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Coinbase Earnings Shows Uneven Growth in Ethereum, Solana and Cardano Staking

Coinbase still has a long way to go to become the “#1 Staking Provider”.

When Coinbase reported its quarterly earnings in August, the company told shareholders it was prioritizing the development of its staking product and had a long-term goal of becoming a top provider.

As users wager crypto assets, they are loaned to validators on the blockchain network. Validators use funds to secure the network and process transactions. In return, the user receives a portion of the validator’s reward. It has become an increasingly popular offering for Coinbase, whose trading revenue dropped 44% in Q3.

while reporting Earnings in the third quarter On Thursday, Coinbase (COIN) had mixed results in its “Blockchain Rewards” category. His revenue for the quarter was $63 million, down 18% from his $77 million in the same period last year.

Note that few assets can match this time last year when the cryptocurrency market cap exceeded $3 trillion and Coinbase stock closed at $337.05. Since then, the global crypto market has lost two-thirds of its value, with COIN down 83%, ending at $58.82 on Friday.

Comparing the first nine months of 2022 to the same period last year is a different story.

In the first three quarters of 2021, Coinbase generated $120 million in revenue from blockchain rewards. During the same period this year, the company increased it by 77% to bring him to $213 million.

“Compared to Q2, blockchain rewards in Q3, both in terms of user numbers and increased number of native units staked across all assets supported by the platform. We have benefited from increased participation in staking,” the company wrote. letter to shareholders“Growth in staking users was largely driven by Solana, which started supporting us in June.”

The crypto exchange also mentioned that it added support for Cardano (ADA) staking in March. Not so with Ethereum.

“We launched Ethereum institutional staking globally in Q3. Adoption is still early, but we are optimistic about the long-term opportunity,” the company wrote in the letter.

Before the merger, Coinbase accounted for 15% of the 13.5 million ETH staked, according to blockchain analytics firm Nansen.To Early Octoberthe total increased to 14 million, while Coinbase’s share remained the same.

To be clear, it does not mean that Coinbase users have withdrawn their staked ETH.No one can withdraw staked ETH until developers implement ETH Shanghai upgrade The network is scheduled to launch in September 2023.

Instead, it shows that people who have wanted to stake ETH over the past few weeks have chosen to do so with providers other than Coinbase.

However, Coinbase’s Ethereum staking business faces another potential challenge. When asked if he would censor transactions on the Ethereum network or he would move away from ETH staking, CEO Brian Armstrong responded: rather close.

The issue comes after the U.S. Treasury Department’s Office of Foreign Assets Control identified crypto wallet addresses connected to Tornado Cash on Ethereum mixers. sanctions listTraditional financial institutions such as banks face heavy penalties when doing business with sanctioned individuals or entities.

There is as yet no indication that federal regulators are pressuring Coinbase or other cryptocurrency companies to delist or blacklist authorized wallet addresses. Yet Coinbase continues to attack.

In September, the company upheld the lawsuit To the U.S. Treasury Department. The complaint called the agency’s sanctions against Ethereum mixer Tornado Cash “an unprecedented and overly broad action.”

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