Blockchain
Coinbase: Base Layer 2 and Derivatives Make a Case for A More Durable Business Model
In November of 2023, Coinbase added derivatives trading which will help the exchange participate in a higher percentage of trading activity. Derivatives trading is roughly 2/3 of all crypto trading compared to spot trading at 1/3. Equally as important (if not more so), Coinbase has launched a Layer 2 called Base over the past year, which has been growing in popularity and ranks #6 across both Layer 1 and Layer 2 chains in terms of total value locked (TVL). However, Coinbase has an important hurdle to clear. Bitcoin ETFs are impacting Coinbase’s core business model of charging high fees for crypto transactions. It’s clear from the data we pulled below that ETFs are not additive for Coinbase, which is the opposite of what management had promised earlier this year.
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