Why is Base, the most profitable L2, able to earn 180,000 USD a day?

Priority fees are the main source of Base revenue, accounting for 86% of its total revenue.

Written by: Zack Pokorny

Compiled by: Luffy, Foresight News

Base, developed by the cryptocurrency exchange Coinbase, is the most revenue-generating 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 earnings reached $185,291, far surpassing the $55,025 of the second-ranked Arbitrum.

Clearly, Base has become a platform with consistently high income, but what drives its economic activities? What other advantages does Base have that other leading L2 solutions do not possess, allowing it to create such high value?

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

The Trading Sorting Mechanism of Base

The transaction ordering on Base is determined by two variables:

1. Transaction submission time (delay);
2. Relative to the complexity of the transaction, the fees paid by the sender (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 an additional fee to choose "express" delivery for faster service. The priority fee mechanism creates a dynamic auction market, consistent with the Ethereum EIP-1559 fee model, achieving a balance between delivery time and economic incentives.

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

But how does the sorter decide which "urgent" transaction to prioritize? It does not directly consider the total fee, but rather focuses on the quote of each unit of Gas (the required computational resources), that is, the cost-effectiveness ratio of the resources needed for the transaction versus the benefits it brings.

Let's illustrate this again using the example of a logistics company: Suppose the delivery truck has limited space (similar to the gas limit of a block), and the driver (the sorter) wants to maximize the tip income within that limited space. At this point, there are two packages:

• A large package, base shipping fee of 50 dollars, but priority tip is only 10 dollars, taking up half a truck space;
• A small package, basic shipping cost is only 20 dollars, with a priority tip of also 10 dollars, taking up very little space.

Although the total cost of the large package is $30 higher than that of the small package, the driver will still prioritize loading the small package because it is more cost-effective in terms of space utilization.

The Base 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 computing resources are also the blocks with the highest revenue. Thus, when two users submit transactions simultaneously, regardless of the complexity or total fee of the transactions, the user who pays a higher priority fee per unit of Gas is more likely to have their transaction included in the block first.

The following diagram illustrates this process:

Why is this important? How does Base differ from competing chains?

The EIP-1559 style fee model of Base 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. Therefore, although there are still delayed competition factors, the economic benefits allow the income of sorters to grow directly with the demand for block space and the profitability of on-chain transactions.

This stands in stark contrast to Arbitrum's primary ordering mechanism. Arbitrum employs a strict "First-Come, First-Served" (FCFS) model, where users primarily compete on latency rather than economic cost. In this model, the main competition is not about who can pay higher fees, as all users have the same Gas fee and do not use priority fees, but rather who can deliver transactions to the sorter the fastest. This leads to a "latency race," where professional participants ensure their transactions are prioritized by investing in low-latency infrastructure. In this environment, Arbitrum's fees only increase with 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 earn similar priority fees. In practice, Timeboost adds a "fast lane" for transaction execution on Arbitrum, where users can bid to use this lane within a limited time. Users entering the fast lane can achieve near-instant execution, while other users are still processed in FCFS order, with only a 200-millisecond delay added to compensate for the priority of the fast lane. Although Timeboost introduced some form of priority bidding, its mechanism is more predictive rather than reactive compared to Base's priority fee model. Bidders must estimate potential total earnings for a future time period and bid based on that estimate. This means that Arbitrum collects a fixed fee from the winning bidder, regardless of the actual earnings during that time period. This proactive fixed-rate model is less effective in capturing the value of sudden high-yield trades compared to a reactive system where users bid individually for each transaction.

How much revenue does Base generate?

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

Since the beginning of this year, Base's total revenue has reached 33.4 million USD, Arbitrum has reached 9.9 million USD, and the other 14 L2 networks have reached 8.4 million USD.

Relatively speaking, over the past 180 days, Base has accounted for 64% of the total revenue of the top Ethereum L2 networks ranked by collateral value among 15. Its share has significantly increased over the past year, rising by 48 percentage points from a daily average of 37% in July 2024, calculated using the 7-day moving average of daily revenue share. As of July 20, due to increased activity on other chains, Base's share of Ethereum Rollup revenue has decreased to 49.7%.

