How to Borrow on Base And Other Layer 2s

Background

As blockchain networks evolved, developers recognized that decentralization came with limitations in scalability. To improve transaction speed and reduce costs, they created Layer 2 (L2) solutions—networks built on top of Layer 1 chains like Ethereum. However, differences in design and protocol rules between Layer 1 and Layer 2 networks mean that assets on one network aren't directly usable on others, which can restrict their functionality. For example, assets on Ethereum Mainnet aren’t inherently compatible with networks like Base or Arbitrum. Bridging was developed to address this by locking an asset, such as ETH, on one network and creating a corresponding token, such as bridged (or wrapped) ETH, on the target chain. This enables users to utilize Ethereum assets on Layer 2s, expanding their reach and interoperability while preserving the security of the original holdings.

How To Borrow on A Layer 2 Using Rocko

Start the Loan Process

First, go to app.rocko.co and start the loan set up process. On the third page, you’ll be asked to select the lending protocol and network for your loan. For example, you can choose Compound on Ethereum or Compound on Base, a Layer 2 network built on Ethereum. Note that different networks may support different collateral assets.

Confirm Your Loan

Upon finalizing your loan, you will receive the address for your Rocko smart wallet. It is essential to transfer the required crypto collateral to this wallet for your loan to be fulfilled. Make sure to send the collateral on the same network you selected for your loan to ensure a smooth transaction. For example, if you chose Compound on Base, you would need to transfer the crypto collateral to your Rocko smart wallet on the Base network. Once your crypto collateral has been received, your Rocko smart wallet will automatically fulfill your loan and transfer the funds to your specified wallet address or account.

Coinbase Users

For Coinbase users in most U.S. states, it’s easy to transfer crypto on a specific network as you can select the network when you go to withdraw collateral as shown in the image below.

Non-Coinbase Users

For non-Coinbase users, you can acquire crypto on a different network using a bridge. Many networks offer official bridges that are managed by the team behind a Layer 2 network. Additionally, there are bridging aggregators such as Stargate and Decent that allow you to bridge assets to and from a variety of networks. Base also provides bridge options for Base on theirwebsite.

Summary

Layer 2 networks like Base can provide faster and cheaper transactions while benefiting from the security of the Ethereum network. Additionally, when lending protocols like Compound are deployed on Layer 2 networks like Base, it provides another loan option and interest rate. With Rocko, you can compare rates and easily borrow from the best option for you.