Base and Mantle positioning

Optimism taking over or a honeypot for criminals.

“Purpose uncertain
Promise high
Ethereum labor
By and by
Out comes optimism with speed
Cheap and fast”

With every Ethereum transaction being as expensive as a carafe of water in the Sahara, solutions for scaling are melting lead. With Arbitrum and Polygon having flourished on speculation, it seems the time for Optimistic roll-ups has arrived.

This is where you position yourself for a shift in narrative

Welcome to the use case for optimistic roll-ups. An overview of investable protocols, and the opportunity of being very early in a potentially flourishing digital environment.

This article discusses what exactly an optimistic roll-up is, and speculation cases on both Base and Mantle projects.

TL;DR

• By taking a part of the Ethereum workload off-chain, optimistic roll-ups are able to provide faster and cheaper transactions.
• Base, known for hosting the BALD meme token, has a lot of functional apps and is slowly regaining volume after the meme token rug.
• Mantle may have multiple opportunities, but is technologically inferior to the Base ecosystem. Therefore, it has a bigger chance of redundancy.
• Centralized exchanges building ecosystems opens up a new speculatory playground. A playground for traders with a high-risk profile.

The definition

Optimistic rollups are a scaling solution to Ethereum. It takes the workload off of Ethereum’s on-chain computation, hence providing cheaper and faster transactions. It does this by trustlessly recording transactions off-chain.

An average transaction on Ethereum is averaging at $28, while a transaction on Optimism is 11 cents.

“Optimistic” in this sense, refers to the assumption that all transactions are valid by default. It does not verify or validate transactions before submitting them to Ethereum unless challenged. Instead, it relies on economic incentives and fraud proofs to ensure the system’s correctness and security.

It’s like making a ham sandwich with two friends, but all three of you are in your own kitchen. You might take that earlier mentioned carafe of water and mix it up with flour and eggs.

Friend One might go and wrestle with a pig to get that ham, while Friend Two churns the butter. In the end, Optimistic rollup is your personal assistant that takes the ingredients and makes sure every ingredient is correct.

Any error and it will scream at you like a bus full of Gordon Ramseys. If correct, it will combine the ingredients, throw it in the oven, and upload it to the Ethereum blockchain.

This way, errors will be solved before the product is finished.

Layer two speculation

As of August 2023, there are two optimistic roll-up ecosystems that everyone seems to be talking about.

These two chains are Base and Mantle. In this second part, I will discuss what the ecosystem does, and guide you through opportunities, risks, and options.

Base

Coinbase’s commitment to the on-chain world and instantly available to all of its 100M+ users. As of the time of writing, it is primarily recognised for hosting the BALD token. The infamous meme token known to have gained 4 million percent in a day, just to retrace 95% the next day. Oops.

Opportunities

Coinbase is currently the unchallenged cryptocurrency exchange king in the land of the free. These users have instant access through a user-friendly interface, giving them the chance to easily invest in whatever Base has to offer; with margin!

Base uses the same infrastructure as Ethereum, so it can directly target developers. Applications like Aave, Sushiswap, and Magic Eden are already functional and running.

With Bitcoin and Ethereum in a tight range, traders are looking for gains in riskier, new places. Being in the right place at the right time can get you quick and disproportionally large gains on Base-specific projects.

The big spike is the 2-days BALD hype. It is apparent that even after the rug pull, interest is still rising.

Risks

Base will not have a native token, instead using Ethereum’s ETH for transaction fees. Therefore, to find any profitable trades, you’ll need to dive into smaller projects. Exchanges to find these on are KTX Finance, Swapsicle DEX, and LogX Trade.

Bridging Ethereum to Base is currently a one-way-only transaction. You will have to trust Coinbase to open up withdrawals of Ethereum when they deem it safe to do so. For reference, that’s the sous-chef checking the ingredients.

