Coinbase’s layer 2 blockchain Base is having the “Coinbase Effect” all on its own. The “Coinbase Effect” is when a crypto is listed or rumored to potentially be listed on the Coinbase crypto exchange and the price of that asset increases tremendously, giving overnight returns rarely seen in the stock market or any other investment tool by comparison. This time the Coinbase blockchain itself has produced “the effect” without an actual listing on the exchange.
As reported by CoinDesk, Base, which was developed by Coinbase on OP Stack, launched its testnet in January and opened to builders in mid-July. Volume was minimal, so far, as only a few decentralized exchanges went live on Base.
Things began to turn around late Saturday, July 29th. Crypto Twitter “X” user @cheatcoiner tweeted about meme coin BALD – funded by Coinbase staked Ether (cbETH) – on Base network, stating they purchased 2% of the supply.
These types of tweets are commonly referred to as “calls” – mostly consisting of influencers promoting tokens only to dump them on unaware followers at higher prices. The use of cbETH quickly inspired speculation among crypto trading circles about the token likely being created and issued by someone at Coinbase.
What came next was a FOMO-frenzy. (FOMO = fear of missing out)
In less than six hours, BALD tokens attained a $50 million market capitalization as their popularity spread among trading circles. It reached an $85 million capitalization late on Sunday - netting @cheatcoiner over $1.4 million from an modest investment of $500.
From issuance to peak, the price increase was a 4,000,000% surge.
BALD market liquidity rapidly grew as the developer of BALD tokens kept adding more Ether to a liquidity pool that traded BALD against Ether. As of July 31st, the trading pair holds over $32 million in liquidity and has exceeded $100 million in volume.
@Cheatcoiner wasn’t the only trader to make a pretty penny. Twitter “X” user @Lookonchain said Monday that four crypto wallet addresses transferred a cumulative 0.534 Ether, or just over $1,0000, to buy 50 million BALD within 4 mins of the token’s issuance.
How much of these gains make their way out of Base remains to be seen, however. As of Monday, there is only a one-directional way to move funds over to Base from Ethereum, with no official support for the other way.
Some wise words from CaptainAltcoin.com in observation of the BALD “FOMO-frenzy”:
“While $BALD’s rise has created enormous wealth for some investors, it also serves as a reminder of the volatile and unpredictable nature of the cryptocurrency market. Many were caught by surprise and missed the opportunity for these outsized returns, with some individuals expressing their regrets publicly.
Cryptocurrency investments, particularly in relatively unknown and highly volatile coins such as $BALD, carry significant risk. Therefore, while the tales of overnight riches can be enticing, potential investors should exercise due diligence and consider their risk tolerance before getting involved in such ventures.”
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