Does Layer 2 Base need to launch a token?

I. Scenario 1: Never Launch Token

• - Coinbase's Official Stance: According to statements from Coinbase, the exchange currently has no plans to launch a native token for the Base network in the future.
• - Network Performance and User Expectations: In terms of current traction and user interest, Base stands out as one of the most closely watched Layer 2 networks. This high level of attention fuels significant community expectation for a potential large-scale airdrop.

• 

•      Key performance indicators for the Base network, such as revenue and daily transaction volume, are showing consistent growth. Significantly, Base has achieved and maintained the #1 ranking for revenue among all Layer 2 solutions.
•     Furthermore, the ecosystem's Total Value Locked (TVL) demonstrates steady growth and stability, according to data from DeFiLlama. This positive trend is attributed to strong activity within the ecosystem, driven by both the "Degen" meme coin phenomenon (featuring popular tokens like $BRETT and $DEGEN) and large-scale airdrop programs, such as the notable Farcaster airdrop.
• => This activity culminates in impressive 24-hour trading volumes reaching up to $450.9 million, ranking Base behind only major blockchains like Solana, BSC, and Ethereum in terms of daily on-chain trading activity.
• Moreover, Base's ecosystem revenue over the last 30 days also leads all other Layer 2 networks, reinforcing its strong market position.

     Consequently, Base fundamentally fulfills the key criteria to attract capital flow and generate revenue organically. It boasts a relatively well-developed and strongly performing ecosystem with anchor projects in various key sectors. Because of this inherent strength, Base might not necessarily need to launch its own native token.

     In contrast, other Layer 2 solutions like ZKsync and StarkNet arguably needed to launch tokens. This was driven partly by the need to allow Venture Capital (VC) investors to recoup their investments and, crucially, to create incentive mechanisms aimed at retaining capital and preventing significant outflow from their ecosystems.

The importance of such incentives has been highlighted recently; when major airdrops on some platforms failed to meet user expectations, significant capital outflow occurred because there weren't sufficiently compelling applications or 'games' to keep users engaged and funds locked within the system.

     Conversely, the Base ecosystem has emerged as something of a 'gold mine' for investors, especially those who feel they missed the previous wave of opportunities on Solana. This is thanks to Base hosting numerous potential projects with low market capitalizations that are not yet listed on Binance, combined with a large and active Meme coin community (offering many 'games' or speculative opportunities), and its characteristically low transaction fees.

1. 1. Legal and Regulatory Issues

2.      The tightening regulatory environment for crypto projects by the US government has already caused numerous projects, both large and small, to withdraw from this lucrative market.
3.     Being intrinsically linked to and supported by Coinbase, a major cryptocurrency exchange operating in the United States, Base is obligated to comply strictly with US regulations. This makes the prospect of launching a native Base token particularly sensitive. Such a launch could face potential allegations from the SEC (Securities and Exchange Commission) of being an unregistered security, a significant legal hurdle.
4.     Given the substantial liquidity readily available from the US market combined with the fact that Base has already secured stable capital flow and activity without needing its own token, it's clear that Coinbase likely wants to avoid any regulatory entanglements or controversies related to the Base network, especially those a token could introduce.

1. 2. Potential Liquidity Challenges

2.     If regulatory issues were to compel a hypothetical Base token to be unavailable in the US market, it would lose access to a massive share of liquidity from the country. This potential user base is estimated to include over 110 million Coinbase users. Such exclusion from the US market could significantly impede the token's ability to achieve strong growth in the future.

3. 

4.  

