Coinbase has significantly diversified its revenue sources since 2021, enabling it to maintain robust earnings per share over recent quarters. Analysts, including DeFi specialist Michael Nadeau, recognize Coinbase as a more robust entity that adapts its business model to align with prevailing market trends.
Expanding revenue channels
Coinbase has effectively broadened its financial landscape, capturing significant growth in non-traditional sectors. Notably, the company has seen substantial revenue from its dealings in stablecoins and staking options, starkly contrasting its financial activities in 2021.
The introduction of the Base blockchain has begun to make a noticeable impact on the company’s financial health. Despite not reaching the trading revenue peaks of the 2021 bull market, Coinbase has ventured into diverse crypto activities, particularly those generating fees and rewards. The company’s dual approach now includes facilitating access to meme coins and NFTs via its Base platform while expanding its institutional finance capabilities through Coinbase Prime.
Strengthening market position through compliance
Coinbase continues emphasising regulated trading to mitigate risks associated with unregulated markets, which it cites as a significant competitive threat. The company is also laying the groundwork for international derivative trading and is actively pursuing a MiFID license in the EU by potentially acquiring a local entity.
Although currently limited, derivative trading on Coinbase could soon expand, offering a new revenue stream. Coinbase Derivatives LLC, in particular, has been actively securing approvals to launch new markets, recently adding tokens like Avalanche (AVAX) and Shiba Inu (SHIB) to its offerings.
Innovative user engagement initiatives
Another growth vector for Coinbase is its native Base blockchain, developed through Optimism superchain technology. This platform has attracted nearly 30 million wallets, with $1.7 billion in value bridged from other protocols, offering users access to significant tokens like USDT and USDC. The base has established itself as a vibrant hub for less formal crypto activities, such as NFT and meme token trading, supported by features like direct Uniswap trading access and the Aerodrome exchange. Coinbase has introduced a gas fee subsidy program to boost engagement further, promising $10 monthly to savvy wallet users and encouraging broader participation in blockchain-based activities.
As Coinbase continues to adapt and expand its business model, it remains focused on enhancing its traditional trading services and exploring new market opportunities to maintain its competitive edge in a fluctuating market landscape.