Coinbase’s ‘Startup Mindset’ is Serving Them Well

TL;DR

• In the first quarter of 2021, they brought in an eye-watering ​$1.5 Billion​, just from transaction fees (86% of its total $1.8 billion revenue).

• But as crypto winter hit, the number of transactions going through the platform dropped and they moved to other products like subscriptions and staking, and a rev-share agreement with Circle where they get paid interest.

• It’s great to see their continued innovation and their ability to maintain that ‘startup mindset,’ even as a public company.

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This isn’t an ad for Coinbase (but hey, if anyone has any connections there, we’d love to work with them), it’s a quick look into just how quickly they’ve adjusted since going public.

Coinbase listed on the Nasdaq in April 2021 (i.e. ‘The Good Times’).

In the first quarter of 2021, they brought in an eye-watering ​$1.5 Billion​, just from transaction fees (86% of its total $1.8 billion revenue).

But as crypto winter hit, the number of transactions going through the platform dropped and they were in dire need of additional ways to make up for that lost revenue.

Since then, they’ve made two particularly smart moves:

Un: Adding products like subscriptions and staking.

Deux: A revenue-sharing agreement with Circle, in exchange for providing ‘reserves’ for the world’s second largest ​stablecoin​, USDC.

To explain that further, in order to operate USDC, the company behind it (Circle) needs to hold a ton of money in reserves, so they don’t depeg from the dollar in the case of a ​bank run​.

Coinbase seemed to see that interest rates were on the rise and put their hand up to back Circle, in exchange for interest.

Their quarterly earnings report comes out today, but, revenue from transaction fees ​reduced to 46%​ in the first quarter of this year, and that percentage is expected to drop even further in today’s report.

(Which is great news! Diversified revenue streams is far better than all eggs in being one basket)

There’s no doubt that Coinbase has pushed the crypto industry forwards big time.

It’s great to see their continued innovation and their ability to maintain that ‘startup mindset,’ even as a public company.

Looking forward to seeing the latest numbers in the quarterly report later today.