The most profitable L2, why can Base earn $180,000 a day?

Written by: Zack Pokorny

Compiled by: Luffy, Foresight News

The Base platform created by the cryptocurrency exchange Coinbase is the most profitable platform in the Ethereum Layer 2 (L2) network, with daily earnings often exceeding the total of all other top Rollup projects. In the past 180 days, Base's average daily revenue reached $185,291, far surpassing the $55,025 of the second-ranked Arbitrum.

Clearly, Base has become a consistently high-revenue platform, but what drives its economic activity? What advantages does Base have over other leading L2s that enable it to create such high value?

This report will explore Base's fee structure and highlight the activities driving its revenue growth. We find that Base's sorting mechanism and decentralized exchange (DEX) activities are key drivers.

Base's Transaction Sorting Mechanism

The transaction sorting on Base is determined by two variables:

1. Transaction submission time (latency);

2. The fee paid by the sender relative to the transaction complexity (economic incentive).

This mechanism is similar to the operational model of logistics companies like UPS: packages are sent in the order they are delivered by users, while allowing senders to pay extra fees for "express" delivery to receive faster service. The priority fee mechanism creates a dynamic auction market, consistent with the Ethereum EIP-1559 fee model, balancing delivery time and economic incentives.

Specifically, transactions on Base include a "base fee" (lowercase "b", do not confuse with the chain name) and a priority fee: all users must pay the base fee when sending transactions, while the priority fee is optional and used only to expedite transaction execution.

But how does the sorter decide which "express" transaction to prioritize? It does not directly consider the total fee but focuses on the bid per unit of Gas (the computational resources required), i.e., the cost-effectiveness of the resources required for the transaction versus the revenue generated.

Let’s illustrate this with the logistics company example: suppose the delivery truck has limited space (similar to the Gas limit of a block), and the driver (the sorter) wants to maximize tip income within that limited space. At this time, there are two packages:

• A large package with a base shipping cost of $50, but a priority tip of only $10, occupying half the truck space;

• A small package with a base shipping cost of only $20, but a priority tip of also $10, occupying very little space.

Even though the total cost of the large package is $30 higher than the small package, the driver will prioritize loading the small package because it has a higher cost-effectiveness in terms of space occupied.

Base's sorter follows the same logic, prioritizing transactions with the highest priority fee per unit of Gas, ensuring that the blocks with the "highest cost" of computational resources are also the most profitable. Therefore, when two users submit transactions simultaneously, regardless of transaction complexity or total fees, the user who pays a higher priority fee per unit of Gas is more likely to have their transaction prioritized in the block.

The following diagram illustrates this process:

Why is This Important? How Does Base Differ from Competing Chains?

Base's EIP-1559 style fee model creates a continuous public market auction environment for block space, allowing users to bid directly for block space based on the urgency and profitability of their transactions. Thus, although there are still latency competition factors, the economic benefits allow the sorter's revenue to grow directly with the demand for block space and the profitability of on-chain transactions.

This sharply contrasts with Arbitrum's primary sorting mechanism. Arbitrum adopts a strict "first-come, first-served" (FCFS) model, where users mainly compete on latency rather than economic cost. In this model, the main competition is not about who can pay more fees, as all users have the same Gas fee and do not use priority fees, but rather who can deliver their transaction to the sorter the fastest. This leads to a "race for latency," where professional participants ensure their transactions are prioritized by investing in low-latency infrastructure. In this environment, Arbitrum's fees only grow with the scale of demand and do not effectively reflect the profitability or urgency of individual transactions.

In April 2025, Arbitrum launched the Timeboost feature, aimed at creating a more flexible FCFS system that allows sorters to capture revenue similar to priority fees. In practice, Timeboost adds a "fast lane" for transaction execution on Arbitrum, where users can bid to use this lane for a limited time. Users entering the fast lane can achieve nearly instant execution, while other users are still processed in FCFS order, only adding a 200-millisecond delay to compensate for the priority of the fast lane. Although Timeboost introduces some form of priority bidding, its mechanism is more predictive than reactive compared to Base's priority fee model. Bidders must predict the potential total revenue for a future time period and bid based on estimates. This means Arbitrum receives fixed fees from winning bidders, regardless of the actual revenue situation during that time period. This proactive fixed-rate model is less effective than a reactive system where users bid individually for each transaction in capturing the value of sudden high-revenue transactions.

How Much Revenue Does Base Generate?

In the past 180 days, Base's average daily revenue was $185,291. In contrast, Arbitrum's average daily revenue was $55,025, while the combined average daily revenue of the other 14 Ethereum L2 networks was $46,742.

So far this year, Base's total revenue has reached $33.4 million, Arbitrum $9.9 million, and the other 14 L2 networks $8.4 million.

Relatively speaking, in the past 180 days, Base accounted for 64% of the total revenue of the top 15 Ethereum L2 networks ranked by total value secured. Its share has significantly increased over the past year, rising by 48 percentage points from an average daily share of 37% in July 2024. As of July 20, due to increased activity on other chains, Base's share of Ethereum Rollup revenue has dropped to 49.7%.

