gegründet
founded
Refers to the establishment or creation of an organization, company, or city.
Das 1995 gegründete Unternehmen ist heute Weltmarktführer.
The company, founded in 1995, is now the global market leader.

founded / based
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founded
Refers to the establishment or creation of an organization, company, or city.
Das 1995 gegründete Unternehmen ist heute Weltmarktführer.
The company, founded in 1995, is now the global market leader.

'Gegründet' (founded/based) is the past participle of the verb 'gründen' (to found/base). This verb has two main meanings: 'to establish something' and 'to build something on a basis', which are reflected in the uses of 'gegründet' (founded/based).
Die Europäische Union wurde auf den Prinzipien von Frieden und Zusammenarbeit gegründet.
The European Union was founded on the principles of peace and cooperation.
The preposition 'auf' (on) is a clear signal for the meaning 'based on'. If the preposition is missing and the context is an organization, a company, or a city, the meaning is 'established'.
Die Firma wurde 2005 gegründet.
The company was founded in 2005.
In the meaning of 'based on', 'gegründet' (based) is always used with the preposition 'auf' and the accusative. The structure is: 'gegründet auf + accusative'.
Ihre Anklage ist auf einen falschen Verdacht gegründet.
Her accusation is based on a false suspicion.
arisen / emerged
'entstanden' and 'gegründet' can both say that something new has come into being. The difference lies in how it got there. 'entstanden' is generally used when something has arisen or emerged through a process, an event, or over time. This can be planned or unplanned. 'gegründet' is used especially for organizations, companies, associations, or cities when they have been deliberately established. Learners may confuse the words because a company has also 'entstanden' after it is founded. But 'gegründet' is more precise when you mean the official beginning of an organization.

Der Verein wurde vor zehn Jahren von Eltern aus dem Stadtteil gegründet.
The association was founded ten years ago by parents from the neighborhood.
Aus dem kleinen Gespräch ist später eine enge Freundschaft entstanden.
The small conversation later developed into a close friendship.