The Important Role of Priority Fees

The transaction fees on Base consist of two main components and an optional priority fee:

• Layer 1 (L1) fees: Used to pay the costs of submitting a batch of L2 transactions to the Ethereum mainnet. After the Ethereum Pectra upgrade in March 2024, which introduces "blob" (data blocks) through EIP-4844, the L1 fee portion for Base (and general L2 transactions) will significantly decrease. This is because submitting bulk data via blobs is more economically efficient than submitting it as call data in L1 transactions.
• Base Fee: The mandatory fee for executing transactions on the Base. Set by the protocol, it fluctuates based on the usage of space in the previous block— 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 the execution of transactions. Priority fees help transactions achieve a more favorable position in the block or ensure that the transaction is included in the current block rather than delayed to the next block. A block can contain thousands of transactions, which are executed in order of their slot. Typically, the first slot in a block is the most valuable, as the transaction in that position is executed first and is not affected by subsequent transactions.

Priority fees are the main source of Base revenue, allowing users to bid for accelerated execution. In the past 180 days, the average daily priority fee revenue for Base reached $156,138, accounting for 86.1% of its average daily revenue.

Specifically, the priority fees for the top slot of the Base block are a significant contributor to the sorter’s revenue, as users compete for positions near the top of the block. Since 2025, the priority fees paid for the first slot of the block alone have contributed 30% to 45% of daily revenue. Additionally, during the same period, the priority fees paid for the top 10 slots of each block contributed 50% to 80% of daily revenue. However, in the weeks following July 5, the share of priority fees from the top slot significantly declined as a portion of the total daily revenue. This is attributed to two factors: 1) increased traffic raised the base fee, thereby diluting the share of priority fee revenue; 2) the implementation of "Flashblocks" on July 16 (which will be detailed below) led to high-priority transactions falling into lower slots in the block (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 coming from just 250 addresses. The top-ranked address accounted for 3.6% of all priority fees during the same period, which is equivalent to 1.99 million dollars when calculated at the ETH price at the time of payment.

What are Flashblocks?

Developed by Flashbots, Flashblocks aims to improve transaction processing speeds on Base. To achieve this goal, it introduces "sub-blocks", which are high-confidence pre-confirmations of block sub-parts created approximately every 200 milliseconds. For example, a block can contain three different sub-parts, and users can receive pre-confirmations for these sub-parts before the block is confirmed on the chain at a set interval of 2 seconds. This allows end-users to feel that transactions are almost completed instantly, even if the block interval on Base remains unchanged, resulting in a smoother and more responsive experience.

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

The figure below 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 proportion of priority fees for each slot; the blue line represents the cumulative proportion of all slots up to that slot (Pareto distribution).

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

The Impact of DEX Trading

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

The activity of DEX is an important reason why Base's priority fees remain high. Among the total fees earned daily by the Base sequencer, 50% to 70% 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 only 34%. This is attributed to two factors: 1) the rise in base fees has diluted the proportion of priority fees; 2) increased competition for on-chain block space has forced users to pay priority fees for non-DEX transactions.

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

Conclusion

Through the analysis of Base's DeFi and yield structure, we found that:

• Priority fees constitute the vast majority of earnings;
• Over the past year, more than 60% of the priority fees came from only 250 addresses;
• High DEX trading volume and TVL;
• Priority fees from DEX trading contributed to nearly three-quarters of the total priority fees.

These points indicate that Maximal Extractable Value (MEV) trading, particularly competitive activities like DEX arbitrage, is an important source of revenue for Base sequencers. The EIP-1559 style fee model adopted by sequencers is a direct mechanism to achieve 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 extra for urgent inclusion, this model allows sorters to capture and commercialize the competitive value of block space more efficiently than traditional "first-come, first-served" or purely delay-driven systems.