Coinbase Cloud holds and stakes a significant amount of its customers’ cryptocurrencies. The numbers unveiled by the platform seem to be in line with Coinbase’s ambition to become the equivalent of AWS for cryptocurrencies.
Coinbase cloud and cryptocurrencies: billions of dollars of digital assets to be stored
On December 2, 2021, Coinbase Cloud reveals it holds $30 billion in cryptocurrencies on its platform as of November 2021. The platform stakes most of these assets on behalf of its customers, on 25 blockchains using proof of stake, including Ethereum (ETH) 2.0, Tezos (XTZ), and Cosmos (ATOM). Coinbase Cloud’s customers include institutional investors, individuals, and also businesses.
Coinbase provides custody of the crypto-currencies and takes a 25% commission on the staking fees. Coinbase Cloud, on the other hand, earns 8% on the interest earned from staking. Coinbase acquired Coinbase Cloud, formerly Bison Trails, in 2021 for an amount that would exceed $80 million.
Coinbase, the AWS of cryptocurrencies: serving developers and exchange revenue
Coinbase’s chief product officer, Surojit Chatterjee, indicated in an exclusive interview with Forbes, the exchange’s ambition to become “the AWS of crypto.” Coinbase Cloud thus fits into these plans of the exchange:
“We’re building this whole suite of Coinbase Cloud products that you can think of as crypto computing services to help developers build their applications faster.”
Coinbase Cloud is also an additional way for Coinbase to diversify its revenue without being dependent on the fees they charge on transaction volumes that correlate to fluctuations in the price of cryptocurrencies. That volume dropped 29% in the third quarter of 2021, when the crypto markets were relatively quiet. Coinbase’s revenue and profit were then down 39% and 75%, respectively, compared to Q2 2021.
The Bison Trails acquisition seems to be paying off for Coinbase for now as it continues to acquire companies to expand its ecosystem. Will the purchase of Unbound Security be as beneficial for the exchange, which wants to offer an innovative way to manage private keys?
