The Potential Rise of Base Network as Ethereum’s Dominant L2 Solution
Base, an Ethereum-based layer 2 network, is making significant strides in the decentralized finance (DeFi) sector, posing a strong challenge to Arbitrum. The Total Value Locked (TVL) on Base has reached an all-time high of $1.96 billion, marking a 37% increase in just two weeks. In contrast, Arbitrum has experienced limited growth during the same period.
Base network’s Impressive Growth
Recent data reveals a substantial uptick in daily active addresses on Base, soaring from approximately 507,000 to over 1.2 million in the past three months. Meanwhile, Arbitrum has witnessed a decline in daily active addresses from 789,000 to around 466,000. The daily transaction count on Base is currently double that of Arbitrum, indicating a clear shift in competitiveness favoring Base.
Furthermore, the surge in stablecoin supply, particularly USD Coin (USDC), on the Base network has risen by $300 million since the beginning of the month. Year-to-date figures show a notable increase in USDC supply on Base, reaching $3.35 billion from under $50 million on January 1st. These statistics underscore heightened activity and liquidity within the Base network.
Will Arbitrum be Overtaken by Base?
Despite Arbitrum maintaining its position as the largest Ethereum layer 2 with a TVL of $2.54 billion, the rapid growth of the Base network indicates a potential overtaking in the near future. The competitive dynamics between the two platforms suggest that Base could soon surpass Arbitrum in market influence.
Assessing ARB’s Price Prospects
ARB’s price outlook has shown signs of a bullish reversal pattern with the confirmation of a double-bottom formation. However, breaking past the strong resistance level at $0.62 poses a challenge, as evidenced by unsuccessful attempts over the past four days. In order for ARB to rally towards the next target of $0.82, substantial buying volumes are required.
An analysis of the volume histogram bars indicates a higher selling pressure compared to buying pressure, potentially hindering ARB’s breakout. The Relative Strength Index (RSI) line, though in bullish territory at 64, has plateaued post a notable uptrend, signaling a gradual loss of buying momentum.
Should buying momentum falter, ARB might consolidate around the $0.61-$0.62 price range before initiating a definitive move. Failure to surpass the neckline could lead to a price retracement towards the support level at $0.47. Additionally, the layer 2 sector, ranked fourth in key crypto narratives by Kaito AI, continues to attract interest, potentially benefiting L2 tokens like ARB in the near term.