Base's growth dilemma: Doing everything right, yet users still leave

Original Author: Thejaswini M A

Original Compilation: Chopper, Foresight News

A few days ago, I came across a concept from Japanese philosophy: basho (place/field). A rough translation would be “place,” but what Nishida Kitarō meant by it goes far beyond a mere geographic location. It’s more like a situation—an environment in which everything can become what it is. In other words, you don’t end up somewhere by accident; the place you’re in shapes you. Today, I’m going to use this theory to interpret Base.

Last month, its number of active addresses fell to the lowest point in 18 months. Reflecting on why, I realized: Base has only built a location—it has never created the conditions for things to grow and take shape.

When Coinbase launched Base in 2023, the crypto-native circle rarely produced a kind of belief. People thought it could finally solve Ethereum’s oldest problem: infrastructure everywhere, yet no real users. And with 100 million users and unmatched distribution power, Coinbase had a unique advantage. Once the doors opened, users were already waiting outside.

For a while, this confidence seemed to be validated. Base’s growth rate outpaced every prior Layer 2. In October 2025, its total value locked (TVL) reached $5.6 billion, and its fee revenue was unmatched across the entire L2 landscape. Then in September 2025, Base confirmed token issuance—almost as if it were foreshadowing a sure-win experiment. Yes, a place was turning into a basho.

Then the users left.

Looking at the data makes it even more obvious: Base’s active addresses returned to the level seen in July 2024. The token issuance expectations perfectly met the needs of the “airdrop crowd”: get the last payout, then walk away.

Base also bet on the creator economy in 2025, but it didn’t work out. Its core was the Zora protocol, which by default tokenizes content. By the end of the year, on Base, 6.52 million creator and content tokens were issued via Zora—yet only 17,800 remained continuously active throughout the year, accounting for just 0.3%. The remaining 99.7% are left untouched.

Base’s daily active addresses hit a peak of 1.72 million in June 2025. By March 2026, only 458,000 remained—a steep 73% drop from the high. After Armstrong announced in September 2025 that Base was considering token issuance, active addresses fell 54% within just six months, meaning speculative capital exited completely.

Sociologist Ray Oldenburg studied what causes people to repeatedly return to a place without regard to compensation. He called it the “third place,” like a bar, a barbershop, or a city square. They are not spaces for efficient production, yet they offer people a reason to return that has nothing to do with incentives. The key is this: the desire to come back can’t be manufactured artificially—it can only naturally grow out of the long-term possibilities a place provides. The crypto industry designs places to extract users, and then wonders why no one stays.

This is what it looks like to have a place without a basho: people pass through, take what they need, and leave—because leaving comes at no cost. There’s no identity formed, no capabilities built that can’t be replicated elsewhere within three weeks, and nothing makes leaving a loss. Does this chain contain a unique set of relationships? We never built things with that kind of thinking, did we?

You can’t use financial incentives to build a basho. Incentives can certainly pull people into the door, but they can’t make them want to stay. The desire to stay must come from the possibilities a place nurtures over the long term. Nishida Kitarō calls this “the logic of place”—how fields of relationships shape the things that emerge within them. The crypto industry designs fields to extract value, only to be surprised that what gets born is only extraction.

Brian Armstrong has publicly stated that Base App now focuses on becoming Coinbase’s self-custody, trading version.

That social and creator vision—aimed at building social stickiness and having users establish identities worth protecting on-chain—has vanished. Judging from the data, this was a rational decision, but it also concedes something: the vision was never truly formed. Base has a place; it now only focuses on serving past users, because that’s what it can provide.

One chain, one lane

Base is the clearest snapshot of the entire L2 model.

Since June 2025, usage across mid- and small-sized L2s has declined overall by 61%. Most chains outside the top three have become zombie chains: active enough that they aren’t shut down, yet too quiet to matter. The ratio of L2 daily active usage to L1, which was 15x around mid-2024, has dropped to about 10–11x today. Most new L2s see their usage directly collapse after the incentive period ends. The entire L2 ecosystem is cooling down—not just Base.

The rollup-centric roadmap used to be a theory about user adoption: lower the cost to participate → users flood in → an ecosystem forms → compounding growth. This year, the Ethereum Foundation published a 38-page vision document outlining Ethereum’s future direction. Meanwhile, the largest L2’s activity bottomed out and left the OP Stack, and the second-largest L2 saw growth stall.

Lowering the cost to enter doesn’t mean you’ve created the conditions for things to take shape. The industry solved the “getting in” problem, but assumed “belonging” would automatically follow. It won’t—because belonging isn’t a feature you can just deploy.

Farcaster is the crypto world’s closest product to building a basho. That’s because a specific group of people built a specific culture on it: developers share their work, discuss Ethereum, and over the course of months form impressions of one another. This takes time, and competitors can’t replicate it with higher rewards. Friend.tech tried to do the same using incentive mechanisms: it topped the charts in a week and vanished within a month. Same mechanism, but no culture formed. The difference isn’t the product—it’s whether people stay long enough for something to truly take shape.

What can keep people?

In the winter, the chains that keep users don’t rely on more generous incentives.

Arbitrum’s daily active addresses hit a peak of 740,000 in June 2024; now they’re at 157,000—an equally steep 79% drop. Both chains are declining, but the underlying logic is completely different.

Base’s users go on-chain to trade. When trading volume declines, they leave. Arbitrum’s users, however, aren’t affected by fee levels; the correlation between user numbers and fee revenue is nearly zero. Base attracts tourists, while Arbitrum—somehow—keeps users.

Hyperliquid holds its ground because its trading experience is uniquely good, and because a community forms with a sense of identity no place else has. Token incentives are almost irrelevant—being part of it becomes a part of their behavior and identity. Things shape users, and users in turn shape things.

The crypto industry is still optimizing for “how to get people to come,” while the question of “how to create a situation” is only remembered after data collapses—and it’s never considered when designing the chain in the first place.

I believe Base has the strongest distribution capability in history, and could have solved this problem better than any other chain.

Now it’s a trading application. That’s a sensible product direction, but it’s also something more than 40 products are already doing. A trading app can’t produce a basho—it can only produce sessions: users come in when they need to trade, then leave after they’re done.

To truly become a successful app, you need to establish an ongoing connection. You need users to build a relationship between each visit, so that the next visit feels like a return—not just an arrival.

Armstrong’s pivot is, to a large extent, based on lessons Base learned from its data. The social layer, the creator economy, and on-chain identity—things that should have turned Base from “being used” into “being inhabited”—all require patience, and the system doesn’t reward patience.

The Ethereum ecosystem needs Base to be more than just a trading venue. The foundation of the entire L2 narrative is that a chain can become infrastructure people build their lives around. If the L2 with the strongest distribution capability in crypto ends up settling for being a faster Coinbase, then the narrative itself falls apart.

Nishida Kitarō believes that the deepest basho is where the boundary between the self and the place begins to dissolve. You can’t fully separate “who you are” from “what place shapes you.” It sounds abstract, but on a public chain it means: a user can’t imagine a financial life after leaving that chain; a developer’s entire toolset is built around some ecosystem; their identity almost can’t exist elsewhere.

As far as I know, nothing like this has ever been built on any L2. It may be impossible to build under incentive programs.

Even if you hold 100 million potential users, without something worth staying for, the end result is still an empty venue. Base understands this now.