Welcome to another engaging article where we dissect the Base Layer 2 Blockchain which was officially launched just a week ago.
Since its debut, it's been making waves across the crypto ecosystem, with multiple tokens posting impressive tenfold returns. As usual, I've jumped in early for some promising returns. I thought it'd be a great idea to share some insights and a step-by-step guide on how to make the most out of the Base ecosystem.
What is the Base Layer 2 Blockchain?
The Base Layer 2 (Base) is a novel blockchain platform serving as a layer two scaling solution for Ethereum. Constructed by cryptocurrency heavyweight, Coinbase, Base enhances Ethereum's performance by managing transactions on a secondary blockchain which eventually settles back on the main Ethereum chain.
Take note, however, that the transition between the Ethereum's chain and the Base ecosystem requires the payment of gas fees in ETH, hence maintaining sufficient ETH in your wallet is critical.
Crossing the Bridge to Base
Getting started with Base requires having a wallet, such as MetaMask, and some funds on a blockchain, preferably Ethereum. With these ready, navigate to the Base website and locate the Bridge tab. This Bridge function allows the transfer of funds from one blockchain to another.
One thing to keep in mind is the inherent risk associated with the use of bridges due to hacking incidents in the past or incorrect transaction signings. I strongly advise against transferring more funds than you can afford to lose.
Exploring Opportunities in Base Ecosystem
Upon successfully crossing the bridge into the Base ecosystem, the honest exploration begins. You can quickly discover potential ventures without endorsements for any specific projects; the emphasis here is on the high-risk nature of the ventures you'll potentially encounter.
There are several platforms to unveil potential projects. The first stop should be the Base website itself which lists projects vetted by Coinbase. Another excellent platform is DeFi Llama. This website indexes applications on various blockchains, providing valuable metrics such as Transaction Volume and Total Value Locked (TVL). I also recommend social media platforms, especially Twitter, as a research tool for discovering projects not yet listed on other websites.
Buying Projects on Base
Once you find a project you're interested in, the next step is purchasing tokens. For this, decentralized exchanges like Uniswap and BaseSwap are your go-to platforms. Again, please note the inherent risk in newer exchanges such as BaseSwap. So, it's crucial to tread with caution.
Evaluating Projects on Base
Here, the focus is on what I look out for when vetting projects. Beyond looking at essential elements such as liquidity and the age of the pool, social proof is another essential aspect. A strong presence on social platforms like Twitter indicates some level of authenticity and legitimacy.
Additionally, as a developer, I usually vet the smart contract of a project before investing. This helps weed out projects with suspicious rug-pull mechanisms. Lastly, I take a look at the price chart of a project. As a rule of thumb, I avoid investing at all-time highs but instead, wait for some form of pullback.
My Investment Strategy
When investment opportunities arise, a boring buy-and-hold strategy served me pretty well.
However, remember, this comes with a fair share of risk, and it's best to invest only what you can afford to lose. By adopting this strategy, I aim to minimize risk and optimize gains over a medium to long-term timeframe.
Wrapping up
Getting the hang of the Base ecosystem and vetting potential investments can be quite exciting, but remember, the key is to stay informed, stay cautious, and invest wisely. More than ever, the best long-term strategy is learning, understanding, and navigating the complex world of blockchain technology as a developer. It offers a guaranteed way of increasing your salary and making the most out of the crypto boom.
Until next time, stay informed, stay invested, and as always, thanks for reading!