For Base in general, the biggest risk for the ecosystem is redundancy. With Ethereum looking for on-chain solutions for their high fees, it’s only a matter of time before it fixes its current state. An example is protodank sharding, which significantly reduces gas prices.

Base could become the first big ‘permissioned rollup’. Centralization will take over and users will need to perform KYC to use the platform to avoid sanctioned entities from using it. This will scare off a big part of its current, pseudo-anonymous user base.

Price verdict

To become profitable with Base, you will need to dive head-first into the ecosystem. This will expose you to more honeypots like BALD. Since you can’t withdraw the Ethereum you send to Base — like a bald Winnie the Pooh — you’ll be stuck, upside down in that pot, looking for another big percentage.

The safer options will be positions in the Optimism token (OP) or the Coinbase share (COIN), as they are indirectly affected by the success of the Base ecosystem.

If optimistic rollups remain popular, it is merely a matter of a 6–18 months time frame before Optimism’s token breaks its all-time high of 3 dollars. Concurrently, Coinbase’s COIN stock should be eyeing the 100$ mark it hit in early July this year, potentially even seeking the 300$ all-time in a full-blown bull market.

Mantle

Mantle is a Layer-2 ecosystem developed by both the BitDAO and the Bybit exchange, running on its own token. This MNT token will be used for both governance voting and transaction gas.

Since MNT is swapped for ETH in settlement, it directly derives security from the Ethereum ecosystem.

Mantle is a modular blockchain. The core function of this type of blockchain operation is specialisation for the execution, consensus, settlement, and data availability layer.

Independence of the Ethereum blockchain for settlement gives Mantle the extra advantage of lower fees and potentially solving the blockchain trilemma — combining scalability, security, and decentralisation.

Opportunities

Mantle, at the time of writing, has not had a big ‘’come to this ecosystem” moment. The ecosystem might just have that opportunity that early Base users had.

BitDAO has a treasury of over 3.9 billion dollars. A huge bag to potentially deploy in both Mantle development and price action.

With Celestia on the horizon, the modular blockchain thesis is viable. Mantle will be able to play on this narrative.

Risk

Technologically, there is absolutely nothing special about Mantle. Most promotional talks about Mantle are using fancy marketing terms and a ‘growth flywheel’-approach that is copied from Ethereum and Metamask.

The current leading DEX ‘Agni.finance’ has, at the time of writing, a TVL of $23M and a volume of $800K.

99.98% of that volume is from the trading of Ethereum, Mantle, USDC and USDT. There is actually no token that has the slightest of volume trading. Calling this a desert is an understatement.

Price verdict

Mantle is a lesser version of Base and Celestia and does not have a uniqueness to it. The chances that there will be a pepe, shiba inu, or bald knock-off token that does well are high, and will get manipulated into outer space for a couple of days.

However, that will be all for Mantle, and after initial gains are withdrawn, the ecosystem will die a slow and dragged-out death.

The price of MNT is hovering at 50 cents, coming down from an initial 60 cents. It remained stable this month and it won’t take a lot of volume to reach a single dollar price.

Despite this potential +40%, it is very important to keep in mind that Mantle will become redundant in the near future, and liquidity will dry up.

Conclusion

As much as the bones of civilization are strengthened with safe roads, so are the roads that are cheap to use. Ethereum will not gain any substantial real-life adoption until transaction fees are under 10 cents.

Until that happens, Layer-2 solutions will attract users, speculation, and high-price action.

With centralized players like Coinbase and Bybit entering the speculatory playground, there is a certainty for fireworks. As pretty as fireworks are, they can just as easily hurt and go out with a bang.

Until Bitcoin makes a big move, both Base tokens and Mantle tokens can be both extremely profitable and loss-making.

If your risk profile permits it, explore these ecosystems, look for opportunities, and take a chance. You might just find a big pile of honey without your head getting stuck, suffocating in a horrible demise, while Bitcoin takes over the world.

As always, stay vigilant, retain conviction, and keep stacking sats.