Why did users still leave despite Base doing everything right?

Author: Thejaswini M A | Translation: Hey, Golden Brother, Golden Finance

A few days ago, I came across a concept in Japanese philosophy — basho. A rough translation would be “place” or “location,” but the meaning that the philosopher Hajime Nishitani gives it is far more difficult to define than a simple spot: it’s more like a kind of circumstance, a field in which everything can become itself.

In short: people don’t show up somewhere by accident; rather, the place they’re in shapes them. Nishitani is talking about consciousness and existence. Some people might hear this and dismiss it as common sense wrapped in lofty vocabulary, but sorry—today I’m going to use this theory to analyze Base.

Back to Base. Last month, its number of active addresses hit a new 18-month low. Reflecting on it, I realized: Base has only built a location, but it has never created a circumstance where things can grow and take form.

When Coinbase launched Base in 2023, the crypto-native circle reached a rare consensus around trust. Everyone believed it could finally solve Ethereum’s oldest problem: the infrastructure is complete, yet it lacks users. With Coinbase holding hundreds of millions of users and unmatched distribution power, the advantage was unique. Once the door opened, users had already been waiting.

At one point, this confidence was perfectly reasonable. Base’s growth outpaced any Layer2 before it. In October 2025, total value locked (TVL) reached $5.6 billion, and fee revenue was unmatched across the entire L2 space. And precisely because of this, when token confirmations launched in September 2025, it felt as though a successful experiment was finally settled once and for all. A mere location, seemingly about to become a real “basho.”

Then, users walked away.

Let’s look at the details. The number of active addresses on Base has already recovered to the level of July. Token confirmation payouts also fully satisfied the needs of airdrop farmers: one final payoff—nothing more than that.

Base’s 2025 push for content creators’ economy initiatives also didn’t help. Its mechanism is Zora, a protocol that defaults to tokenizing content. By the end of the year, Zora issued 6.52 million creator and content tokens on Base. Of those, only 17,800 tokens remained active throughout the year, accounting for just 0.3%. The remaining 99.7% had already sold out before anyone paid attention.

Base hit a peak in daily active addresses of 1.72 million in June 2025. By March 2026, daily active addresses fell to 458,000—a 73% drop from the peak. After Armstrong announced in September 2025 that Base was exploring token issuance, Base’s active addresses shrank by 54% over the next six months, meaning the speculation frenzy had already cooled off.

Sociologist Ray Oldenburg studied what makes people return to a place repeatedly without regard to compensation. He called it the third place—bars, barbershops, city squares. These places don’t pursue efficiency, yet they offer reasons to return that have nothing to do with incentives. The core is this: the will to stay cannot be manufactured; it can only grow naturally from the long-term possibilities that a basho nurtures.

The space designed by the crypto industry exists only to extract value, and then it’s confused about why no one stays.

That’s what it looks like when there’s only a location and no basho: people pass by, take what they need, and leave at no cost. There’s no identity formation here—no capability that can’t be replicated elsewhere within three weeks. Leaving doesn’t feel like a loss; it’s just switching to another place. Does a unique kind of relationship form on this chain? Obviously, we haven’t built the product that way.

Money incentives can’t create a basho. You can use incentives to get people into the door, but you can’t rely on them to make people stay. The desire to stay can only come from the possibilities that the place itself nurtures over the long term. Nishitani calls it the logic of basho: the relational field shapes everything that comes into being within it. The crypto industry designs fields for extraction, and in the end, it’s surprised to find that only extraction is what is ultimately created.

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

What was supposed to give users a sense of belonging—social layer, creator economy, on-chain identity—has vanished. Judging from the data, this is a rational decision, but it’s also an admission: a basho was never formed. Base has only a location; now it can only optimize pass-through traffic, because that’s all that’s left.

The entire L2 industry is cooling off

Base is not an isolated case; it’s a microcosm of the entire L2 space.

