Coinbase’s blockchain network, Base, has surged past Tron to become the fifth-largest decentralised finance (DeFi) ecosystem by deposits, cementing its rapid rise since launch in 2023. According to DefiLlama data, deposits on Base soared to over $6.6 billion, surpassing Tron’s $5.2 billion, in a sign of growing confidence in Coinbase’s strategy to marry mainstream crypto adoption with DeFi innovation.

Lending boom fuels Base’s growth

At the heart of Base’s success is the sharp rise in DeFi lending. Lending protocols have attracted $73 billion in deposits globally this year, up 52% since January, with Base capturing a disproportionate share of that momentum.

On Base itself, two protocols dominate: Morpho, with more than $2.5 billion in deposits, and Aave, the second-largest on the chain. Together, they represent over 60% of Base’s total deposits. Morpho alone has been a key driver, thanks to its integration with Coinbase that allows customers to borrow stablecoins against their Bitcoin holdings, an innovation that has contributed an extra $1 billion to Morpho’s Base total value locked (TVL).

A Morpho spokesperson told DL News:

“Base is doing a great job promoting native lending and borrowing protocols.”

The broader surge underlines how lending protocols are acting as the backbone of DeFi’s growth in 2024, with Base positioning itself as a natural home for such activity.

Coinbase’s edge: speed, cost, and user base

Base is a Layer 2 blockchain built on top of Ethereum and launched in partnership with Optimism in 2023. Coinbase has marketed Base as a network offering fast, low-cost transactions, targeting both new crypto users and experienced DeFi participants.

A Coinbase spokesperson said the exchange has prioritised transaction efficiency to bring users into the ecosystem. That strategy appears to be paying off, not only in terms of deposits but also in broader engagement. In July, Coinbase launched a dedicated Base mobile app, essentially a rebranded version of Coinbase Wallet, which channelled fresh liquidity into protocols like Morpho.

Industry figures say Coinbase’s reputation and reach are providing the crucial network effects. Mehdi Lebbar, co-founder of yield aggregator YO Protocol, which manages $73 million in deposits on Base, described the decision to build on Base as straightforward:

“Coinbase’s vast user base provides a foundation for a thriving marketplace.”

Competition heats up: Tron, Binance, and others

Despite losing its place to Base in terms of DeFi deposits, Tron remains formidable in other areas. Its flagship lending protocol, JustLend, alone accounts for $5.2 billion, more than Morpho and Aave combined on Base. Tron also maintains the upper hand in stablecoin trading volumes, an area where Base is still developing.

Tron DAO, the organisation supporting the blockchain, did not immediately comment on Base’s advance.

Meanwhile, the rise of Base mirrors a trend among centralised exchanges building their own blockchains to capture DeFi growth. Binance’s BNB Chain, launched in 2017, is now the third-largest by DeFi deposits with $9.3 billion, while Crypto.com’s Cronos, launched in 2021, ranks 16th with $643 million.

This competitive environment highlights the jockeying for position among exchange-backed blockchains, each seeking to leverage its existing user base to dominate DeFi.

Coinbase riding crypto market momentum

The timing of Base’s surge coincides with renewed bullishness in the broader crypto markets. Coinbase, a US-listed exchange, has benefited directly from this upswing, with researchers at Bernstein projecting the company’s stock could climb 60% to $510 in the near term.

The performance of Base further strengthens Coinbase’s narrative as not just an exchange but a key infrastructure provider in decentralised finance. Its ability to attract billions in deposits within just over a year of launch underscores the strength of its brand, the loyalty of its customer base, and its willingness to innovate in an increasingly crowded field.

For DeFi users, the success of Base signals a shifting landscape. While older blockchains like Tron continue to hold sway in specific niches, Coinbase’s Base is proving that speed, integration with established platforms, and network effects can accelerate adoption – and potentially redefine the rankings of DeFi powerhouses.