Coinbase Is Investing Significantly in Staking Ahead of the Ethereum Merger

Coinbase
Share on linkedin
Share on facebook
Share on twitter
Share on reddit

Faced with a drop in cryptocurrency prices on the one hand and reduced money from user transactions on the other, Coinbase CEO Brian Armstrong stated that the business is not focused on profitability. It’s all about staking.

On Coinbase’s [NASDAQ: COIN] most recent earnings call, he stated of the crypto market, “Any given quarter it may be up or down.” “It’s critical to discern between what we can control and what we can’t.”

The frost of crypto winter has dampened retail and institutional investors’ appetite in trading digital assets. When compared to the same quarter a year earlier, Coinbase trade volume plummeted by more than half, to $217 billion from $462 billion.

Coinbase CFO Alesia Haas revealed on the conference call that when faced with headwinds, “investors tend to move from traders to hodlers.” However, she claims that the number of monthly transactional customers increased by 200,000 in the most recent quarter compared to the same period previous year.

Coinbase stated in its shareholder letter that it is maintaining customers by allowing them to stake cryptocurrency, adding, “As a result of our core retail customer trading less, our [monthly transacting user] mix has trended increasingly towards non-investing activities—notably staking.”

Staking is the technique of earning interest on cryptocurrency by lending it out to validate transactions on a network’s protocol. It allows validators on proof-of-stake networks to operate, protect the network, and communicate with one another.

The exchange views its staking product to be a “early triumph” for the firm, according to the letter. It also identifies staking as one of Coinbase’s prioritized products, with the long-term objective of being the leading staking provider among crypto firms.

Staking incentives are available on Coinbase for currencies like as Ethereum, Algorand, Cosmos, and Tezos. Cardano was added to the list in March, followed by Solana in June. Coinbase said that 67% of its monthly transactional customers interacted with non-investing products offered by the business, including staking, in the second fiscal quarter of this year.

It did not say how many of its users were staking cryptocurrency, but it did say, “Across all assets we support, [Coinbase] witnessed increased native units staked in Q2 compared to Q1.”

As the second largest cryptocurrency by market value makes the long-awaited switch from a proof-of-work validation mechanism for transactions to proof-of-stake, the corporation continues to emphasize staking as part of its business model.

“We began offering Ethereum staking for institutional clients for the first time in early August,” the letter to shareholders adds. “We will continue to introduce assets for staking for both retail and institutional clients in the future.”

Share This Article:

Share on linkedin
Share on facebook
Share on twitter
Share on reddit

Related Posts