The trading volume of the largest US-based cryptocurrency exchange has fallen 29%, from $462 billion in Q2 and $327 billion in Q3. The company highlighted market volatility as a key factor in determining transaction revenue in its most recent report. Although the numbers were not impressive, the platform said it was still a win.
Coinbase Makes a Huge Hit
After its debut as a publicly traded company, Coinbase had seen record revenue from April through June. It was unable to escape the negative effects of the bearish market movements over the next three months.
Net revenue for the exchange was $1.2 billion. $1.1 billion of that came from transaction revenue. In Q3, $1 billion was generated from retail transaction revenue, a 44% decrease compared to Q2.
Coinbase’s institutional transaction revenues were also down almost 34% compared to Q2 and reached $67.7million.
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Although all other revenue was down, Coinbase’s subscription and services revenue helped to keep the income from falling even further.
These sources generated $145 million in revenue in Q3, which was 41% more than Q2. The quarter was boosted by the “Earn”, which saw a reduction of 10% in revenue and reached $15.2 million. Blockchain rewards and Custodial fees revenue also contributed to the increase.
Blockchain rewards revenue increased by Staking and Ethereum 2.0. It was due to lower Bitcoin and cryptocurrency prices as well as maximum net flows using its custody solution. Coinbase made more than $31million in total custodial fees revenue.
There is no evidence that users have moved from Coinbase Consumer into Pro.
Coinbase also saw a decline in third quarter weighted average retail transaction fees rates. According to Coinbase Pro, the decline can be attributed largely to Coinbase Pro’s relatively high trading volumes.
Coinbase Pro has what is known as a “tiered fee structure” where users who trade larger amounts of money pay lower fees. According to reports, there were no changes to its retail fee structure during the quarter. Therefore, the Pro did not see any evidence of user migration to the General Consumer platform.
The quarter before, however, saw a decrease in weighted average institutional fees rates. The largest contributors to institutional trading volume were market makers.
Featured Image Courtesy FT
Marla Brooks – Financial Analysis
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