Cryptocurrency traders have recently flocked to Coinbase’s layer-2 blockchain Base, despite the platform’s nascent user experience, which doesn’t yet allow users to bridge tokens out of it. Nevertheless, one trader managed to turn $500 into over $1.4 million in a token.
Base was first launched in January on OP Stack and was first only open to developers, but its appeal has widened despite the platform’s lack of a two-way token bridge and a somewhat cumbersome decentralized exchange (DEX) experience.
Traders began to show significant interest in Base following a social media spark over the weekend, with a trader disclosing an investment in the memecoin $BALD, a token on the Base network supposedly backed by Coinbase staked ether (cbETH). Blockchain data has shown the deployers behind BALD did hold a large amount of cbETH.
The trader claimed they acquired 2% of the cryptocurrency’s circulating supply when its market capitalization was below the $50,000 mark, suggesting an initial investment of around $500. The fact that cbETH was said to be involved sparked speculation that Coinbase – or someone associated with the exchange – could be associated with the creation of the token.
What unfolded next was a rapid bull market that saw the BALD tokens reach a market capitalization of $50 million in less than six hours. By late Sunday, this figure had climbed to $85 million and the trader’s initial investment had ballooned to $1.4 million after the price of the cryptocurrency surged over 4,000,000%.
The BALD market gained significant liquidity as more ether was added to a pool trading BALD against ETH. The trading pair’s liquidity, at one point, was above $32 million as trading volumes surpassed $100 million.
Notably, the short-lived memecoin frenzy was cut short by a rugpull from the developers behind BALD, which removed liquidity from the pool that was being used to trade it.
While it’s unclear whether the trader cashed out their tokens before the rugpull, as the deployers of BALd started removing liquidity the cryptocurrency’s price started plunging, to now have lost over 90% of its value.
On-chain data seems to suggest the deployers of BALD may have links to Sam Bankman-Fried, the founder of collapsed cryptocurrency exchange FTX accused of misappropriating user funds. Wallets tagged by Nansen as belonging to Alameda Research – a firm founded by SBF – have interacted with BALD’s deployer contract address before.
Moreover, Wintermute’s head of research, Igor Igamberdiev, tied an address belonging to Alameda Research that had interacted with several DeFi protocols, including SushiSwap and dYdX, that also interacted with BALD.
Featured image via Unsplash.