Coinbase Q3 Financial Report Shows Unbalanced Growth in ETH, Solana, and Cardano Staking

This article comes fromDecrypt, original author: Stacy Elliott

Odaily Translator | Nian Yin Si Tang

This article comes from

, original author: Stacy Elliott

Odaily Translator | Nian Yin Si Tang

Coinbase has a long way to go to become the “number one staking provider.”The last time Coinbase reported quarterly earnings was in August, when the company told shareholders it had prioritized developing its own staking product and had a long-term goal of becoming a top provider.When users stake their crypto assets, those assets are delegated to validators on the blockchain network. Validators use these funds to secure the network and process transactions. In return, users will receive a portion of the validator's rewards. This has become an increasingly popular product for Coinbase. Notably, the company's trading revenue fell 44% in the third quarter.

On Thursday, Coinbase released

third quarter financial report

, with mixed results for the “blockchain rewards” category. The company's revenue for the quarter was $63 million, down 18% from $77 million a year earlier.

Remember, hardly any asset has performed as well as it did this time last year, when the cryptocurrency market surpassed $3 trillion in market capitalization and Coinbase (COIN) closed at $337.05. The global cryptocurrency market has lost two-thirds of its value since then, with COIN down 83 percent to close at $58.82 on Friday.If you compare the first nine months of 2022 with the same period last year, you see a completely different picture.In the first three quarters of 2021, Coinbase earned $120 million in revenue from blockchain rewards. During the same period this year, the company's revenue from this segment rose 77% to $213 million.

“Blockchain rewards benefited from increased staking in Q3 compared to Q2 — both in terms of the number of users and an increase in the number of native staked units across all assets supported by our platform,” the company said in a statement. shareholder

wrote in the letter

, "The growth of staking users is mainly driven by Solana, and we have supported Solana since June."The cryptocurrency exchange also noted that it added support for Cardano (ADA) staking in March. So there are signs that some of Coinbase’s staking offerings are gaining traction, but that may not include ethereum.“During the third quarter, we launched our institutional staking service for ethereum globally, and while adoption is still in its early stages, we are optimistic about its long-term opportunity,” the company said in the letter.

Before the merger, Coinbase accounted for 15 percent of the 13.5 million ETH staked, according to blockchain analytics firm Nansen.

to early October

, the total number of ETH pledges increased to 14 million, while the proportion of Coinbase remained unchanged. Over the past month, Coinbase’s share has actually dropped, and now accounts for 14% of Ethereum’s staked volume.To be clear, this does not mean that Coinbase users have withdrawn their staked ETH. No one can withdraw staked ETH until developers deploy the Shanghai network upgrade, which is expected to launch in September 2023.。

Instead, it’s a sign that people who wanted to stake ETH over the past few weeks have opted to work with providers other than Coinbase.

Meanwhile, Coinbase’s ethereum staking business faces another potential challenge: when its CEO, Brian Armstrong, was asked whether he would censor transactions on the ethereum network or would exit ethereum staking,

He said he would rather close the businessArmstrong was asked about the issue after the U.S. Treasury Department’s Office of Foreign Assets Control added crypto wallet addresses connected to Ethereum mixer Tornado Cash to its sanctions list. Traditional financial institutions such as banks are known to face heavy penalties if they do business with sanctioned individuals or entities.There is no indication yet that federal regulators will pressure Coinbase, or any other cryptocurrency firm, to exclude or blacklist sanctioned wallet addresses. Still, Coinbase went on the offensive.