Author: Thejaswini M A Translator: Shan Ouba, Golden Finance

A few days ago, I read about a concept in Japanese philosophy - basho. A rough translation is “place, location,” but the meaning given to it by the philosopher Keiji Nishitani is far more difficult to define than a mere place: it is more like a situation, a field that allows everything to be itself.

To put it simply: people do not appear somewhere by chance, but are shaped by the place where they are. Nishitani talks about consciousness and existence. To some people, this is just common sense wrapped in advanced vocabulary, but sorry, today I am going to use this theory to analyze Base.

Back to Base. Last month, its active address count hit an 18-month low. Upon reflection, I realized: Base only built a place, but it never created a situation for things to grow and take shape.

When Coinbase launched Base in 2023, the crypto-native circle reached a rare consensus of trust. It is believed that it can finally solve the oldest problem of Ethereum: complete infrastructure, but lack of users. With hundreds of millions of users and unrivaled distribution capabilities, Coinbase has unique advantages. As soon as the door opens, users have been waiting for a long time.

At first glance, this confidence seems reasonable. Base is growing faster than any previous Layer 2. The total locked value (TVL) reached US$5.6 billion in October 2025, and the fee income is unmatched in the entire L2 field. Because of this, when the token is confirmed to be online in September 2025, it seems that a successful experiment has been completed. A simple place is about to become a real "place".

Subsequently, the users disappeared.

Let’s take a look at the specific data. The number of active addresses on Base has returned to July levels. The confirmed issuance of tokens also fully meets the needs of airdrop farmers: a final income, nothing more.

Base's move to bet on the content creator economy in 2025 doesn't help either. The mechanism is Zora, a protocol that tokenizes content by default. By the end of the year, 6.52 million creator and content tokens had been issued through Zora on Base. Of these, only 17,800 tokens remained active throughout the year, accounting for just 0.3%. The remaining 99.7% of the tokens were sold before anyone took them.

Base reached a peak of 1.72 million daily active addresses in June 2025. By March 2026, the number of daily active addresses dropped to 458,000, a 73% drop from the peak. After Armstrong announced in September 2025 that Base was exploring a token issuance, Base’s active address count shrank by 54% over the next six months, suggesting that the speculative frenzy had subsided.

Sociologist Ray Oldenburg once studied: What makes people return to a place repeatedly regardless of reward? He calls it the third space - bar, barber shop, city square. These places do not pursue efficiency but provide reasons to return that have nothing to do with incentives. The core is: the will to stay cannot be manufactured, but can only grow naturally from the long-term possibilities of the place.

The crypto industry designed the space just to extract value and then wonder why no one was left.

This is what it's like to have a place but no place: people passing by, taking what they need, and leaving at no cost. No identity is formed here, no ability is built that cannot be replicated elsewhere in three weeks, and leaving does not feel like a loss, just a change of place. Is there a unique relationship in this chain? Obviously we didn't build the product that way.

Money incentives cannot create a place. You can use incentives to get people in the door, but you can't use incentives to get people to stay. The desire to stay can only come from the long-term gestation possibilities of the place itself. Nishitani calls this the logic of place: the relational field that shapes everything that is born within it. The crypto industry designed the field for extraction, and was surprised to find that only extraction was born.

Coinbase CEO Brian Armstrong publicly stated that the Base App has now been transformed into a non-custodial, transaction-focused version of Coinbase.

The vision that once relied on social networking, the creator economy, and on-chain identity, which should have given users a sense of belonging and willingness to protect them, has disappeared. Judging from the data, this is a rational decision, but it is also an admission: the place has never been formed. Base has only one location and can only optimize passing traffic these days because that's all it has left.

The entire L2 industry is cooling

Base is not an isolated case, but a microcosm of the entire L2 field.

Since June 2025, the usage rate of small and medium-sized L2 has plummeted by 61%; most of the public chains outside the top three have become zombie chains, active enough to remain open but without any influence. The proportion of daily active users of L2 relative to L1 has dropped from 15 times in mid-2024 to 10–11 times today. The vast majority of new L2 usage crashes directly after the incentive period ends. The entire L2 track is cooling down, not just Base.

The previous roadmap theory centered on Rollup believed that: reduce participation costs → user influx → ecological formation → network effect compound interest growth. The Ethereum Foundation released a 38-page plan this year, but the activity of the leading L2 has bottomed out and it has withdrawn from the OP Stack, and the growth of the second one has stagnated.

Reducing entry costs ≠ Create a shaping environment. Industries solve the access problem but assume that belonging will follow. This is not the case, belonging is not a feature that can be rolled out.

Farcaster is the closest the crypto industry has come to building a place. Because a specific group of people has built a unique culture on it: developers share their work, debate Ethereum, and form each other's opinions over time. This takes time and cannot be replicated by competing products offering higher rewards. Friend.tech tried the same idea using an incentive mechanism, reaching the top in one week and dying in a month. The product mechanisms are similar, but they lack culture. The difference isn't in the product, it's in whether someone sticks around long enough for something to actually take shape.

What can really retain people?

Public chains retaining users through the bear market cycle do not rely on more generous incentives. Arbitrum’s daily active addresses peaked at 740,000 in June 2024 and now stand at 157,000, also a 79% plunge. But the logic of the two is completely different.

But the mechanism is different. Base users come for transactions and leave when transactions are cold; the number of users is highly correlated with fee income. Arbitrum users are not affected by rates, and the correlation between user numbers and revenue is close to zero. Base attracts tourists, Arbitrum retains local users.

Hyperliquid is able to stand because its trading experience is unique and its community has developed an identity that does not exist elsewhere. Token incentives are almost irrelevant, staying there is part of its behavior and identity. Places shape users, and users in turn shape places.

The encryption industry is still blindly optimizing and "bringing in new people". It will only consider the "situation" issue after the data collapse, but never consider it at the beginning of the public chain design. Base has the strongest user distribution capabilities in history and could have solved this problem better than any public chain.

But it’s just a trading app now. This in itself is understandable, but there are already more than 40 similar products on the market. The trading application cannot create a place, but can only generate a single session: the user leaves after completing the transaction. The situation that makes things take shape requires a more continuous connection, and the next visit needs to feel like "coming home" rather than "first arrival".

Armstrong's strategic shift was largely based on conclusions drawn from data. The social layer, the creator economy, on-chain identity—these things that are supposed to turn Base from a “tool” into a “home” require patience that short-term indicators cannot reward. Seasonal addresses and TVL only measure location size, so “place” is never prioritized.

The Ethereum ecosystem needs Base to be more than just a trading place. The foundation of the entire L2 narrative is that the public chain can become the infrastructure for people's lives and construction. If L2, which has the strongest distribution capabilities in the history of encryption, is ultimately satisfied with being a faster Coinbase, then this narrative will be self-defeating.

Nishitani believes that the deepest place is where the boundaries between self and place begin to dissolve: you cannot completely separate yourself from the environment that shapes you. Put it on the public chain, it is:

• Users cannot imagine their financial life without this chain;

• All tools for developers are natively adapted to a certain ecosystem;

• Identity can hardly exist elsewhere.

As far as I know, no L2 has ever implemented this. It may not be built at all during the incentive cycle.

I may have overextended the word "place" a bit, but the core is simple: even if there are hundreds of millions of potential users, if there is nothing worth leaving behind, it will still end up being an empty room. Base now understands.

It still hasn't found its true self.