📈 Can Coinbase Become Profitable?

Joyce of Global Coin Research | Funding Slows Down

Marco Manoppo & Karon Pangestu
May 05, 2023

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Good Morning,

FTX wants $3.9B back from Genesis. SUI hits $15 billion in FDV. PEPE market cap reached $960M. Will the infamous internet frog character ever beat Dogecoin in market cap?

Only time will tell.

In Today's Email:

What Matters: Coinbase Q1 2023 revenue 📈
Founders-Investors Highlight: Joyce Yang, Founder of Global Coin Research 👩‍🔬
Deal Flows: zkLink $10M multi-chain trading 💻

Narratives: Play around with DeFi protocols in Sui and zkSync era.

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WHAT MATTERS

Coinbase Beats Q1 2023 Earnings

@tier10k

State of play: Coinbase shares were up 8% after-hours as the company beat revenue expectations. It generated $736M in revenue in 1Q23, with an EBITDA of $284M.

While the YoY revenue was down 34%, it still beat analysts expectations by 18%.
USDC contributes to $199M in interest income.
Staking contributes to $73.7M in revenue.

Coinbase shifted focus to profitability, by ending special pricing programs for market makers and laying off 20% of its workforce, which bring down operating costs by almost half to $896.4M.

The company is also looking more and more like a bank.

7/ Transction volume was flat Q/Q, but transaction revenue was up 14% QoQ. That's a big quarterly growth figure. Gain driven by pricing.
Coinbase ended special pricing programs for market makers in 2022. COIN is prioritizing profits over share.
Alts coins were 45% of volume.
— Ram Ahluwalia, higher for longer crypto CFA (@ramahluwalia)
2:22 AM • May 5, 2023

The key takeaway: It is becoming more clear that Coinbase can become profitable when it wants to.

Granted, if Coinbase does so, it won’t be able to scale as aggressively against offshore exchanges in the international markets.

Why it matters: Coinbase knows it needs to become more active internationally given the regulatory uncertainty in the US.

This is not only to hedge its regulatory risk, but also the fact that derivatives products are an extremely lucrative business.
With Coinbase International Exchange being launched, it is an active offensive strategy against Binance to acquire international market share.

For builders: Pay attention to what large players such as Coinbase are building. Make sure your product isn’t simply a feature that can be easily replicated by larger and more well capitalized industry players.

For investors: Coinbase quarterly earnings signals the condition of the crypto markets. Understanding its product strategy can provides investors with glimpses as to what industry verticals can provide opportunities.

BUILDER-INVESTOR HIGHLIGHT

Joyce Yang, Founder of Global Coin Research

Joyce Yang is the Founder of Global Coin Research, a decentralized community of web3 investors and researchers.

Community members get access to research and educational content, as well as access to investment opportunities for the highest tier member.
GCR has invested over $41M in 65+ projects to-date.
To become a member of the community, one can purchase GCR tokens on the open market.

Previous backgrounds: Joyce has an educational background in Economics from Harvard, and had previously held positions as a Software Equity Researcher at Merrill Lynch, as well as a Reporter on TechCrunch.

The big idea: GCR aims to provide a platform for any web3 enthusiast to participate in a community of researchers and investors. As a DAO it aims to become a more effective platform to conduct research, source deals, and invest in projects.

Take a peek at our new referral reward at the bottom of this issue. Share this newsletter and receive our list of 100 smart crypto investors' wallet addresses 👇

DEAL FLOWS

zkLink Raised $10M

zk.link

Deal flows slowed down in the past week 😔 — we saw $70M+ in deals.

zkLink $10M Strategic Round: zkLink is building a unified multi-chain trading infrastructure. Powered by zk-SNARKS technology, zkLink aims to provide traders with unified liquidity across numerous L1 blockchains and L2 networks.

zkLink aims to launch its mainnet in Q3 2023.
Its initial products would include an order book DEX and NFT marketplace.
zkLink also offers APIs for developers to easily deploy multi-chain dApps.

Deal flows in the past week:

Nolus, $2.5M Pre-Seed Round
OpenTrade, $1.5M Seed Round
Portals, $2M Seed Round
Entendre Finance, $4M Seed Round
Vibe, $4M Seed Round
Tristero, $4.8M Seed Round
FARE Protocol, $6.2M Seed Round
Fedi, $17M Series A
zkLink, $10M Strategic Round
AlienSwap, $12M Strategic Round
SuiPad, $1.155M Unknown Round
Tangem, $8M Unknown Round
Aki Network, Undisclosed $ Seed Round
Cetus Protocol, Undisclosed $ Seed Round

QUICK BITES

Coinbase beats Q1 2023 revenue estimates.
FTX seeks to claw back $3.9B from Genesis.
Cash App generates $2.2B Bitcoin sales in Q1 2023.
SUI launches mainnet.
SEC changes its mind on officially labeling digital assets.
Moonpay launches retail crypto app.
BitFlyer USA fined $1.2M by NYDFS.
Blockchain Association leaves New York for Washington DC.
Curve deploys crvUSD stablecoin.
RFK Jr. raises crypto issues in his campaign.
Voyager plans to distribute funds to creditors in the next few weeks.

MEME & NOTEWORTHY READS

New Order’s read on the crosschain future.
Vitalik Buterin’s presentation on Ethereum 3.0 roadmap.
Joel John’s read on one-click web3 checkout.

— non aesthetic things (@PicturesFoIder)
4:02 AM • May 5, 2023

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.