5. 3. Argument: Launching a Base Token Would Be Largely Redundant

6.      A ccording to statements by the Coinbase CEO, Base currently has no intention of launching a token in the future. This suggests the ecosystem is designed and capable of operating effectively without necessarily needing its own native governance token.
7.     Introducing a token at this stage could lead to redundancy and a potential lack of essential utility, especially when compared to established Layer 2 tokens like Optimism ($OP) or Arbitrum ($ARB) which have defined governance roles. A Base token without clear utility could face higher selling pressure than its peers. Clearly, Base would not want to risk undermining its current strong market position against competing platforms by launching a token without a compelling use case.
8.     Furthermore, the Coinbase exchange already has its own publicly traded stock under the ticker $COIN on the US stock market. This stock ($COIN) currently serves as the mechanism for providing value to investors and the company, including governance rights through share ownership and the ability to raise capital.
9.     Therefore, not creating an additional native token for Base can also be seen as a strategy to avoid potential conflicts of interest with the company's existing investors, namely the $COIN shareholders.

10. 

11.      Another factor to consider relates to compatibility and utility. Essential utility on the Base network can be sufficiently provided through ETH itself, or via other established tokens already existing within the Ethereum ecosystem.
12.     Because Base is built fundamentally for deep compatibility with Ethereum, users can readily use these existing tokens directly on the Base Layer 2. This inherent interoperability significantly minimizes the perceived need for Base to introduce its own separate, native token.

II. Scenario 2: Will Launch Token

     This scenario (a Base token launch) could potentially happen, but the probability seems low or challenging primarily due to the significant legal risks mentioned earlier.

     However, recent events have fueled community speculation. Notably, the Founder of Coinbase recently shared a link allowing users to check their activity points accumulated on the Base network. This action indirectly raised hopes within the community about the prospects of a future Base airdrop.

     Although Coinbase CEO Brian Armstrong has stated that Base has no current plans to issue a token, this position seems to contradict previous comments made by Paul Grewal, Coinbase's Chief Legal Officer (CLO). Grewal had, in the past, suggested the possibility of a Base token being introduced eventually.

     Here are a few additional reasons, often discussed as 'Hopium' among community members and airdrop hunters, that might support a potential Base token launch:"

• 1. Incentives and Governance

• - A native token could be utilized to incentivize key ecosystem participants, including developers, users, and validators.
• - Implementing a governance token would empower holders to vote on significant protocol decisions, theoretically enabling greater decentralization over time and aligning more closely with the standard blockchain ethos.

• 2. Ecosystem Growth and Engagement

• - Tokens can be powerful tools to reward early adopters, developers, and active users, thereby fostering a more vibrant and highly engaged community around Base.
• - Distribution mechanisms for such rewards could include Airdrops, Developer Grants, and other participation-based programs.

• 3. Operating More Distinctly from Coinbase

• - Establishing greater operational separation from Coinbase through a token could potentially help the Base ecosystem mitigate direct conflicts of interest with Coinbase's existing shareholders (holders of $COIN stock).

• 4. Security and Decentralization

• - A native token could potentially be incorporated into a staking mechanism to further contribute to network security.

• 5. Deeper Integration with DeFi and DApps

• - If Base aims to significantly deepen its integration or expand its native DeFi ecosystem, a native token could serve multiple critical functions. These include facilitating liquidity provision, enabling yield farming opportunities, or acting as collateral within various DApps, thus enhancing the overall utility of the network.

• 6. Alignment with Optimism's Superchain Vision

• - Given that Base is built using the OP Stack and that Optimism itself utilizes its own token ($OP), Base might eventually see strategic value in launching its own token. This could allow for better alignment and integration within the broader Optimism Superchain ecosystem, potentially unlocking benefits related to interoperability or shared security models.

III. Partner With AquaFox For Web3 Services

•      At AquaFox, we provide all services related to your token. We offer guidance and support for your token in every aspect on the path to success. The areas where we provide services include:
• - Advanced Market Making: Leverage our sophisticated market making tools to enhance liquidity and stabilize your crypto assets.
• - Blockchain & AI Integration: Our experts specialize in integrating advanced blockchain solutions with AI-driven tools, ensuring seamless and secure operations.
• - Ongoing Support and Innovation: Stay ahead of the competition with continuous updates, expert insights, and a partnership dedicated to your long-term success.