The Important Role of Priority Fees

Transaction fees on Base consist of two main parts and an optional priority fee:

• Layer 1 (L1) fees: used to pay the cost of submitting a batch of L2 transactions to the Ethereum mainnet. After the Ethereum Pectra upgrade in March 2024 introduced "blobs" through EIP-4844, the L1 fee portion for Base (and general L2 transactions) has significantly decreased. This is because submitting bulk data through blobs is more economically efficient than submitting it in L1 transactions as call data.

• Base fee: a mandatory fee for executing transactions on Base. Set by the protocol, it fluctuates based on the usage level of the previous block space— the busier the network, the higher the base fee; conversely, the lower it is.

• Priority fee: an optional fee, also known as a "tip," used to prioritize transaction execution. The priority fee helps transactions secure a more favorable position in the block or ensures that transactions are included in the current block rather than delayed to the next block. A block can contain thousands of transactions, which are executed based on their slot order. Typically, the first slot of a block is the most valuable because the transaction in that position is executed first and is not affected by subsequent transactions.

Priority fees are the main source of Base's revenue, with users bidding for expedited execution. In the past 180 days, Base's average daily revenue from priority fees reached $156,138, accounting for 86.1% of its average daily revenue.

Specifically, the priority fees for the top slot of Base blocks are significant contributors to sorter revenue, as users compete for positions near the top of the block. Since 2025, transactions in the first slot of the block alone have contributed 30% to 45% of daily revenue from priority fees. Additionally, during the same period, transactions in the top 10 slots of each block contributed 50% to 80% of daily revenue from priority fees. However, in the weeks following July 5, the share of priority fees from the top slots significantly declined. This is attributed to two factors: 1) Increased traffic raised the base fee, diluting the share of priority fee revenue; 2) The implementation of "Flashblocks" on July 16 (which will be detailed below) caused high-priority transactions to fall into lower slots within blocks (but as we will see, this is not necessarily a bad thing).

Priority fees mainly come from a small number of addresses, with 64.9% of priority fees in the past year originating from just 250 addresses. The top address alone accounted for 3.6% of all priority fees during the same period, equivalent to $1.99 million when calculated at the ETH price at the time of fee payment.

What are Flashblocks?

Developed by Flashbots, Flashblocks aim to enhance transaction processing speed on Base. To achieve this, it introduces "sub-blocks," which are high-confidence pre-confirmations of block sub-parts created approximately every 200 milliseconds. For example, a block may contain three different sub-parts, allowing users to receive pre-confirmations of these sub-parts before the block is confirmed on-chain at the set 2-second interval. This means that even if Base's block interval remains unchanged, end users can experience transactions as if they are completed almost instantly, resulting in a smoother and more responsive experience.

Why is this crucial for analyzing Base network fees by slot? Because from the perspective of transaction sorting, each "sub-block" is effectively treated as a new block. Therefore, high-priority fee transactions may fall into lower slots of the overall "confirmed block," but are at the top of the "pre-confirmed sub-blocks."

The following diagram shows the difference in the distribution of priority fees for the top 200 block slots before and after the implementation of Flashblocks. The black bars represent the share of priority fees for each slot; the blue line represents the cumulative share of all slots up to that slot (Pareto distribution).

In the week before the implementation of Flashblocks, the Pareto curve sharply rose in the top 10 slots and then increased linearly to the 200th slot. In contrast, in the week following the implementation of Flashblocks, the Pareto curve was relatively flat at the lowest slots, only beginning to steeply rise around the 50th slot of each block—indicating that high-priority fee transactions are falling into later slots of confirmed blocks.

The Impact of DEX Transactions

DEX activity on Base is very active. Among all Ethereum L2 networks, Base has the highest daily DEX trading volume, accounting for 50% to 65% of L2 network DEX trading volume, and its DEX total value locked (TVL) is the highest among all L2 networks (excluding perpetual futures DEX).

The active DEX activity is a significant reason why Base's priority fees remain high. Between 50% to 70% of the total fees received by Base sorters daily come from priority fees of DEX transactions. However, since July 7, the proportion of DEX transaction fees in the total daily fees has dropped from 67% to just 34%. This is attributed to two aspects: 1) Rising base fees diluted the share of priority fees; 2) Increased competition for on-chain block space forced users to pay priority fees for non-DEX transactions.

Since 2025, priority fees paid by DEX transactions in the first slot alone have contributed 30% to 35% of the total daily priority fees, while priority fees from DEX transactions in the top three slots have contributed 50% to 62% of the total daily priority fees. Recently, the share of DEX priority fees in the top slots has declined due to increased overall competition on-chain leading to higher priority fees for non-DEX transactions, as well as the implementation of Flashblocks causing high-priority DEX transactions to fall into lower slots within blocks.

Conclusion

Through the analysis of Base's DeFi and revenue structure, we find:

• Priority fees constitute the vast majority of revenue;

• Over the past year, more than 60% of priority fees came from just 250 addresses;

• High DEX trading volume and TVL;

• Priority fees from DEX transactions contributed nearly three-quarters of the total priority fees.

These points indicate that maximum extractable value (MEV) transactions, especially competitive activities like DEX arbitrage, are significant sources of revenue for Base sorters. The EIP-1559 style fee model adopted by sorters is the direct mechanism for achieving this: it transforms block space competition from an inefficient latency-based race into an efficient economic auction.

By charging priority fees to users willing to pay for urgent inclusion, this model enables sorters to capture and commercialize the competitive value of block space more effectively than traditional "first-come, first-served" or purely latency-driven systems.

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