According to Milk Road (@MilkRoadDaily), Base has emerged as a dominant Layer 2 (L2) network, quietly capturing over $50 billion in market capitalization from the Ethereum ecosystem. Data cited in the discussion highlights that while Ethereum's on-chain economic activity (often termed as 'Ethereum GDP') is declining, Base's rapid growth as an L2 solution is attracting both projects and capital. This trend raises concerns for Ethereum traders, as significant value migration to Base could impact ETH transaction fees, network security funding, and overall liquidity on mainnet. Traders are advised to monitor Base's TVL and user activity as these metrics may influence ETH price action and L2 token valuations, especially if Ethereum's scaling approach continues to divert value away from its base layer (source: @MilkRoadDaily, May 2, 2025).

According to Milk Road’s interview with Michael Nadeau, recent data shows that Base, a Layer 2 solution, is capturing significant transaction volume and user activity that would traditionally occur on Ethereum mainnet. Nadeau highlights that Base’s rapid growth is leading to higher on-chain activity and DeFi volume on its network, potentially diverting transaction fees and user engagement from Ethereum L1. For traders, this shift suggests a redistribution of value accrual, with Base-based tokens and projects possibly gaining momentum while Ethereum Layer 1 fee revenue faces pressure (source: Milk Road via x.com/i/broadcasts/1…). Monitoring transaction flows and liquidity migration to Base can provide actionable trading insights for both ETH and Base ecosystem assets.