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Base Network, the 2 Ethereum network regulated by Coinbase, has seen its Total Value Locked (TVL) drop by $1.4 billion in recent weeks.
The decline comes as public controversy over the chain’s strategy and product direction increases.
Fundamental TVL declines as Coinbase builders, naysayers and leadership clash over chain direction
Underlying volume fell from about $5.3 billion in January to about $3.9 billion at the time of writing.
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This decline is important because TVL is still one of the most Indicators monitor capital activity And the trust of developers In blockchain systems.
However, fluctuations in the value of TVL are common in L2 networks, especially during broader market rotations or liquidity changes.
With tight liquidity, Base is also facing unusual open criticism (and backlash) from founders and investors. And the heads of Coinbase.
Al Qaeda creator Jesse Pollack coined this moment as part of a typical growth cycle for rapidly expanding ecosystems.
“Al Qaeda went from non-existent to one of the most important chains in the world in two years, and it happened because of the builders. As with all rapid growth, along the way, some left, some gave up. The builders who stay are those who know the next era. “books Polish.
His comments reflect a view of many infrastructure teams: that early rises often attract speculative capital and short-term projects, followed by periods of consolidation before the next phase of development.
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Critics say the base has lost its fire
Some founders and investors say Base’s recent challenges are strategic rather than cyclical. A maker and Coinbase contributor known as Hish on X has publicly criticized it Launch the Base applicationarguing that it was marketed as a “super app” but offered features that users did not ask for.
Investor Mike Dudas expressed similar concerns, Saying Coinbase Wallet was previously a broad focus on the chain, but its priorities have changed due to a strategic change.
Coinbase leadership admits mistakes
rejected Brian Armstrong, CEO of Coinbase Respond directly to criticism and accept responsibility for previous decisions.
“I will take responsibility for that if I want to fire someone,” he said, adding that Base is now focused on being “a self-styled version of Coinbase, focused on commerce.”
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He emphasized that self-protection has become more important as the financial activity continues sequentially. However, Coinbase’s CEO also explained that most of the company’s resources are still directed to… Leading retail platform.
In separate statements about Coinbase’s broader strategy, Armstrong also noted growing institutional engagement with cryptocurrencies and highlighted growth in:
- Trade volumes
- Assets on the platform, and
- Product revenue sources,
According to Armstrong, the company remains well as the financial system grows.
The discussion expands to include ecosystem design
The discussion expanded beyond immediate product changes to include larger questions about how to grow the crypto ecosystem.
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suggests Uniswap founder Hayden Adams Integrating managed accounts and self-filing into a unified interface can improve ease of use. His remarks reflect ongoing efforts in the sector to simplify the membership process without sacrificing decentralization.
Meanwhile, some community commentators argue that the Base should strengthen the incentives and culture to retain developers and users.
Meanwhile, others counter that long-term adoption depends more on infrastructure, compliance and institutional partnerships.
If Base can turn Coinbase’s infrastructure and distribution advantages into sustainable user growth, the current decline may be temporary.
Otherwise, competition between Layer 2 systems is likely to increase as liquidity and developer interest in high traffic continue.
