Base's Dominance in Ethereum Layer-2 Fee Generation and Network Value Capture

Ethereum's Layer-2 (L2) ecosystem has emerged as a critical force in scaling blockchain adoption, with Base-Coinbase's L2 solution-solidifying its position as a dominant player in 2025. This analysis evaluates Base's structural advantages, fee dynamics, and market share to assess its long-term investment potential, drawing on recent data and strategic developments.

Market Share: Revenue and TVL Leadership

By the end of 2025, Base captured 62% of total L2 revenue, generating $75.4 million in on-chain revenue, while the broader L2 market totaled $120.7 million according to ChainCatcher. This dominance extends to DeFi, where Base's TVL reached $4.63 billion, representing 46% of the L2 market according to ChainCatcher. Additionally, Base's TVL of $12.5 billion accounted for 33% of the L2 transaction volume market according to Levex. These figures underscore Base's ability to attract both capital and user activity, driven by its integration with Coinbase's ecosystem and strategic partnerships.

Ethereum's L2 networks collectively processed 5.19 times more transactions than Ethereum mainnet in 2025, with Base contributing significantly to this volume according to Levex. Despite Ethereum's dominance in total fees ($387,662.50 in 2025), Base's lower average transaction fees (often below $0.50) and higher throughput position it as a primary conduit for scalable, cost-effective transactions according to Ledger.

Structural Advantages: OP Stack, Coinbase Integration, and Scalability

Base's architecture, built on Optimism's OP Stack, provides a foundation for high throughput and low costs. With 2-second block times and average fees below $0.50, Base outperforms competitors like Arbitrum in cost efficiency according to Levex. This is further amplified by its seamless integration with Coinbase's ecosystem, including Coinbase Commerce, Coinbase Wallet, and a user base exceeding 100 million. This integration ensures a ready audience for DeFi, NFTs, and social dApps, accelerating adoption according to Ledger.

The OP Stack also supports interoperability with the Optimism Superchain, a vision of interconnected L2s that could enhance Base's role as a decentralized, scalable network according to Ledger. Meanwhile, Base's EVM compatibility allows developers to deploy dApps with minimal code modifications, fostering rapid ecosystem growth. Platforms like Aerodrome, Aave, and Friend.tech have driven liquidity and user engagement, further entrenching Base's position according to Levex.

Fee Dynamics and Value Capture

Base's fee structure is optimized for mass adoption, with average fees dropping below $0.01 per transaction in 2025 according to MEXC. This contrasts with Arbitrum's multi-dimensional gas pricing model, which dynamically adjusts fees based on resource usage but often results in higher volatility according to Arbitrum. Base's consistent low fees have enabled it to process 50 million monthly transactions, even during high-traffic periods according to Levex.

Value capture is another key differentiator. While Ethereum's revenue declined due to L2 competition, Base's on-chain revenue grew 30-fold year-over-year according to ChainCatcher. This is supported by Coinbase's institutional-grade infrastructure and regulatory clarity, which appeal to both retail and institutional users according to Levex. Additionally, Base's roadmap includes progressive decentralization, addressing concerns about centralization risks tied to Coinbase's sequencer role according to Levex.

Competitive Landscape: Base vs. Arbitrum

Arbitrum, another leading L2, has focused on governance-driven upgrades like BoLD and Timeboost to enhance security and MEV capture according to Ledger. However, its TVL ($3.86 billion) lags behind Base's ($4.32 billion) according to Levex. Arbitrum's dynamic pricing model aims to stabilize fees but lacks the simplicity and predictability of Base's approach. Furthermore, Arbitrum's reliance on tokenomics (e.g., ARB staking) for value capture remains unproven compared to Base's direct revenue streams according to The Standard.

Long-Term Investment Potential

Base's dominance is underpinned by structural advantages that align with Ethereum's long-term vision. The Fusaka upgrade-aimed at improving data availability and transaction pricing-further strengthens L2 scalability, benefiting Base's growth trajectory according to Fidelity Digital Assets. With Ethereum's L2 ecosystem handling 90% of Ethereum-related transactions in 2025 according to Binance, Base is well-positioned to capture a growing share of the $18.8 trillion in stablecoin settlement volume according to MEXC.

For investors, Base's high TVL, low fees, and strategic partnerships suggest a strong value proposition. However, risks include regulatory scrutiny of Coinbase's central role and potential competition from emerging L2s. Base's roadmap for decentralization and continued innovation in fee dynamics will be critical in sustaining its lead.

Conclusion

Base's dominance in Ethereum's L2 ecosystem is a product of its structural advantages, including the OP Stack, Coinbase integration, and optimized fee dynamics. With 62% of L2 revenue and 46% of DeFi TVL, Base has established itself as a leader in value capture and user adoption. As Ethereum's L2s continue to scale, Base's ability to balance efficiency, security, and decentralization positions it as a compelling long-term investment.