereum chain’s fees are not immune to sudden spikes in traffic, rendering the promise of affordability unreliable and potentially deterring users from engaging with the platform.
6. Short-Lived Meme Coins
Most tokens launched on the Base L2 Ethereum chain, particularly meme coins, experience short lifespans. With little to no genuine interest or belief in the underlying projects, these coins often fizzle out within days or weeks of their inception, leaving investors disillusioned and hesitant to participate further.
Despite these significant challenges, there remains immense potential for the Base L2 Ethereum chain to flourish. Addressing issues such as security vulnerabilities, promoting the development of legitimate projects, and implementing measures to stabilize fees could bolster confidence in the platform and attract a broader user base. If these obstacles are effectively overcome, the Base L2 Ethereum chain stands poised to realize its promise as a leading decentralized ecosystem with unparalleled innovation and utility.