Since June 2025, usage rates of mid- and small-sized L2s have crashed by 61%; among chains outside the top three, most have turned into zombie chains. Their activity is only enough to keep them from shutting down, with no real influence. The ratio of L2 to L1 daily active users has dropped from 15x at mid-2024 to the current 10–11x. Most new L2s see their usage collapse outright after the incentive period ends. The entire L2 track is cooling off—not just Base.

Earlier, roadmap theories centered on Rollups argued: reduce the cost of participation → users flood in → the ecosystem forms → network effects compound growth. This year, the Ethereum Foundation published a 38-page plan, while top L2s hit the floor in activity and exited the OP Stack; growth for the number-two player also stalled.

Lowering the cost of entry ≠ creating a formed circumstance. The industry solved the problem of access, yet mistakenly assumed a sense of belonging would follow automatically. That’s not how it works. A sense of belonging is not a feature you can ship.

Farcaster is the product closest to building a basho in the crypto industry. Because a specific group of people built a unique culture on it: developers share their work, debate Ethereum, and form their viewpoints over the long term. That takes time, and it’s absolutely not something that can be replicated simply by competitors offering higher rewards. Friend.tech tried the same idea with an incentive mechanism: it topped the charts in a week and disappeared in a month. The product mechanisms are similar—what’s missing is culture. The difference isn’t in the product; it’s whether there are people who stay long enough for something to truly take shape.

What can genuinely keep people?

Public chains that retain users through bear market cycles don’t rely on more generous incentives. Arbitrum’s June 2024 peak daily active address count was 740,000; today it’s 157,000—a similarly steep 79% drop. But the logic behind the two is completely different.

But the mechanisms differ. Base users come for transactions; when transaction activity is quiet, they leave. The number of users and fee revenue on Base are highly correlated. Arbitrum users aren’t affected by fee rates; the correlation between user count and revenue is nearly zero. Base attracts tourists, while Arbitrum keeps local users.

Hyperliquid can hold its ground because its trading experience is uniquely differentiated, and its community formed an identity that doesn’t exist elsewhere. Token incentives barely matter—staying there is itself part of its behavior and identity. A basho shapes users, and users, in turn, shape the basho.

The crypto industry is still optimizing “user acquisition” one-sidedly. Only after the data collapses does it start thinking about the “circumstance” problem, but it never considers it from the outset of public chain design. Base has the strongest user distribution ability in history; it could have solved this problem better than any chain.

But it’s only a transaction app now. That’s not inherently wrong. After all, there are more than 40 similar products on the market. A transaction app can’t generate a basho; it can only produce one-off sessions: users do their transactions and then leave. And the circumstance that allows things to take form requires more continuous connection—so that the next visit feels like “coming home,” not “arriving for the first time.”

Armstrong’s strategic shift is largely driven by conclusions drawn from data. Social layer, creator economy, on-chain identity—these things that should turn Base from a “tool” into a “home” require patience, and short-term metrics can’t deliver returns. Active addresses and TVL only measure the scale of a location; therefore, “basho” was never prioritized.

The Ethereum ecosystem needs Base to be more than a transaction venue. The foundation of the entire L2 narrative is that a public chain can become the infrastructure for people’s lives and building. If the L2 with the strongest distribution capabilities in crypto history ultimately just ends up being a faster Coinbase, then the narrative collapses on its own.

Nishitani believes that the deepest basho is where the boundary between self and place begins to dissolve: you can’t completely separate your own existence from the environment that shapes you. Put it on a public chain, and it looks like this:

• Users can’t imagine a financial life away from this chain;

• All of the developers’ tools are natively compatible with a particular ecosystem;

• Identity can hardly exist elsewhere.

As far as I know, no L2 has achieved this. It may even be impossible to build it within an incentive cycle.

I might be stretching the term “basho” a bit too far, but the core is simple: even with hundreds of millions of potential users, without something worth staying for, it ultimately remains an empty room. Base now understands that.

It still hasn’t found its true self.