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

Even with 100 million potential users, as long as there’s nothing worth staying for, it will ultimately turn into people leaving and the building remaining.

Written by: Thejaswini M A

Compiled by: Chopper, Foresight News

A few days ago, I came across a concept from Japanese philosophy: basho. A rough translation is “place,” but the meaning that philosopher Nishida Kitaro gave it goes far beyond a mere geographic location. It’s more like a kind of situation—an arena in which everything is able to become itself. In other words, you don’t show up somewhere by accident; the place you’re in shapes you. Today, I’m going to use this framework to interpret Base.

Last month, its number of active addresses fell to a new 18-month low. Reflecting on this, I realized: Base has only built a location, but it has never created the conditions for things to grow and take shape.

When Coinbase launched Base in 2023, the crypto-native circle—rarely—generated a kind of faith. People believed it could finally solve Ethereum’s most ancient problem: infrastructure everywhere, but no real users. With Coinbase holding 100 million users and unparalleled distribution power, that was a unique advantage. Once the door opened, users were already waiting outside.

For a while, this confidence seemed to be validated. Base’s growth rate outpaced every prior Layer2. In October 2025, its total value locked (TVL) reached $5.6 billion, and its fee revenue was unmatched across the entire L2 space. Then, in September 2025, Base confirmed the issuance of a token, as if to foretell a surely successful experiment. Yes—one place is turning into a basho.

Then, the users left.

Looking at the data is even more direct: Base’s active addresses returned to the level of July 2024. The token issuance expectations perfectly met the needs of the airdrop crowd—grab the final payout and then go.

Base also bet on the creator economy in 2025, but it didn’t work. Its core is the Zora protocol, which defaults to tokenizing content. By year-end, Base issued 6.52 million creator and content tokens through Zora, but only 17,800 remained continuously active throughout the year—just 0.3%. The remaining 99.7% is nobody’s concern.

Base’s daily active addresses peaked at 1.72 million in June 2025. By March 2026, only 458,000 remained—down 73% from the high. After Armstrong announced in September 2025 that Base was considering token issuance, within just six months, active addresses dropped 54%. That means speculative capital fully exited.

Sociologist Ray Oldenburg once studied what makes people return to a place repeatedly, without regard for compensation. He called it the third place—like a bar, a barbershop, or a city square. They aren’t efficient production spaces, but they give people a reason to return that’s unrelated to incentives. The core is this: the desire to come back can’t be manufactured by force—it can only naturally grow from the possibilities that a place provides over the long term. The crypto industry designs places in order to extract users, and then wonders why no one stays.

That’s what a location without a basho looks like: people pass by, take what they need, and leave—because leaving has no cost. There’s no identity formed, no capability that can’t be replicated elsewhere within three weeks, and nothing makes leaving feel like a loss. Is there any unique relationship formed on this chain? We’ve never built things with that mindset, have we?

You can’t use financial incentives to construct a basho. Incentives can certainly pull people through the door, but they can’t make people want to stay. The desire to stay has to come from the possibilities that the place nurtures over time. Nishida Kitaro called it “the logic of place,” referring to how the field of relationships shapes the things that emerge within it. The crypto industry designs a field to extract value—and ends by being surprised that what emerges is only extraction.

Brian Armstrong has publicly stated that the Base App is now focused on becoming Coinbase’s self-custody and trading version.

That social and creator vision, once aimed at building social stickiness and letting users form identities on-chain worth protecting, is gone. From the data, this is a rational decision—yet it also admits: that vision was never truly formed. Base has a place; it now only focuses on serving past users, because that’s all it can offer.

One chain, one track

Base is the most vivid snapshot of the entire L2 model.

Since June 2025, usage across mid-sized and small L2s overall has declined by 61%. Most chains outside the top three have become zombie chains: they’re not active enough to shut down, but too quiet to matter. The ratio of L2 daily active users to L1 dropped from 15x around mid-2024 to today’s 10–11x. Most new L2s see usage crash outright once the incentive period ends. The whole L2 ecosystem is cooling down—not just Base.

The rollup-centered roadmap used to be a theory about user adoption: reduce the cost of participation → users flock in → an ecosystem forms → compounding growth. This year, the Ethereum Foundation released a 38-page vision document outlining Ethereum’s future direction. Meanwhile, the largest L2 by active user engagement hit the bottom and left the OP Stack, and the second-largest L2’s growth stalled.

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

Farcaster is the product in the crypto world that comes closest to building a basho. 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 views of each other. This takes time; competitors can’t replicate it with higher rewards. Friend.tech tried to do the same thing with an incentive mechanism—topped the charts in a week, vanished in a month. Same mechanism, but no culture formed. The difference isn’t the product; it’s whether someone stays long enough for something to truly take shape.

What can keep people?

Chains that keep users through the winter don’t rely on more generous incentives.

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

Base’s users get onboard to trade; when trading volume declines, they leave. But Arbitrum’s users are not affected by the level of fees. The correlation between the number of users and fee revenue is nearly zero. Base attracts tourists, while Arbitrum somehow manages to keep users.

Hyperliquid is able to hold its ground because its trading experience is unique. A community has formed an identity recognition that doesn’t exist elsewhere. Token incentives are almost irrelevant—being there has become 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 in,” but the question of “how to create a situation” is only remembered after the data breaks down—and it was never considered at the beginning of chain design.

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

Now it’s a trading app. That’s a reasonable product direction, but it’s also something that more than 40 existing products have already been doing. A trading app can’t create a basho; it can only create sessions: users come in when they have trading needs, complete the trade, and leave.

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

Armstrong’s pivot is largely based on the lessons Base learned from its own data. The social layer, the creator economy, 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 that people build their lives around. If the L2 with the strongest distribution capabilities in crypto history ultimately settles for being a faster Coinbase, then the narrative itself doesn’t hold up.

Nishida Kitaro believes the deepest basho is where the boundary between self and place begins to dissolve. You can’t completely separate “who you are” from “how you are shaped by where you are.” That 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 toolkit is built on a particular ecosystem; and their identity can hardly exist anywhere else.

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

Even if you have 100 million potential users, as long as there’s nothing worth staying for, it will ultimately turn into people leaving and the building remaining. Base now understands that.